Getting approved for a credit card is difficult when you have poor credit scores. But, it isn’t impossible. But, the catch here is that, even if you’re approved for a credit card with poor credit score, you may not land the best deal. The benefits available on your card will differ from a regular credit card holder.
Initially the credit limit will be low. But you can use this to your advantage to build a good credit score over time. Furthermore if you are getting a credit card with a low credit score then make sure that you repay the bills on time. If you are not able to repay on time then you take the risk of further lowering your credit score, which can impact your eligibility chances of securing credit in the future.
Additional Reading: Which Credit Card gives the highest credit limit?
What’s the best way to get a high limit credit card with poor credit scores?
#The best option is to go for a secured credit card. By pledging a high value asset you can increase the available credit limit on the card.
Credit card is a form of unsecured loan. Many banks or financial institutes will not provide you with a credit card if you have low credit scores. That is because there is more risk involved regarding non-payment from the borrower’s side and if you default there is no way for the card issuer to recover the costs.
With a secured credit card, the borrower pledges an asset such as a fixed deposit, a savings account or an investment as collateral. The credit limit of the card is determined based on the value of the pledged asset. For example, if you pledge a fixed deposit worth Rs. 1 lakh, then the credit limit of the secured card is fixed at 80 - 90% of the value of the fixed deposit.
Since you’re pledging an asset, it reduces the risk borne by the card issuer. And, in case you default on the payment, the card issuer uses the asset to recover the outstanding balance.
Additional Reading: Smart Ways To Get Higher Credit Limit On Your Credit Card