Low credit scores cards are beneficial for people who are in financial trouble. They allow you to stretch your payment over months and also give you a chance to improve your credit score through displaying creditworthy behaviour. These cards can either be secured or unsecured.
Applying for a secured credit card
With a low credit card score, getting a secured card is more effortless. Issuers of these cards may consider your income but not your credit card score.
The card company secures your card using the money you deposit into the bank of an issuing card. Your card limit is usually the amount of cash you have deposited, although this might differ with card companies. There is rarely any interest earned on the money deposited in the bank.
Some cards offer you an unsecured card if you demonstrate creditworthy behaviour by paying your debt on time for 6-12 months. In this case, your card issuer returns your deposit.
A suitable secured card should offer you a low APR. With the issuer having your cash as collateral, there is no reason to charge a high-interest rate. However, low APR might also mean more minor perks and no rewards.
The initial card limit is usually low. However, some companies allow you to increase your deposit and raise your limit.
Applying for an unsecured card is more complicated when you have a bad credit card score. It could confine you to a card with a high APR. Sometimes, cards will allow you to have a co-signer with fair credit as it gives them somewhere to retrieve their debt if you fail to pay.
Improving your credit score with credit builder loans
A credit builder loan can help you improve your credit score. When you sign up for this, the card company opens an account in your name, which is under their control. You then borrow the agreed amount, which you will need to deposit into your credit-builder account. After you’ve cleared your loan, the card issuer gives you the money in your account. It is essential to pay your debt on time to demonstrate creditworthy behaviour.
