How Are Credit Cards Affected By Bad History?

Bad history with credit cards can cost you in the short term with fees and in the long term with higher interest rates.

Higher Rates

Your credit history is warehoused by the three main credit reporting bureaus and is a part of the calculation of your credit score. A low credit score, 620 or below, classifies you as a subprime borrower.

In the competitive credit card market there are even bad history credit cards available. But there is a cost. Those with excellent credit scores get the lowest rates the lender can offer. The lower your score the higher a rate you’ll get so that already high credit card rates can become extremely high. If you typically pay only the minimum payment, your balance will grow quickly, costing you much more in the long run.

Costing You Up Front

With bad history credit cards, often there are up front fees and more restrictive terms. For example, those with good credit history routinely receive offers for low-initial interest cards with pre-approved limits. In order to offset the increased risk of extending you credit, you might be required to post a security deposit, pay an application fee or face restrictions such as no balance transfers.