Many consumers today are facing credit problems for the first time ever! This can be attributed to the most recent financial crisis which left many individuals jobless and with huge credit obligations to settle.
Since they have never had any credit problems in the past, they are unsure how to go about rebuilding their credit. Especially since so many of the companies they used to work with in the past have closed their credit card accounts. Many consumers are looking for an instant credit fix, but unfortunately, repairing your credit can take some time.
Instant Approval Credit Cards
Depending on the severity of their credit problems there are several ways to start rebuilding credit. The following types of cards have “instant approval” meaning most won’t do a credit check, or if they do, they allow very low credit scores and will approve you online.
Secured Credit Cards
The most popular of credit builders is the secured credit card. Since it requires a security deposit, it offers instant approval to those that apply. You choose a card and open a savings account. The amount you deposit will become your credit limit. Ideally you want to have a secured credit card that will report to all 3 credit bureaus (Experian, Equifax and TransUnion).
With on time payments your secured credit card will usually become unsecured credit card within a year and the bank will return your security deposit. That’s one of the reasons secured credit cards are so popular. Interest rates and fees tend to be less also with secured credit cards versus their unsecured credit cards for bad credit counter parts.
Debit Cards a.k.a Prepaid Credit Cards
Even though people call these credit cards, they are not. Since no credit is actually extended to people who hold these cards. Prepaid Debit Cards have gained in popularity since they generally don’t require a credit check. That’s why they are considered instant approval credit cards also. They require that you attach your checking account to the card. A lot of people use debit cards to help them stay on budget. Since you can’t spend more than what is in your checking account.
They can be used to build credit ONLY IF it has a feature called credit builder. Most debit card companies that offer credit builder, do charge a fee for this service. With credit builder they will report your debit card to at least one credit bureau. Sometimes more. Just depends on the card.
Bad Credit Unsecured Credit Cards
These credit cards are unsecured credit cards for people with bad credit, issued by sub prime banks. While they are unsecured, which makes them attractive to a lot of consumers, they also carry high fees, high rates, and low credit balances.
The appeal of not having to put a security deposit down and the fact that these cards will report to all 3 credit bureaus makes them the most popular form of credit rebuilding credit card.
How Instant Approval Credit Cards Can Help You Rebuild Your Credit
Rebuilding your credit after having a set back isn’t difficult. Once you find the right credit card option for your situation, you just need to make sure you pay on time and learn to budget your money wisely so that you never find yourself in this situation again.
Its just in my humble opinion. Secured credit cards are a better option than these unsecured ones. Why? With the unsecured credit cards you get a very low credit limit. But with a secured credit card you have the option of putting down a large deposit, and thus having a large credit limit. A large credit limit will look better on your credit report. A big part of being granted large unsecured lines of credit is based on how much “comparable” credit you have. In the long run, the secured credit card will have a better effect on your credit score, your financial situation (since you will get your security deposit back ), and your ability to qualify for larger loan amounts.