It is still possible to obtain a credit card, even with bad credit. If your are in this situation, you will most likely have to pay more and your card’s terms may be more inflexible than those of the average credit card owner. If you still owe bad debts, call a credit counselor and he/she should be able to give you the advice you need to begin building a better credit history.

It is hard enough to obtain credit if you have a bad credit history, and can be just as hard to get credit if you don’t have any credit history at all! If you are trying to establish a credit history for the first time or you have made mistakes in the past and are trying to rebuild your credit history, there is still hope!

Credit counselors advise that you first try applying for a credit card through a credit union, they usually offer the best rates for people with damaged or no credit. The best rates are obviously offered to those with high credit ratings. You will find that the further away from perfect your credit rating is, the worse your finance charges, fees and credit limit will be.

Be careful that you don’t obtain a higher credit limit than you can handle. This could cause your credit-building attempt to fail. If you can afford more, apply that money towards getting out of other types of debt. This will improve your debt-to-credit ratio, which should improve your credit score.

Don’t lose focus of your non-credit-card bills. There is almost no point in paying off your new credit card if you fail to pay your mortgage, car payment or utility bills. If you think you need help in developing a budget, call a credit counselor!

It is also important that you do not apply for every credit card you see. Every time you apply for credit, it can be seen by other creditors on your credit report. Take your time and do your research to find out where you will most likely be approved.

Keep in mind that you may not be able to get a credit card anywhere on your own. If this is the case, you may need to find a relative or friend willing to co-sign for the card but be aware that if you do not pay on time every month, you will damage the co-signer’s credit as well as your own.

You may want to consider opening a secured credit card as another option. This is done by putting your own money into a savings account, which acts as the credit line for your credit card. For instance, you put $1,000.00 into your secured account and your credit line could be as much as $1,000.00 (some secured accounts can have fees). Credit counselors advise you to visit www.bankrate.com for a listing of the best secured credit cards. This is reported just like an unsecured credit card and shows creditors your ability to handle credit. Eventually, your bank may extend your line of credit beyond what you have put in, which may help you reach a status to where you no longer need a secured credit card.

Most people would say that you should only consider bankruptcy as a last resort. While its important to consider all of your options first, there are instances where bankruptcy is appropriate and can provide you with the fresh start that you need. My concern with bankruptcy is when people file.

On average, one third of bankruptcy filers made the decision to file after being pushed over the proverbial edge by a credit collector; they couldn’t take the constant harassment and threw their hands up in the air. The problem with this – if you file bankruptcy today and, God forbid, you should find yourself with tens of thousands of dollars in medical debt next month, what will you do then? You can’t file again.

Bottom Line: If you have come through a financial crisis and are not still in the middle of it and could say, “If I could just get rid of this financial burden, I would be fine with my current employment, housing and transportation situation” then you might be a candidate for bankruptcy. Take the time to seek legal advice and explore your options. BEWARE: Most bankruptcy attorneys don’t get paid unless you file bankruptcy. Therefore, there may be special incentive to encourage you to file even if there are alternative options that are more beneficial.

Family Credit Counseling Service receives hundreds of calls per week
from consumers looking for credit counseling and debt management
assistance. Often one of the first questions asked by a consumer is,
“Are you a non-profit organization?” My answer to this question is,
“Yes, but if you’re trying to find a trustworthy credit counseling
organization to assist you in becoming debt free, this is generally
not an adequate question to measure the legitimacy of a credit
counseling organization.”

Bottom Line: It’s good to know that an organization is a non-profit
organization. It’s even better if they are members of the Better
Business Bureau. If you’re really interested in ensuring you are
dealing with a legitimate organization, determine if that
organization is a licensed debt management provider in your state.
There are many states that don’t require licensing, but there are
many that do. Find out if your state requires licensing and if so,
choose a credit counseling organization from this short list. The
chances you will have the opportunity to speak to a credit counselor
that has your best interests in mind will increase greatly.

The New York Times recently published an article (read article here: http://www.nytimes.com/2007/07/31/opinion/31tue1.html?_r=1&oref=slogin) discussing the atrocities against consumers by the credit card industry brought to light this spring by Democratic Senator Carl Levin of Michigan.

While I agree with the alarmist perspective of the author on this subject, I won’t be holding my breath waiting for legislation that will cap penalty interest rates at 7% above previous rates or capped charges for consumers who exceed their credit limit. The savvy consumer isn’t going to wait for this legislation to pass either as a means to financial freedom.

Bottom Line: Debt free living is a choice! It’s going to require an evaluation of your current lifestyle and spending habits along with a detailed plan of attack toward debt. Determine today you won’t spend the next twenty-six to thirty years paying off that credit card debt!