Choosing the Right Credit Card
The credit industry can be an intimidating one. This goes double if you are just starting to build your credit or have bad credit. However, just because you have bad or no credit does not mean that you will always be turned down for a credit card. In fact, there are certain credit cards in Canada that come with a guaranteed approval. These cards help ensure that you have a credit card to safeguard yourself against unexpected expenses.
Hearing the term 'guaranteed approval' may sound too good to be true, and it might be in some cases. However, some credit card companies issue guaranteed approval cards as a way to help you improve your credit rating. If you are stuck with bad credit, it makes it hard to be approved for any kind of credit card to improve your rating. Thus, you are faced with a dilemma. You need someone to approve you for credit so you can rebuild your credit, but no one will take a chance because you have bad credit. This vicious cycle goes around and around. Credit card companies came up with guaranteed approval credit cards to bring in more customers and give people with bad credit a second chance.
When you start off with a guaranteed approval credit card, you might have a high interest rate and a low line of credit. This situation should be temporary and the terms will change as you prove to be creditworthy. Your goal is to use this type of credit card to get your credit score on the road to recovery. During this time, it is extremely important to pay your bills on time and never miss a payment. As you start improving your credit score, you can talk to your credit card company about lowering your rates and increasing your line of credit.
The main difference between a traditional credit card and one that you are guaranteed approval for is the application process. For a guaranteed approval credit card, you do not have to have a credit check. The decision to give you a card is already guaranteed regardless of your credit history or income. With a traditional credit card, the company is going to check your credit history and your income. After sizing up this information, you receive a line of credit and a rate that matches your credit score.
The major disadvantage for guaranteed approval credit cards is that their rates are generally higher. You are also not going to be offered a huge line of credit. That being said, they give you a chance to increase your credit score and give you a line of credit to protect yourself from emergencies when you might need extra money. Guaranteed approval credit cards are also approved a lot faster than traditional cards, so they are suitable for people who are looking to get their hands on a credit card quickly.