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You’re pre-approved.

Many people who have experienced bad credit might agree that these words seem like a light at the end of the tunnel.

They mean that a lender wants to consider extending credit to you, and they’d like you to apply. (Though keep in mind that pre-approval doesn’t guarantee approval.)

Not to downplay the importance of increased peace of mind, reduced stress levels and better access to credit – but, arguably, one of the many joys of improving your financial standing is becoming wanted again.

While you might not be ready to take on the risk of accumulating more debt, simply knowing that you can is often an extra boost of confidence.

In order to rebuild your credit you must demonstrate that you are responsible with credit, and one way to do that is through credit cards. However, consumers seeking to establish new credit should take a careful look at terms for some of the products offered to individuals who have bad to fair credit.

The Right Credit Cards for You

Secured cards are a common credit-building tool; they require an upfront cash or collateral deposit that will eventually serve as the limit for the card. Then there are subprime credit cards, which don’t require an upfront deposit, but often have high interest rates and fees, and low limits.

If you’ve received an offer for a high-cost credit card, that doesn’t necessarily mean that’s your best, or only, option. This is why it’s important to do your research and shop for the best deal you can find.

For both subprime credit cards and secured credit cards, be on the lookout for ones that carry high fees that could have an impact on your credit utilization ratio, especially if you have a low credit limit. When it comes to your credit score, your debt usage is the second biggest factor in your credit score — and using less than 30% of your credit limit is preferable (10% is even better). Say you have a $300 limit, and a $75 annual fee — this utilizes 25% of the credit limit, then you decide to make a purchase over $15, which will put you over the ideal utilization percentage. Not only is the card striking your pocket, it’s also potentially hurting your credit score. Furthermore, some cards have monthly fees that can also bump up your utilization, so it’s important to do your research and look for a card within your credit range that offers the lowest fees and lowest interest rates.

There are a variety products and options available to help consumers improve their credit standing. If you are looking for ways to improve your credit or want to find a less costly credit option you can still get a credit card with bad credit, here’s how, and you can even rebuild your credit without credit cards as well. As you work on building your credit, you can track your progress by getting two of your credit scores for free on Credit.com.

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