How to Get a Credit Card

Credit Applications and Realistic Expectations

Due to the troubles in the economy, the standards for how to get a credit card have changed in the last couple of years.

When you have a credit crunch, underwriters naturally are going to tighten up standards and add restrictions to manage their risk. Interest rates are likely to increase.

So you want to get the latest information on being issued a line of credit through one of the major finance and credit institutions.

Even if you have bad credit or you’re a “credit ghost” (no credit history), you shouldn’t give up. You just need tips for how to get a credit card.

Apply for the Correct Credit Card

When it’s time to get your own credit card, do a little online research and find the type of credit card which fits your demographic. There is a credit card designed for every person in the world; you just have to find it.

There are debit cards specifically designed for kids and teens (see “Visa Buxx”), so it shouldn’t surprise you that there are credit cards for college students and credit cards for seniors, too. Find the one whose program you’re most likely to be accepted into and apply for this card. You might not be getting an American Express Card or a Visa Gold Card on your first try, but you’ll be able to get a credit card, no matter what your credit issues are.

In those particular cases, here are way to get a credit card if you have bad credit.

Explain Your Bad Credit

One fact many debtors don’t know is that you can add a personal statement to your credit report explaining any defaults or bad items on your history. If you have some issues in your recent past, use those 100 words to explain what happened. If you lost your job in the economic crunch or you went through a long illness or divorce, add that to your credit score. People understand these things and they show your credit problems are likely a one-time issue, not a pattern of trouble.

Get a Subprime Credit Rate

People with a bad credit history or no credit background have to be ready to deal with subprime credit rates. “Subprime” is another word for crazy-high interest rates on your credit line. You don’t have the history other people do, so you are asked to pay high margins when you borrow money. Remember, a credit card is borrowing money from a financial institution, even if it seems like charging is buying things and paying later.

Getting a subprime credit rate mitigates some of the danger the credit card company faces when issuing you a credit card. When you pay huge amounts in interest, you’ll cover the costs if you eventually default on credit.

Imagine you’ve gotten your first credit card and you only have a $1,000 maximum. Then imagine you max out your credit card and end up paying only on the interest for a year or two. Even if you pay $1,200 in pure interest, not paying down your credit bill, then default on your loan, the credit institution ends up with a net gain. Extrapolate that concept out to big sums of money in the tens of thousands of dollars, or across tens of thousands of debtors borrowing from a creditor institution, and you’ll see how even defaulting debtors still pay off for a firm.

Build Your Credit Score

The key to getting a subprime credit rate is to avoid paying interest. Don’t overcharge your card. Instead, use it for convenience, paying only what you can afford to pay off at the end of the month. When you do this, you avoid interest payments. Your bad interest rate doesn’t matter, but you begin to establish a positive credit history. Funny enough, you hear about creditors calling the people who pay off their bill every month and never pay interest “deadbeats”, because lenders make their money off the people who fall into the credit trap.

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