In America, more than 30% of the population is using a credit cards on a regularly basis. However, more than 60% of the users have tried credit cards at least once. By analyzing the market, credit card companies have rolled out multiple credit cards. While applying for credit cards for bad credit no deposit, users have to fill the basic information like income, credit score. Individuals, who want quick approval should go with credit cards for people with bad credit. They can also check how do credit card companies verify income for a quick approval. Below are two tips for instant approval of Application:
•Check credit score Before applying: All the lending companies consider credit scores before accepting the applications. For example, if any company has asked for a credit score of 500 on first digital card then the applications below 500 credit scores may be rejected. In some exceptional cases, good repayment cases are allowed.
•Purchase credit cards for bad credit: According to the type of credit scores, many companies have rolled out Credit cards for bad credit. These are secured and unsecured cards. Users suffering from bad credit can quickly purchase them. Let’s discuss the working of both cards.
1. Secured cards: Secured cards are backed by the collateral. This means users who want to purchase secured cards have to pay the collateral equal to the credit limit. For example, if the credit limit is $1,000 then the collateral is $1,000. The extra fees like Application fee or maintenance fee is deducted from the collateral. This card is mainly designed for the individuals who are either beginners or are suffering from bad credit. Companies have kept the collateral in the deal because of bad credit scores.
A bad Credit score signifies late repayments and inability to handle credit. To understand this users should check the factors affecting the credit score. Let’s discuss them:
Payment history: Payment history is the main factor contributing to the credit score. It has a weightage of 35%. This means just by improving payment history, a user can easily improve his credit score.
Utilisation Ratio: This Ratio is the second most important factor with the weightage of 30% of the Credit score. The utilisation ratio is defined as the ratio between usage and total credit limit available. For example, if the usage is $100 and the limit is $1,000 then the utilisation ratio is 10%. According to credit card experts, the utilisation ratio must be less than 30%. Increasing the usage or ratio means getting into the books of high category users.
Credit history: Credit history means for how long a user is having credit. The oldest age of credit card and the recent credit card is considered to check the history. It has a weightage of 15%. Longer history means a high credit score.
Credit mix: Credit mix is related to how diverse the portfolio is. For example, if any user has availed a loan and still has a good credit score signifies that he’s an expert in handling credit. Accordingly, the lending companies can easily provide him with the best credit card. However, this accounts for only 10% of the credit score.
New credit: New Credit means the recently opened credit accounts. For example, if any user has recently purchased a credit card. Applying multiple times frequently may lead to rejection on Applications. This also accounts for 10% of the credit score.
2. Unsecured cards: These credit cards are not backed by the collateral. That’s why they are called as unsecured credit cards for bad credit . However, companies don’t issue them to all the users as the credit limit is high. People with bad credit have to pay high-interest rate on repayments.
