How to Get a Revolving Credit Line with Bad Credit

It is often easier to get a low limit revolving credit line than an installment loan if you have bad credit. A revolving credit line is like a credit card. You will be provided with a limit, and you can spend up to this limit until you pay down the balance. Once you pay down the balance, you can again spend up to the limit. A $5,000 revolving line, then, could give you an unlimited source of financing as long as you periodically pay down the balance. Even though these loans are lower risk and easier to achieve with bad credit, you will still need to overcome your credit score to get the best revolving line possible.

Seek Low Limits

Limits typically have more to do with your income than your credit score. Borrowers with very high incomes are more likely to achieve higher limits. However, if you have a high income and a low credit score, you can elect a lower limit card to overcome your credit deficiency. The risk to the lender is no greater than if you had a high credit score and low income. Incomes can be proven through statements or through bank account balances. If you maintain a balance over $5,000 on a monthly basis in your standard checking account, most credit card companies will issue you a low-limit card, even if you have a low credit score. Your interest rate, though, may still be higher.

Work with Lenders Known to You

It is easier to verify account balances and prove your credit worthiness if you work with a lender you have an existing relationship with. For example, most banks offer credit lines to their customers. You can speak with your banker directly about opening a credit line with the bank, and the banker will only need to view your existing account information instead of requesting a whole host of new forms from you. Similarly, if you have a good track record of repaying loans with a lender, like your mortgage lender, you may be able to get a credit line from that lender even if you have bad credit.

Secure the Credit Line

A secured line will always be more accessible to a low credit borrower than an unsecured line. A secured credit line uses an asset as collateral. If you default on the loan, the lender can seize that asset in order to recover the loss. Any asset can be used as collateral for a loan, including home equity, a vehicle, a savings account or even stock. Each of these assets should only be placed as collateral with caution. If you default, the asset will be seized without hesitation, and the lender is legally permitted to take the asset. It is easiest to secure a loan with a bank or lender that already knows the value of your asset. For example, if you have a savings account at your bank, you can use this savings account to secure a credit card through the same bank. The bank will not have to go to another source to verify the value of the asset.

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