The recent turmoil in the economy has made credit card companies much more selective about who they give a card to. Only those who have good credit record are able to get a credit card with lucrative terms.
If your credit history hasn’t been good then you might get stuck in a vicious circle, where the terms that you get on a card will be much harsher, which will further increase your chances of a default. The only way out of this problem is to improve your credit record. Here are a few ways of establishing or re-establishing a good credit history.
An easy option is to apply for a secured card. These cards require some deposit as security and one such well-maintained account that sends information to major consumer reporting agencies would help you in building good credit history. As they are secured with a deposit, it should be easy to get such a card. According to the FICO scoring formula, there is no difference between secured and unsecured credit cards so it will help you build credit.
Most companies allow you to upgrade to an unsecured credit card if you have had a secured card for 18 months and they will return your deposit at the end of that period. Some secured cards even pay you an interest on the deposit.
Another way is to go for retail and gas cards. They give you a straight discount on goods that are purchased on the day the account is approved. Some cards even have continuing discounts and schemes for loyal customers and big spenders.
However, these cards have very high interest rates with very low credit limits. Some of the gas cards have to be paid in full every month and do not have much value in FICO scores. You should get a card that allows you to revolve payment so that it can be treated like an unsecured card for the purpose of FICO scores.
Finally, you have the option of going for prepaid cards. In these cards, your purchases are deducted from a prepaid amount. Some of them give a credit line if you are willing to pay a fee. However, most such cards do not send information to any major credit reporting agencies.
Instead, they report to alternative credit bureaus, like PRBC, which do not have much acceptance yet. If you are lucky and your lender looks at the PRBC score, then this card might be able to help you.
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