Dealing with bad credit can be really difficult. The problem with bad credit is that the only way to rebuild your credit score is to take on manageable, small debts – and repay them consistently.
However, a really bad credit score can make it difficult to qualify for a reasonable credit card or get a loan. In turn, this restricts your ability to rebuild your credit score. This is a vicious cycle – and unless you know how to break it, you could be stuck with bad credit for years, with no real way of breaking the cycle.
That’s why we’re here with some simple tips that can help you rebuild your credit score! By choosing the right credit cards, managing your debt burden wisely, and spending responsibly, you can easily improve your credit score.
This will allow you to qualify for better rates on auto loans, credit cards, and much more. And with time, you’ll be able to totally repair your credit score!
Tips On Using Credit Cards Responsibly With Bad Credit
Before we get into our recommended credit cards, we need to touch on the basics. If you plan to apply for a credit card with bad credit, you must be responsible. It’s likely that poor financial habits caused your bad credit – and if you’re not ready to change your ways, you shouldn’t apply for a credit card.
But if you are ready to maintain smart financial habits, here are some tips that can help you make the most of your credit cards, and rebuild your credit.
- Don’t apply for a ton of credit cards at once – When applying for credit cards, choose only one or two companies to apply to at once. Multiple applications for credit can have a negative effect on your credit score, and reduce your chances of being approved.
- Apply for the right credit cards – If you have a 520 FICO score, you’re not going to qualify for a $10,000 credit limit, 10% APR American Express – and getting rejected will impact your credit score. So focus on credit cards that accept people with bad credit – we’ll go over those below.
- Pay your entire balance every month – High outstanding balances can affect your credit score. You should be paying off your balances in full every month. This reduces your debt utilization ratio, and helps improve your credit score.
- Don’t choose a bad card just because you’re desperate – You should avoid cards that are clearly a bad deal – cards with fees of over $50 annually and APRs of over 30% should be avoided, no matter how bad your credit score may be.
These four tips can help you avoid common missteps when rebuilding credit, and help you make the most out of your credit cards.
The 3 Best Types Of Credit Cards For Canadians With Bad Credit
There are many options for credit cards in Canada – but the following 3 types of cards are the best choice for Canadians with bad credit.
- Secured credit cards – Many major companies like MasterCard, VISA, and Capital One offer secured credit cards. Secured credit cards are the best choice for anyone with bad credit, because they offer relatively low fees and service charges in exchange for an upfront deposit.
When you apply for a secured credit card, you pay an upfront deposit. Usually, you’ll pay an amount that matches your total credit limit. This allows credit card companies to minimize risk, and offer you a better rate on your card. If you’re late with payments or fail to pay your balance, they’ll simply close your account and take your deposit. Secured credit cards are also good for encouraging healthy spending habits, because you’ll never be able to overspend beyond your deposited balance.
- Store credit cards – Many major retailers offer credit cards that can only be used at their stores, and these can be useful tools to help you rebuild your credit.Usually, the balance limit is quite low, and these cards offer decent APRs even to people with bad credit. And because they can be spent only at one store, you’re much less likely to get in over your head, and start taking on more debt than you can pay off.
- Unsecured credit cards with high fees – Some credit card companies are willing to take a risk on people with bad credit, and will offer you an unsecured credit card with a high APR.
If you don’t have the money to deposit for a secured credit card, this is a viable option – but be careful. If you have not changed your spending habits, you could easily take on a high debt load, and further damage your credit score – so it’s better to attempt to get a secured credit card or a store credit card first.If you qualify for these credit cards, you can take your first steps towards rebuilding your credit – and a better financial future!
Got Bad Credit? Need A Car? Come To Ride Time Today!
Rebuilding bad credit is a long process. So if you have bad credit – but still need to qualify for an auto loan – get in touch with Ride Time today! We specialize in providing great used vehicles for reasonable rates – no matter what your credit score may be!
If you can give us a valid Canadian driver’s licence, a pay stub showing a monthly income of $1,500/monthly before deductions, and proof of 3 month’s employment, we’re willing to work with our network of lenders to get you a reasonable rate on a fantastic used car.
So if you need a car and you have bad credit in Winnipeg, you don’t have to wait until you’ve rebuilt your credit score. Come to Ride Time today, and browse our selection of used cars, trucks, and SUVs.