About Bad Credit
Credit ratings and reports, assigned to your Social Security number, are documents or numbers that represent your credit and financial history. Credit scores are determined by the following criteria: any negative payment history, debt, length of your credit history, the variety of your credit experiences and any inquiries you've made into obtaining new debtors. Often the most influential criteria are negative payment history and amount of debt. Missing payments on a large debt can quickly lower your credit score to be considered bad. Your credit score will be on a scale of 340 to 840, with a poor to fair rating being 340 to 619.
Credit Card Companies
Unsecured credit card companies specialize in providing credit cards to people with bad credit, in order to help them increase their credit score over time. Unsecured credit cards are credit cards that are not guaranteed by collateral, unlike their secured counterparts which are often attached to savings accounts to guarantee payments. Most of these companies do not offer free services; however, a few do offer low and no annual fees. Companies that offer unsecured low and no fee credit cards to people with bad credit include American Dream, Tribute Gold, Orchard Bank and First Premier Bank.
Rates, Fees and Qualifications
Most people with bad or no credit will qualify for unsecured credit cards with these companies; however, the degree of your bad credit can affect your APR rate and any fees you may encounter. Students with little or no credit and people with credit scores in the high 500s can qualify for better rates, lower fees, and higher spending limits with Orchard Bank and American Dream. First Premiere Bank offers an initial credit line of $250 to all bad credit applicants and allows them to increase their spending limit over time. APR for these credit cards ranges from 7.9 to 19.9 percent based on past credit performance.
Repairing Your Credit
Obtaining one of these unsecured no-fee credit cards is only the first step to repairing your credit. To use these cards to repair your credit score, it is recommended to not maintain a monthly balance, especially on a credit card with a high APR. Instead make small purchases and pay off the balance every month. Over time your credit score will increase, as long as you continue to pay off your debts.