No Matter How Bad Your 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
divorced. Thousands of women have been denied loans and credit cards on
Still other people carry too much debt to be considered a good risk. If
you have a car loan, a student loan, a mortgage, two or three -- out cards,
you are unlikely to be granted another credit card.
But in any and all of the above cases, you can still obtain a credit card.
No matter how bad your credit, and even if you have declared bankruptcy,
you can still be granted a VISA or Mastercard with a limit as high as
$5,000, if you know the write company to call, and how to make your
We are going to reveal these card companies and the methods by which you
can obtain a VISA or Mastercard later in this report, but first, let's talk
about some of the other things you really should know about credit cards,
including annual fees, interest rates, credit reports and more.
Your Credit Rating
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
The three major credit rating agencies are:
Experian Equifax and Trans Union Corp. :
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.
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.
No Annual Fee Cards
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
you benefit form a card with no annual fee.
Perks and Freebies
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.
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.
A Secured Card
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
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.
Which card companies offer secured credit card plans? The following:
CitiBank -- Minimum deposit is $300, which earns 4%.
Federal Savings Bank -- Minimum deposit is $250, which earn 2.5%. Call
Orchard Bank -- Minimum deposit is $400, which pays 4% Call 800-873-7307
Key Federal -- Minimum deposit is $300, which earns from 4% to 5%. Call
Signet Bank -- Minimum deposit is $200, which earns 5%.
Using a secured credit card can also help repair your credit rating if you
use it responsibly over a number of years.
Even if you do not have bad credit, a secured credit card is recommended
for anyone who wants the safety and convenience of a credit card. Secured
cards are a safe, responsible way to control your spending, and you
actually earn money though interest on your deposit while you enjoy the use
of your card.
DISCLAIMER: At the time of writing the referenced banks, companies, and phone numbers were valid. However, with progress and the consolidation of so many companies they may now be outdated – but the concepts and points made are still good. Where you find references outdated – simply substitute the current company.