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Bad credit history means poor rating with the banks and low FICO scores. At least about 43.4 million people seem to fall into that bracket wherein the scores are below 599 and that is roughly about 25.5% of the population. This is an alarming fact but there are ways to work out a solution. In order to improve one's credit scores one has to work on it and eventually erase all the negative information and move the FICO scores upwards of 650 in order to go up on the credit rating once again. The easiest way to do so is by getting hold of another new card and by using it in a responsible manner in order to get good credit rating with the banks as well as the credit bureau.
It is not necessary to merely obtain a card and use it lavishly to gain brownie points but to keep the card and use it sparingly. By just being in possession of a card and not using it to its full potential in itself will generate all the positive information that is required on the card.
There are two options for someone with bad credit which is obtaining a secured or an unsecured credit card. Though both cards will have the same functions, the fee structures that are associated with these cards would be different. The cards which come under the general category are usually the unsecured cards which are certainly the best option for anyone who would be looking forward to restoring the credit rating and also for one who wishes to access another card just to avail the benefits or a loan. Previously companies provided a credit line of around $250 on these cards but the client was charged a fee of about $200. But now, with the new act in place issuers are supposed to charge only 25% of the card limit as fee during the first year.
The card companies have gone a step ahead and charge a processing fee of about $25-$45 for a credit limit of $300. Despite this the consumer would be less burdened, because the present fee structure is certainly much lesser than it used to be and the cards have much more value as the available credit is not lost due to the fees. Payments are upfront and the presence of a processing fee would indicate that there are other fees that would be associated with the card.
At the same time, secured credit cards are a good option for someone who does not wish to avail a loan. A security deposit is required on these cards and the credit line is more or less equivalent to the amount that is deposited. Secured cards do not charge other fees as there is a substantial down payment that is required. These are the cheapest and the most suited option for those who wish to rebuild their credit rating.
However, it is still advisable to always maintain a good credit rating in the first place instead of getting into bad credit history and then making rectifications, one must maintain good spending habits and limit the usage of the card and keep spending to less than 30% of the allowed limit.
