subject: For Whom Is A Bad Credit Mastercard For? [print this page] A bad credit MasterCard is a type of credit card that is targeted at consumers that have bad credit and may otherwise struggle to get a credit card. Finance companies are still prepared to offer these people the benefits that a it can bring, as long as they agree to certain terms and conditions.
A person can be said to have bad credit if they have a score towards the lower end of the scoring scale, typically 650 or lower. The actual scale used varies from company to company, but is often the FICO, NextGen or VantageScore system, each of which rates potential customers on their previous credit behavior.
These individuals can have low credit scores for a number of reasons, such as having missed payments on their existing financial products, received court judgments against them or having filed for bankruptcy. The lower a credit score, the less chance of the individual being approved for a credit card.
Depending on how bad their credit score actually is, an applicant may be offered either an unsecured MasterCard or a secured MasterCard. An unsecured card offers the customer a line of credit, in the same way that most standard cards do. A secured card requires the cardholder to deposit an amount of their own money upfront as a security bond, which will then equal their limit on their card.
With a secured card once the limit has been set the card has largely the same uses as a traditional card. The customer can use it to purchase products and services from anywhere that accepts MasterCard. Depending on the issuer, with good financial behavior it is usually possible for a card holder to build positive credit. This will mean that in the future they could be eligible for better value credit cards in the future.
The downside of these is that in order to be accepted the applicant will often have to pay annual fees, monthly fees and other usage charges that are not normally associated with good credit cards. The annual percentage rate of interest is also often higher, with some of these cards charging up to and above 20% APR.
A bad credit MasterCard can only be recommended for those that are in a financial position to make their monthly repayments on time, and are determined to rebuild their credit score. Those with irregular or low incomes should first consider a pre-paid card, which prevents you from accumulating further debt.
by: William Trustey
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