Gone are the days when bad credit meant bidding adieu to credit cards completely. There are certain credit card providers that issue credit cards to people with poor credit scores. In addition to using such credit cards to make purchases and for other financial transactions, one can also use these to rebuild credit history and improve credit score. So, it is important to learn about the function of credit cards.

The functions of credit cards for bad credit

• Credit card for bad credit works wonders by aiding your credit building process. Such credit cards are instrumental in helping you increase your good credit scores. Also, it will prove beneficial for your credit score if you ensure that your credit card provider reports your good credit record to the 3 major credit bureaus. This will surely help improve your credit score.
• Usually, credit cards are issued at a certain annual fee. However, credit card for bad credit or the ones with no credit is often made available at zero annual fees. Some credit card issuers do not charge annual fees from their credit card holders. So, you can avail credit cards for bad credit without paying an annual fee for retaining the same.
• If you are of the opinion that only credit cards for good credit ensure that their users are rewarded in the form of points or cash back, then you are highly mistaken. Certain credit card for bad credit offers rewards to its users on purchases or if they use it at restaurants.
• According to the usual process, secure credit card issuers evaluate your credit habits after few months and determine whether you are eligible for an unsecured credit card. However, there are certain credit card providers who issue unsecured credit cards right away even if the individual has bad credit, though you might have to pay certain charges for the same.
• A majority of people lose their good credit scores because they didn’t pay their dues when the bill arrives. Some credit cards meant for improving your bad credit allow you to choose the payment date. This comes as a huge relief since you can adjust the payment date according to your convenience.

How to use credit cards for bad credit appropriately?

• The first and the most important rule of using a credit card is to pay your bill on time. On-time payments can improve your credit scores dramatically; it takes only a single late payment for your credit scores to drop. Since you know how drastically timely payments can affect your credit scores, pay your credit dues on time.
• The second important aspect of using a credit card is your utilization ratio. Your utilization ratio is the balance by your available credit. You can keep this low by paying in full every month.
• Also, it is imperative that you check your credit on a regular basis with the 3 major credit bureaus for errors. Such errors can mar your credit score.
• To keep your credit card active, ensure that you put a small charge on it every month. This will prevent any cancellation that occurs when the card has been inactive for quite some time.

What are the consequences of missing a card payment?

• If you miss a card payment, it will directly impact your credit score. The greater your credit card score, the stronger the impact will be. For instance, if you are late by 30 days in making a payment, it can cause a 90 to 110 point drop in your credit scores.
• Most credit card issuers charge late fees if you miss the payment date.
• If you consistently miss payment dates, there are high chances that the credit card provider would raise your interest rate.
• In case of violation of the terms of the agreement, you might end up losing your credit card altogether.

What steps must be taken if I miss a card payment?

• The first thing to do when you miss a card payment is to contact your card issuer. Ensure that you explain what transpired and make amends for it.
• It is imperative that you make a budget and stick to it. This will give you more scope for saving money and set reminders so that you wouldn’t miss another payment.
• Although you missed a payment, you need to remain active on your other accounts. Ensure that you make timely payment with your other accounts.
• You can opt for automatic debit since it will reduce instances of late payment and prevent you from missing a card payment.
• Also, ensure that you monitor your credit report and look for errors and get the credit bureaus to correct them.