| 'Last resort' cards can provide a fresh start |
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| Credit boost
for the future
Whether you stay with the bank or not, looking at the
big picture of rebuilding your credit is the right idea.
Living with what could be called a "credit card
of last resort" is definitely a "bummer," notes Maxine Sweet, vice
president of public education at the credit bureau Experian, who writes an online
consumer credit advice column Ask
Max. "You know you shouldn't be there. But it's also a great opportunity
to turn yourself around. You have a card now, you can manage it, and then you
can move on," she says. A good credit history is the light
at the end of the tunnel. So finding the right tunnel is crucial. Consumers
who pose a high risk to lenders "are getting promotional materials in the
mail," says Emily Davidson, director of communications at Credit.com. "But
a lot of times it's not a good deal."
Often, credit card issuers will buy mailing lists
from credit bureaus, asking specifically for those with credit scores
in a certain range, contends Krawczyk, who is also the author of
Financial
Aerobics: How to Get Your Finances Into Shape and the home study
course, 'Financial Aerobics: 30 Days to Financial Fitness.' Those
with marginal credit will most often get offers for secured cards,
requiring a deposit equal to or more than the total amount of credit
desired. "And then they still charge an arm and a leg on top
of that," he adds.
Experts say the best bet
is to research, research and research. Offers found online -- through basic searches
such as "bad credit" and "compare credit cards," for example
-- won't be touting their high interest rates and fees or low credit limits. But
they "seem pretty straightforward about what the requirements are,"
says George Yacik, vice president of SMR
Research Corp., which has conducted studies on the U.S. credit card industry.
While specific offers change often, here are a few lenders
that have issued unsecured credit cards to consumers with poor or little credit: Research may even reveal a card
that offers rewards for purchases or online bill payment options, which have traditionally
only been offered to those with decent credit but are becoming a bit of a trend
at the lower end of the market, Davidson says. Reading
carefully
With any offer uncovered, just heed the fine print (which
Mills says is more like "unread print"). One of those terms, for example,
may state the issuer's right to raise the interest rate if the customer is even
one day late on one payment, Krawczyk says.
The terms of any credit offer must be disclosed. "If you have
less than perfect credit, it's even more important to read those
disclosures carefully," says Detweiler.
What you find
in the fine print of many offers can make your neighborhood bank seem like the
most desirable lender. "Everyone focuses on the major card issuers. But if
you're just starting out and you already have a relationship with a bank, with
a checking or savings account, ask about their credit products," Mills says.
The big lenders, who have set rules and policies, know only what's on your
credit report. A local bank may be able to see a more favorable side to your money
handling, such as your avoiding overdrafts and using electronic payment options
successfully.
"Carefully select who and what you trust,"
advises Adam K. Levin, president and CEO of Credit.com,
who is also the former consumer affairs director for the state of
New Jersey. And never underestimate how quickly you can use the
system to build a positive credit score. "If you play your
cards right, it's really easy to have good credit," he says.
"Although it gets kind of demonized, the system really is working
in the consumer's favor a lot of times."
Melissa Ezarik
is a Connecticut-based freelance writer.
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