Depending on your financial situation, you may be planning to apply for a secured credit card. Some people who never thought they would be in this situation find themselves doing exactly the same thing after a couple of unforeseen events turned their finances upside down. You may not want to fill out the application out of fear that it might be rejected because you have bad credit. If you recognize yourself in this picture, then you need to know that a low credit score is no reason for you not to have a credit card. Many secured credit card companies can approve you, provided that you can meet a handful of simple requirements.

Get A Copy Of Your Credit Report

You should not be considering applying for a secured credit card unless you know exactly what your score is. You will need a copy of your credit report for several reasons.

• It’s an important piece of information that you should always know.
• It’s essential that you have a good grasp of your current situation if you want to improve it.
• You need to check your report for mistakes and have them corrected
• If there are no mistakes, you need to know what the issues are and take steps towards rebuilding your credit

Closing Out Your Old Credit Cards

Many people, in the process of rebuilding their credit, make the mistake of closing their old credit card accounts. Granted, in some cases, you can make the justification that the interest rates are high and that they charge exorbitant fees, but more often than not, you’re better off keeping them. The reason is simple: a part of the calculation of your credit score takes into account the length of your credit history. When you close out your older cards, it’s essentially the same as deleting part of your credit history. So instead of closing them, a better strategy is to simply not use them. Some may charge inactivity fees, so either use them to pay for smaller bills or make small purchases with them that you can pay off easily.

Maxing Out Your Credit Limit

It’s generally advised not to go over 40% use of your credit limit. That means that if your credit limit is $1,000, you should try not to owe more than $400. Some people are even more conservative and suggest you keep it under 30%. In theory, when you keep your credit use below these levels, your finances are good enough that you don’t need to be using your credit extensively. The same logic applies in the opposite direction, though: going over 50% of your limit damages your score, because now they’re assuming that you have money problems that require you to dip a lot into your credit limit. You also expose yourself to the possibility of being charged higher interest rates.

Sending Out More Than One Credit Card Application

Some people say “my credit is already bad, so what do I have to lose?” and they send out multiple applications to companies giving out secured credit cards, figuring that they’ll at least get one to approve their application. They also think that by sending them all at the same time, their applications will be processed by the time these multiple applications get reported to the credit bureaus. The truth is, you have no control over how long a company can take before they process your application, nor do you have any control over how quickly their do their reporting to the credit bureaus. Odds are that you’re just causing more damage to your credit score, especially if a handful of those companies end up rejecting your application.

When applying for a secured credit card, using these tips will increase your chances of having your application approved. So even if you have bad credit right now, a secured credit card can be the first step towards rebuilding your credit.

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