How to Find the Best Credit Card for Bad Credit

In this struggling economy a large number of consumers are searching for the best credit card for bad credit. You may have paid your bills, loans and credit cards on time year after year but lost your ability to pay when your job disappeared.

When facing hard financial times, you have to prioritize your debts. If you are faced with the ability to pay your mortgage or credit cards, clearly the credit debt will take a back seat.

If you cant pay your mortgage, you lose your home and have to find somewhere to live. If you dont make car payments, the bank will repossess your car and you have no transportation. Other priority payments are keeping utilities such as electricity and water and feeding yourself and your family.

How Your Credit Rating Can Be Damaged

When you dont pay your credit cards on time the loss may not seem as severe. You will ruin your credit rating but you dont risk losing physical products that you rely on daily.

When finances are strained to the limit, we prioritize and payments to credit cards are not the top priority.

You may realize you are damaging your ability to buy in the future but might not understand how many ways bad credit can harm you. When you want to rent a home, your credit rating is requested by the rental agent.

When you buy insurance you may pay higher rates if you have bad credit. In our society, bad credit means you are a bad financial risk.

Consumers with credit problems may think their only alternative is to pay for purchases with cash. The problem with living on a cash basis is that it does nothing to correct the problems in your credit file.

Although the bad credit marks do become less important over time, you need good credit added to your credit rating to overcome the negatives.

How to Repair a Bad Credit Rating

A good path to take is to find the best credit card for bad credit. If you have a good relationship with your bank you may be able to establish a low spending limit credit card with that bank.

This is true if your problems with bad credit are the result of a medical emergency or job loss or other temporary setback. If you previously had a great credit rating theres a good chance your bank might be willing to provide a credit card or a secured credit card to you.

The secured credit card was once widely available to those with bad credit. For this account, the consumer places an amount of money in a savings account held by the lender. The credit lender then issues a credit card that can be used like any other card for purchases online or offline.

The funds held are in an interest bearing savings account and guarantee payment of the credit card. The savings account is collateral that guarantees the credit line.

If you have never considered a credit card for bad credit you may be resistant to the idea of placing cash in an account you cannot access.

This collateralized credit account is similar to taking a loan to buy new furniture or a car. For those transactions, the product you are buying is the collateral and failure to pay will result in the lender confiscating the furniture or the car.

If youve ever taken what is known as a "personal loan" at your bank you may recall signing a document that placed some of your possessions as collateral to guarantee the loan.

The best credit card for bad credit is a secured account because those lenders report to the credit rating agencies. When you search for a credit card for bad credit there are certain things you need to keep in mind.

You will be paying high fees to use such a credit account and you want to make certain it will help fix your bad credit in time. It is important to ascertain that the lender does report monthly to the three major credit bureaus.

Another important factor to look for is whether the secured credit card can be changed to a standard credit account once you have established a good record of payments.

Conclusion

If your credit has been harmed due to a medical emergency or job loss, there are steps to take that will help you repair the damage. Search for secured card offers online and carefully compare the options, fees and terms of use to find the best credit card for bad credit.

Once you have established a new account, use the account monthly and pay it on time each month and start replacing bad credit with a good payment history.