Buzz
You’re already burdened by credit card debt, yet another card could offer the extra financial space you need. What options do you have if you’re in a tight spot and need help managing your finances?
Being in debt doesn’t automatically disqualify you from obtaining additional credit. If you’re in a financial bind, some of these strategies might provide the relief you need to manage unplanned expenses.
Consider becoming an authorized user on someone else’s credit card
If you have a strong relationship with a close friend or family member who boasts an excellent credit score, you might want to consider asking them to add you as an authorized user on one of their credit cards.
They don’t even need to give you the card itself—you can simply benefit from the credit utilization ratio boost and the positive effect on your credit history. By appearing to have more credit available, card issuers may be more inclined to approve your application.
Tap into your 401(k) for a loan
We don’t usually recommend borrowing from your retirement fund, but Anthony Davenport, CEO of Regal Credit Management and author of 'Your Score,' presents a compelling argument for using it as a short-term solution to improve your credit profile and make yourself more appealing to credit issuers.
If you have funds in a 401(k), you can take a loan with a relatively low interest rate and use that money to pay down a portion of your credit card debt. As your credit utilization improves, you'll be seen as a more attractive candidate for new credit by issuers.
Additionally, this method won't appear on your credit report since you're borrowing from your own resources, not taking a loan from a third-party lender.
If you decide to go this route, ensure that you have enough cash flow to repay the loan as agreed, or even earlier if possible.
Contact a familiar creditor
If you’ve maintained a strong payment history on a current card, reach out to your card issuer and ask for the possibility of opening a new account with them. As Davenport mentions, 'They already know you and love you,' and sometimes they won’t even conduct a credit check.
Most credit card issuers offer various options, so as long as you have good credit and a reliable payment record, they'll likely assist you in finding another suitable card. It’s generally more cost-effective for businesses to retain an existing customer than to acquire a new one.
Consider getting a secured credit card
You might be thinking, 'I’m stuck, I don’t have the collateral for a secured credit card.' However, with some help from a generous friend or family member, you could make it work.
A secured credit card requires an initial cash deposit equal to your credit limit. You could borrow, for example, $1,000 from someone close to you and open a secured card with that amount. Use the card as needed, then repay the loan once you get your deposit back.
If you’re facing this situation, you don’t need to be reminded that it’s far from ideal. But one of these approaches may provide temporary relief until you’re able to regain control and get back on track with paying off your debt.
