#credit card bad credit

#Getting a Credit Card even with bad credit

August 11, 2006

How to Get A Credit Card No Matter How Your Bad Credit Rating

Your credit is bad. Perhaps you have a string of unpaid bills haunting

your past. Maybe you declared bankruptcy within the past 10 years, or

defaulted on a student loan.

All of the above can block your access to obtaining a major credit card,

such as VISA or Mastercard.

But bad credit is not the only reason you can be denied a major credit

card. Some people simply have never used credit. People who like to pay

cash only, have never financed a car, taken out a college loan, or a

mortgage may have zero experience with credit. In that case, most card

companies will reject your application, not because you have bad credit --

but because you have no credit rating.

Many women who marry young and do all their borrowing under their husband's

name often find themselves with no credit rating after they are widowed or

How do credit card companies decide if you are a good credit risk or a bad

credit risk? Well, it's sort of a Big Brother thing. There are several

large agencies in America which track the borrowing and buying behavior of

just about every single American who has borrowed money at one time or

another.

The four major credit rating agencies are:

CSC Credit Service Phone: 800-392-7816

TRW Information Sys. Phone: 800-831-5614

Equifax Phone: 800-685-1111

Trans Union Corp. Phone: 800-916-8800

When you send in an application for a credit card, the card company

contacts one of the above agencies, which pulls your file, if one exists,

and let's the company know if you have any bad debts in your background.

If you have never borrowed money or used credit of any kind, your name will

not appear in the data base of any of the above. If you have, there will

almost certainly be information about you. If you have ever defaulted on a

bill, or walked away from a debt owed, that information will be available.

If you have never defaulted on a loan, but have made frequent late

payments, that is recorded, too, and goes against your credit rating.

25 Percent Error Rate

If this sounds a bit like Big Brother, most would agree with you that it is.

It's scary to think that some large anonymous corporation is keeping a

file on you, but it's true. Furthermore, they will share your file with

any lending institution that wants to know something about you. That's the

price you pay to obtain credit. You've heard the statement, there ain't

no such thing as a free lunch. When it comes to the game of credit, the

lunch is definitely not free, neither in the monetary sense, or in the

realm of personal freedom.

To top things off, credit agencies make errors in as many as one-fourth (25

percent) of all their reports. At this minute, false information about you

may be ruining your credit rating.

To check your credit rating for errors, call the agencies at the numbers we

provided above. They will request that you send them a written letter

asking for a copy of your credit report. They will send you a copy of the

information they have about you.

Now let's look at how card companies make the big bucks -- interest rates.

Interest Rates

A few decades ago there were laws against charging the kinds of interest

rates credit cards get today. Exorbitantly high interest rates were called

usury, and were forbidden by federal law. Just 30 years ago loaning

money at 20 percent would have landed any banker in prison. Such rates

were the territory of loan sharks and organized crime.

Today, however, it's standard business. Some cards have rates approaching

21 percent. Some product manufacturers, such as Apple Computer, have

credit plans that push a whopping 23 percent.

Most credit card companies attract customers with super low interest rates,

sometimes as easy as 5 percent. But what they only tell you in the fine

print, which few people bother to read, it that the interest rate jumps

back up after six months. Many cards that start you out at 6 percent soon

jump to 18 percent, or higher. By that time, most people have chalked up a

balance and are stuck. Most people simply fail to notice when their rate

increases. Credit card companies count on that. They like who take no

interest in details. If you don't watch them, they'll watch you -- and

your wallet -- and dip into it in the most insidious ways.

Some credit card companies charge no annual fee for use of their card.

Annual fees range from $18 to $55. You pay it every year simply for the

privilege of using the card. Other companies charge no annual fee. You

might think, then, that this is a better deal. Most often they are not.

Cards with no annual fee almost always have a higher interest rate. If you

leave a monthly balance, you'll always pay more than the annual fee in

interest charges. Only if you never leave an unpaid monthly balance can

One of those insidious ways is the offer such perks as frequent flier miles

or annual rebates. Use the card so often, and get X amount of frequent

flier miles. Use your card, and get credit toward the purchase of an

automobile. Is this a good deal? Hardly ever. As you might have guessed,

the offer of rebates and gifts is simply an inducement for you to pay super

high interest rates. Unless you are a big spender and travel a lot, you'll

rarely benefit from this kind of promotion.

Be Choosy

In short, never sign up for a credit card until you compare rates. Shop

around. Credit card companies are just as competitive as any other kind of

business. That means interest rates that vary widely. In general, never

go for a card that is five percent higher than the current prime rate.

How To Get A Lower Rate

What if you are already on the hook with a major credit card with an

agonizing rate of interest? Pick up the phone, call your card company, and

get tough. Often, if you ask for a lower interest rate, you'll get one --

it's as simple as that.

As further incentive, you can threaten to transfer your balance to another

card company with a lower rate. Many card companies are more than willing

to take you on as a customer by paying off one of their competitors for

you. Of course, you are then beholden to them. That's okay if you score a

lower interest rate.

How Anyone Can Get a Credit Card

Now what about all of you hopeless cases out there. What if you have

deplorable credit, or no credit rating at all. You may have already been

turned down by a half-dozen card companies. What can you do?

First, you should think long and hard about why you want a credit card in

the first place. If you have a history of bad credit, a credit card may be

the last thing you need. Many people feel that credit cards and the debt

they lead people into is a modern form of slavery.

Credit cards are almost magically deceptive and alluring. They get at the

deepest psychological lever of the human mind -- a lever which allows

people to have the feeling they are getting something for free, when in

fact, they are paying two, three, four, even ten times as much for that

product because of the interest they will pay on each purchase.

On the other hand, not having a credit card is becoming less and less

practical in modern America. You can't rent a car without a credit card.

Carrying cash is dangerous. Checks are not accepted everywhere -- and

traveling to another city or country is extremely difficult without the

confidence and identity a credit card brings.

If you decide you really need and want a credit card despite your past

problems with credit, you should get what is called a secured credit card.

Even people who have declared bankruptcy are granted secured cards.

A secured card works this way: you pay a lump sum of cash upfront either

to your bank or the card company itself, usually from $200 to $2,500. The

card company will then grant your credit for up to 150 percent of the

amount of your deposit. If you pony up $500, you will be granted a $750

credit line. If you put up $1,000, you will get $1,500 in credit, and so

on.

Your deposit money will earn a very nice 4 to 5 percent interest while it

is held as collateral by your bank or the card company. The deposit money

acts like a buffer for the lender. In the event you default on your card

debt, the lender gets to keep your money. They may still incur a net loss,

but the risk is far less.

Additionally, the interest you gain on your deposit will offset the

interest on your monthly balance if you have one. If you get a secured

card with an 18 percent interest rate, you can feel good about the fact

that your pre-payment is earning 5 percent.

Using a secured credit card can also help repair your credit rating if you