Applying for Cards without Checking Account
There are a lot of consumers whose FICO score is below 620 points. Some of them are simply young and haven't had a chance to build a solid credit history yet. The others have had some problems with making regular timely payments due to various life events.
People with a low FICO score will definitely find it difficult to get loans and credit cards. Their options with financial resources are quite limited. However, don't get disappointed! The good news is that our site provides you with a chance to qualify for a credit card even if your payment history needs some improvement.
Finance companies have designed several options specifically for people with a low FICO score. These offers come in the form of secured and unsecured credit cards.
First, banks started to offer secured cards. These plastics require you to have some money on your savings or checking account to serve as collateral. But what about people who have no savings or checking account? Nowadays you can get an unsecured credit card and take advantage of its benefits!
Unsecured cards, as the name implies, do not require the borrower to make cash collateral. Instead, you will need to prove your financial responsibility and trustworthiness by presenting information about your current employment and income.
Benefits of Unsecured Cards for Limited Credit
When you get an unsecured credit card, you will be able to enjoy numerous benefits despite the unfortunate fact that you have a low FICO score. First of all, you can purchase everything that you need without carrying cash at hand, for as long as you won't max out your spending limit. Many cards for limited credit provide a reasonably low APR, so you won't lose hundreds of dollars on interest charges!
Some unsecured credit cards come with beneficial rewards programs. You can earn a little amount every time you make a purchase using your plastic. These rewards may be in the form of cash rebates or points. If you choose the first variant, you will get back a 1%-5% of your expenses made through the card. Point rewards can be redeemed for merchandise, gift certificates, airline tickets, hotel stays, car rental, and more.
Having a card for limited credit, you can also take advantage of balance transfer option. Some time ago only people with good to excellent credit were able to move their debt from one plastic to another. Luckily, nowadays you can also transfer your balance to a less-costly card.
As your FICO score gets better and better, you might get increased spending limit, reduced interest rates and other opportunities that are typically offered to regular card holders.
Improve Your FICO Score!
Aside from the usual benefits that you can get from your plastic, the unsecured card provides you with an opportunity to improve your FICO score. However, you need to manage your debt wisely and stick to the following rules.
First of all, make regular timely payments every month. It has the big influence on you FICO score. Regular on time payments will boost your rating, while defaults significantly lower it.
Track all your expenses. When you want to make a purchase, make sure that you really need it. Some people use their credit cards just because they have such an opportunity! This spending pattern can lead to high debts in future.
How much you owe makes up one third of your FICO score. Keep in mind that credit reporting agencies take into consideration your debt/available credit ratio (also called the utilization ratio). It should be less than 30%.
Don't charge more money than can be paid back at the end of the billing cycle. Large charges, for example travel expenses, should be covered within a calendar year. Thus you can avoid accumulating interest.
A lot of recent credit inquiries will have a negative effect on your FICO score because the lenders can decide that you are in a serious financial trouble. So don't submit your application for every card you like! Make a careful comparison, analyze all features and terms and apply for an unsecured plastic that that you feel you have the best chances to get!