A sub prime card was designed for those with a damaged history. It was created to give people a second chance with credit.
They are often used to help rebuild a low score. They help because you can create a positive payment history and it can improve your utilization ratio. Your payment history and utilization ratio are both very important to your score.
They do report monthly to all three major bureaus. Your APR will by approximately 19% and you will have some fees. Unfortunately this is the cost of your prior mistakes, however this can be the last time you have to pay fees for a low score.
Your limit will be approximately $300 and you will be eligible for periodic increases. However some like the Tribute Gold MasterCard do offer a card with a limit of $70 for those with very bad history.
These will help to improve your score more than a secured account. This is because those accounts are reported as secured to the bureaus and this will be weighted less than an unsecured account.
It is still wise to remove negative items from your report. However it has been discovered that once a negative item ages four years it will have much less impact on your score.
You should know that to get the most out of your card you should try to keep the balance at roughly 20%. This will help because it shows the bureaus that you do use your card and are using it responsibly.
You can still get approval even with; charge offs, collections, judgments, and even a bankruptcy. However each has different approval requirements. Many of them will give you an instant decision upon submission of your application.
In sum we do suggest a sub prime credit card for individuals with a damaged history. It can be used to help you build positive a positive payment history and improve your score.