by Katerina Nikolas

Created on: August 24, 2010   Last Updated: September 04, 2010

Once your credit reputation is blemished you will find it almost impossible to obtain an unsecured credit card from a reputable lender. In the wake of so many defaults lenders have tightened up their lending criteria and are less willing to expose themselves to risky customers. Ironically though if you do have bad credit one of the best methods of improving your Fico score is to use a credit card. Not quite the catch 22 situation it appears as credit cards are available for those with bad credit.

You only need to look online to see the hundreds of advertisements offering credit cards for those with bad credit. These should be avoided at all costs as they are issued by sub prime lenders who charge hefty fees and interest rates. First Premier bank specializes in credit cards for bad credit and currently has an interest rate of 59.99%. Unless the balance is cleared in full each month the interest rate will be charged, but as fees eat into the availabe credit before the card is even used many users become trapped and unalbe to clear the full balance. Howver those with good discipline who avoid First Premier products can make use of other sub prime lenders whose fees are lower and clear the balance in full.

It is far more sensible to acquire a secured credit card from a reputable lender and use it wisely to rebuild your credit score. If your intended use of credit is just to spend even more despite your credit history then secured cards are not for you, but sub prime lenders will be your friend.

Secured credit cards are ideal tools for those who are concerned to rebuild their credit history. One needs to be disciplined with their use or it defeats the object of carrying one. If you are obtaining credit as a means of rebuilding your reputation then you should pay the full balance off every month and thus not incur interest charges or leave yourself open to late payments; after all if you have bad credit you will have been down that route before. Only use 30% of the available credit line to demonstrate you can keep to the recommended use of credit to debt ratio.

If you want a secured credit card then you will need to pay a deposit equal to the line of credit extended. This is a good practice as it will encourage you to save. Many lenders will place your deposit in an interest bearing savings account until you are in a position to move onto unsecured credit. Secured credit cards come with a price as they carry fees. However not all fees are equal and you

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