Anyone with a low credit rating might think lending is rather like looking for a needle in a haystack, almost impossible. Credit cards to build credit may be the first rung on the lending ladder.
While it does not make much sense to try applying for a credit card if you have a low credit rating, more so if you have been turned down before, you can actually build up a low credit rating with a credit card. There are lenders who are willing to offer credit cards specifically to those with poor credit history with the intention of helping them rebuild their credit rating. So how can you do this?
Take the Easy Route to Finding Lenders Offering Bad Credit Cards
Not all lenders on the market are willing to offer people with poor credit a credit card. It can be a nightmare trying to find one who is willing to allow you back into the lending market. You search for lenders only to find after a long application process your application is turned down, which is a negative against your credit file. So how can you win?
One way is with our help. Here at Bonsai Finance, we work with lenders more willing to offer credit by way of credit cards to people with a poor credit rating. This means we can partner lenders with people with a bad credit rating, who can then compare lenders for the most suitable card for their needs.
How to Use Credit Cards to Build Credit
A credit card can help you to build up your credit rating only if you use it sensibly and stick to some rules to show the lender you are responsible:
- Never try to go over the limit on your credit card;
- Make sure you always pay the credit card monthly repayment ahead of the date;
- Try to pay off more than the minimum amount owed each month;
- Only use the credit card as a last resort;
- Don’t be tempted by the lender offering increases on the amount they offer you unless you know without a doubt you can afford the increase;
- Never be late making a payment;
- Never miss a payment on the credit card.
What Cards Might be Offered?
Not all credit cards are the same. There is the “typical” credit card, the secured credit card and the credit builder prepaid card. The most suitable one will depend on your personal circumstances and just how bad your credit rating is. While the majority of the lenders we work with do offer credit cards to those with bad credit, there are occasions when you might not be approved for the “typical” credit card.
The secured card means you put something up as security against the card. This is generally a cash sum. If you use the card wisely and pay it off you get the deposit back, if you do not it is used to repay what you owe.
If all else fails due to your credit rating being extremely poor, you might want to consider the pre-paid credit builder credit card. This is not a credit card as such, as you do have to load the card up with money from your bank account. However, it does give the freedom of a credit card as it can be used in any store that takes a credit card.
The credit builder credit card is one of the types of credit cards to build credit for people who have been turned down for other cards. In fact, the whole purpose of the card is to rebuild your credit file. By loading it with your own money and using it sensibly, you show the lender you are responsible. As your credit file is rebuilt your chances of being offered a traditional credit card increase.