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.

Are you planning to apply for credit? Consider checking your credit report first.

Know that when applying for a credit card or a major purchase like a mortgage, the contents of your credit report will determine how much it will cost you if approved. When considering your application, your lender will be checking with one (or all) of the three major credit bureaus: Transunion, Experian and Equifax. Credit counselors advise that it is always a good idea to review your credit report and correct any errors before applying for any type of credit.

Mistakes made in the past can ruin your chances of obtaining credit.

If you’ve made financial mistakes in the past, your potential lenders will see them on your credit report. Knowing what is on your credit report is the first step in cleaning up bad marks from the past. Most experts say over 30% of all credit reports contain erroneous information.

Monitor your credit report for free.

You are entitled to one free credit report per year from each of the three major credit bureaus. To obtain your credit report free online, visit www.annualcreditreport.com. You may also request your free credit report by phone at 877-322-8228 or by writing your request to: Annual Credit Report Service, P.O. Box 105281, Atlanta, GA, 30348-5281. Credit counselors advise that there are many businesses claiming to be the free credit report provider that end up charging their clients fees. You do not need to provide a credit card number to obtain your free credit report.

Why is my credit score so important?

Credit scores are used for so many things like applying for credit cards, mortgages, loans, and can even be considered by certain employers while screening their applicants for employment. While there is no absolute answer to what a lender will consider a good score, it has been observed by credit counseling agencies that individuals with credit scores in the 700 plus range get the best interest rates and credit limits.

How is my credit score calculated?

Your credit score is figured using data from five categories, which include payment history, amounts owed, length of credit history, new credit and types of credit used. Your score changes on a daily basis and is calculated at the time the score is requested.

What does my credit score represent?

This gives lenders a good idea of your likelihood of repaying a debt. A good credit score may save you thousands on financed purchases like a home or car. For example, an individual paying a 30-year $300,000.00 mortgage with a credit score of 620 might qualify for an interest rate of 7.256%, while an individual with a credit score of 720 might qualify for an interest rate of 6.162%. At first glance, it would seem that the interest rates are not largely different however; the individual with the 620 credit score would be paying $2,047.00 per month, while the individual with the 720 credit score would be paying $1,830.00. That’s a difference of $217.00 per month!

What do I do if I have a low credit score?

Paying your bills on time each month will start rebuilding your credit right away. If you have accounts with missed payments, try to make them up and keep them current.

Keep the balance of your credit cards low. You can lose points off your score if you carry a balance in excess of 50% of your credit limit.

Don’t cancel your credit cards! A large part (around one third) of your score is based on how much credit is available to you. Closing accounts may instantly decrease the amount of credit you have available changing key credit available vs. credit owed ratios. Credit counselors advise instead, you put the credit cards away or destroy the card but keep the account open. Closing cards may also cause a loss of credit history, further lowering your score.

Even though your credit score is something that you may not fully understand, there are many things that you can do on a daily basis to maintain this very important number. It is your responsibility to make sure that the information on your credit report that determines your credit score is correct. Visit www.annualcreditreport.com for a free copy of your credit report from each of the free major credit bureaus.