Tae-Nyun Kim, Associate Professor of Finance, was featured as an expert in a recent article on WalletHub discussing “Credit Cards for People with Bad Credit”.
How can people improve their credit scores using a credit card for bad credit?
In order to improve a person’s credit score, they must review their credit history. In the absence of a well-maintained credit history, improving credit scores is a challenging task. Meanwhile, this also implies that it is possible to improve one’s credit score over time. The most important task would be to make your payments on time. Your credit score would drop significantly if you missed a payment. On the other hand, consistently paying the whole amount would greatly improve credit scores.
How should people decide between a secured and an unsecured credit card for bad credit?
An unsecured credit card would be a better option since it does not require a security deposit upfront. However, it requires a higher credit score than a secured credit card. As such, applicants with low credit scores may want to consider applying for a secured credit card instead if they cannot obtain an unsecured credit card. Generally, the amount of the security deposit determines the credit limit of a secured credit card. Those with poor credit should avoid applying for multiple credit cards at once, regardless of whether they apply for a secured or an unsecured credit card. Credit card applications can result in hard inquiries on your credit report, which may further lower your credit rating.