While a poor credit score lowers your chances of opening a new credit card account, that is not a mission impossible. It may take a lot longer than usual and involves some shopping around. Your low credit score may be the result of multiple negative factors such as frequent late payments or defaults. Sadly, the only way to fix a low score is to rebuild your credit. To get a new credit card and rebuild your poor credit history, here is what you should do and consider.
Obtain a Retail Store Credit Card
A retail store credit card is a good option, and most stores are willing to offer one to customers with low credit score. There are some traps to avoid as well. Since retail cards are not affiliated with VISA, Master Card, or other major card companies, you should not use them for other types of purchases. These cards often come with high interest rates which may affect your credit score further if unpaid. Therefore, it is recommended that you get a retail card from a store you often visit to make purchases. The trick to rebuilding your credit is to make small purchases you can easily pay off on time. While you secure money for the minimum monthly payment, it is best to pay more, or even better, in full as to avoid paying high interest charges.
Apply at Your Bank, Credit Union or Savings Institution
Financial institutions you have an account at are more likely to approve your application for a credit card, especially if you make timely payments. However, there is no guarantee you will be able to obtain a credit card with low interest rate or agreeable terms and conditions. Look for other credit card issuers and compare.
Get a Co-signatory
A co-signatory is a person who can act as a guarantor of your credit. If you fail to pay the granted credit, the co-signatory is bound to secure the cash you owe. To obtain a credit card, make sure you find a family member or friend with a good credit standing. Your chances of having the credit granted will increase substantially.
Obtain a Secured Credit Card
This can be a last resort step if you exhausted all other options. A secured credit card requires that you make an initial deposit that serves as a security for the loan. However, the credit limit will only be a certain percentage of the initial deposit. If the latter is larger, the credit limit will also be higher.
If possible, stay away from cards that require annual fees. On the Canadian market, individuals with low credit scores can choose from a variety of credit cards: The Guaranteed MasterCard allows customers to rent a car, purchase merchandise over the Internet, and do their daily shopping. The card goes with an annual fee of $59, interest rate of 19.8 percent, and is suitable for individuals with bad history. The Guaranteed Secured MasterCard® comes with a typical APR of 19.8 percent and annual fee of $59. This card is suitable for persons with limited credit history or no credit. The Provincial TrustTM Shopping Card is interest-free but can be only used to shop on the website of the Provincial TrustTM Shopping Club. The card comes with an annual fee of $129.95 and a flat fee of 19.95 a month.