Building a credit history and a credit score is extremely important as it affects your life to a great extent. Having a low credit score can make your life hard, while high credit scores can open the doors to your dreams. Many people take the first credit card offer that comes their way in order to get a line of credit no matter how much it is. Some customers don’t even bother to read the terms and conditions that they are agreeing to due to the excitement of getting their cards.
Look out for dishonest companies
Dishonest and deceitful sub-prime card companies look for such customers. Such companies can take advantage of desperate people who are in dire need of cash by:
Spelling out contract details in vague terms
Down-playing changes to interest rates after a specified length of time
Extending pitifully low credit limits
Charging exorbitant fees
How can a person with no credit (or bad credit) protect themselves?
The first step you can do when selecting a fair credit card offer, is to read the fine print. And make sure you read all of it. Credit card offers grab our attention with huge print and colorful graphics promising zero interest and low annual percentage rates. These companies are more than willing to overlook any details regarding low credit or bad credit and issue cards to high-risk applicants.
Read the terms and conditions carefully
Make sure you read all the details. Don’t loose your focus by looking at those distracting envelopes and look for terms and conditions. Those packaging might offer great promises but they will have a short life span, after which the card holder is stuck with high rates and fees.
You should know that, in case you have no credit history, or a flawed history, you can expect high interest rates that may range from eighteen to twenty-five percent, or higher. If you find no good offers, then you can rely on your bank. It is often easier to get a credit card from a financial institution where one has had savings and checking accounts. Once you establish a good reputation for keeping a positive bank balance over time, your bank might even approach you with a sweet credit card deal.
Secured Credit Cards
If you are still unable to qualify for regular credit cards then don’t be completely disappointed. Secured credit cards are a good choice for many people in this situation. These cards are secured by a deposit made by the card holder into an account that is set up specifically for this purpose. If the card holder doesn’t make their payments, the card issuer can take the money they’re owed out of that account. Many banks and companies are more willing to issue secured cards as there is less risk factor attached.
Be careful when you sign the agreement
It is better to read the terms and conditions carefully and then sign the agreement. Do look at the interest rate, the annual fee, and late fee too. Some low-credit cardholders feel that they must settle for atrocious offers, like a $200 credit limit after paying $100 in up-front fees. But such offers are totally ridiculous and it is unwise of the cardholders to go for such offers. Sub-prime predators are a fact of life and they’re doing good business by making a fool of such people, but they would not offer ridiculous terms if people didn’t accept them.