Welcome to Second Chance Credit
Is Second Chance Credit Cards the Best Deal For Your Money?
A second chance credit card is an alternative to credit card which does not check into your past credit history as closely as a regular credit card. Yes, you heard that right. For regular cards or online loans, online financial institutions will only look at your credit report if there is bad news. If you have had a bankruptcy, foreclosed, or have a low credit score, you can find yourself refused outright.
However, some other financial institutions are open to approving credit card applications even if you have poor or substandard credit. It just depends on the type of card that you apply for. There are two different types of second chance credit cards. The first is a secured card. With a secured card, you need to have some collateral such as a property, car, etc. As such, you are somewhat secured in your ability to pay back the loan. Of course, if you can't pay off your loan, then your home, car, etc. are at risk.
This second chance credit cards differ from unsecured cards in the way that they require a security deposit before approval. This deposit, often up to one hundred and twenty dollars, is generally the same amount used for initial sign up fees and also guarantees that the credit limit will remain at this level for a certain period of time. After this period of time, the credit limit is available to be increased by paying off the balance and repaying the secured deposit amount. The second possibility for second chance credit cards is unsecured cards which do not require any type of security deposit.
These second chance loans credit cards are usually only offered to people who have bad credit and maybe a few other small blemishes on their report. The reason for this is that these individuals want to get their first credit line but don't really have a great credit rating. These subprime accounts give the individual the opportunity to start all over again, establishing a new credit line and beginning on the right foot. Of course, as with secured cards, the amount of money available through these second chance credit cards may be very limited. Because of this, it is important for those who are looking for these second chance credit cards to make sure that their payment history is consistent. The best way to do this is to build up a good payment history over time.
Make sure that there aren't any late or missed payments, as these will reflect negatively on your credit score. You also want to make sure that your payment history is actually good, because those payment histories will also affect the interest rate that you qualify for with these second chance credit cards. Finally, always remember that it is important to actually pay off the bill, so if you have a history of not paying bills then you may want to reconsider applying for a second chance credit cards. Another option that second chance credit cards offer those who qualify is the opportunity to rebuild your existing credit rating.
There are many different reasons that someone might want to try and rebuild their score, such as losing a job, having a medical emergency, or even being a victim of identity theft. By taking advantage of these second chance options, you can rebuild your score and improve your chances of qualifying for a higher credit limit. Some people even find these second chance credit cards offer an instant credit boost, as they are able to see immediate results. However, with these cards there are some disadvantages.
One of the biggest disadvantages of these second chance cards is that you are still required to have a good credit history in order to qualify for one of these cards. If you have poor credit scores, then you will most likely find that these second chance cards do not offer you any help when trying to rebuild your score. Even though the rates on these secured credit cards are low, they are also often only offered to those with low credit scores. If your score is low, then you are still going to be rated on a particular scale, and you might find that there are other secured credit cards available that are better for you and meet your needs better. It is important to note that many of these secured cards only offer you a limited time period of time to build up your rating.
The key to rebuilding a good score after being turned down for unsecured credit cards is to first take advantage of all the special offers that you can get, and then work hard to fix any problems you might have later down the road. By first getting a second chance at secured credit cards, you can save yourself from having to pay an exorbitant annual fee. But, make sure that you are able to keep up with the payments and you will be able to rebuild your score.