credit cards

Bad credit doesn't mean no credit

If you've got bad credit you can still get a credit card. You'll just pay more, and the terms of your card deal will be much stiffer than the average cardholder has to deal with.

But handle that deal and you can begin to rebuild your credit and get back to better and better card deals.

Some of you don't have really bad credit, you just don't have good credit. Some of you are just establishing credit (maybe it's the first time ever dealing with credit), others of you have had bad credit but are beginning to make headway into restoring a good credit name.

A credit union may offer the best deals for people with damaged credit.

People with spotless credit reports obviously get the best deals. In most cases you will find that your rates, fees, penalties, charges and credit limits (you may have to start with something as low as $500) will be worse in relation to how far from perfect your credit record is.

Card companies look at more than just your payment history, and balance the bad -- like late payments -- against the good -- like a steady job and long-time residence at the same address. So don't assume or accept the worst.

Keep in mind that card issuers are very aggressive in their efforts to sign people up. That means there will be plenty of competition for your dollars even if they are a little crumpled.

Begin with what you need

Don't ask for too much when you apply. It might be a case of getting what you wish for.

If you get more than you can really handle, you could be putting you entire credit recovery at risk. If you can afford more, put that extra money toward getting rid of other debt, including old credit card bills. A reformed credit history is more valuable than a big credit line.

Keep paying off non-credit-card bills. There's little point in paying off your new credit card if you fail to pay a mortgage, utility bill or car payment.

Don't apply to every card company you can find. Too many applications for credit can scare creditors (they can easily find how many times you've applied when they access your credit report), especially if your credit is already tarnished. Take it easy! Research and find your best bet and apply.

Minor credit card

Another option: Try a department store, a gas company or some other smaller credit card. It will help you in your daily finances, and it will also help rebuild that credit. If you can handle a Macy's or a Texaco card, major card companies will be impressed.

Be aware, though, that these credit cards sometimes come with high interest rates and low credit limits. Plus, some issuers of department store cards do not report to the credit bureaus. This means any on-time payments you make with the card won't be noted on your credit report. Having an unreported-card account won't boost your credit one bit.

Co-signatory

You can ask a relative or friend to co-sign for a card if you have trouble getting one yourself. But understand something from the start: When their credit becomes a factor in you getting a card (it may be a huge help if it's great credit), they are also in credit trouble in most cases if you mess up. So in this case it's not a matter of numbers only -- friendship and love are in the mix. Take a lot of care!

Secured card

Consider a secured credit card. Start by checking out Bankrate's survey of the best secured credit cards in the country.

With a secured card you put up your own money (into a savings account) and that amount (or part of it) is the credit line for your card. Put in $1000 and you could have up to a $1000 credit line.

Why bother? It gives you the flexibility of using a credit card and because if you pay off every statement you are letting creditors know that you can handle credit (again) and your bank may soon begin extending your credit line beyond what you have put in. So you are on your way back to healthier credit, to a status where you will no longer need a secured card.

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