How to Get a Credit Card With Bad Credit

If you happen to have a bad credit score, that can have a number of negative impacts that will prevent you from accessing the same benefits, perks, and opportunities that are available for people with strong credit scores. For example, you would not be able to open a regular credit card, as credit card issuers would consider you to be a risk – someone who is either not capable or purposefully not willing to make their payments in time.

When they view you like that, the only thing you can do is prove that you can, in fact, use credit responsibly, which will automatically improve your credit score. But how do you do that if you don’t have access to a credit card?

The short answer is – you can use non-typical credit cards. Credit cards are generally better than debit cards for several reasons. For example, responsible use of a credit card can help you improve your overall credit score, while responsible debit card use doesn’t count. Credit cards also offer more consumer protection, which means that you would gain greater online shopping security.

With them, you can make any purchase right away, and pay for it later, once your statement is due. Not only that, but if you manage to pay off your statement before the grace period runs out, you will even manage to get away without paying any interest. And, finally, credit cards come with plenty of rewards and extra perks that you can make use of.

However, in order to become eligible for a credit card that will bring all of these benefits, you will first have to improve your credit score with non-typical credit cards. Today, we are going to discuss what kinds of cards those are and how you can build your credit after you get them.

Know your credit score

When it comes to your credit score, you should try to always know how high it is, with as much precision as possible. Even if you know its general quality (Poor, Fair, Good, Very Good, Exceptional, according to the FICO model), you should also try to keep an eye on the precise number. A few digits can separate your score from Fair and push it into the Good category, which can already be of great help.

But, more importantly, you should keep an eye on how it changes and progresses in response to your efforts to improve it. Furthermore, you should know if your credit is truly bad enough for you to not be able to receive credit cards, so you don’t waste your time applying before you reach the required credit quality.

There are two ways that will allow you to get your credit score for free. You can request it from your bank or credit card issuer, as most of the major ones offer free credit scores to their customers. You can also use a tool created by American Express, called MyCredit Guide, that will grant you your TransUnion credit score and report, completely for free. There is also a third option that is not free, and that is to purchase your credit score information from one of three credit bureaus (Equifax, Experian, TransUnion).

With that out of the way, let us talk about the available credit cards if your credit score is too low and you need to improve it.

A secured credit card

Your first option would be to apply for a secured credit card. This is one of the best ways to get a credit card if you have a bad credit score, but there is a catch to it. In order to get the card, you must make a deposit that will act as your collateral in case you fail to pay your balance. Also, the deposit that you pay will decide your credit limit. So, if you pay $ 200 deposit, that will be the amount that you get to spend each month.

Once you get the card, make sure to pay off your balance on time every month, and do your best not to exceed your credit limit. In fact, your credit score will improve much faster if you only use up to 30% of your credit limit. The less you use, the better, but consider 30% as a limit in order to have your score improved, and still have some use out of the card.

After all, this card is meant to show that you can manage credit responsibly, and it will matter how you use it. If you decide to take this route, we can recommend a list of the Best Secured Credit Cards for you to look into and decide which one to use.

The benefits of using a secured credit card include access to credit, the ability to improve your credit score through responsible use, and the ability to eventually upgrade to an unsecured credit card, which is essentially a name for a standard card that people with good credit score have access to. The downsides of this solution include the fact that you need to make a security deposit, your credit limit will be the size of the deposit, which usually means that it will be fairly low, you won’t have access to special rewards, and if you miss a payment, you can expect high-interest rates.

A credit card for people with bad credit

Another solution that you should consider is getting one of the credit cards that were made specifically for people with bad credit. These cards do not necessarily require security deposits, although secured credit cards do technically also fall under this category. But, if we remove them out of the equation, there are other credit cards that you can get with no deposit at all.

Once again, if you use these cards responsibly, you can easily start moving toward good credit and eventually, you will be able to upgrade to a better card or apply for a regular credit card from scratch. If this sounds like a solution that you might be interested in, check out our list of the Best Credit Cards for people with bad credit.

Now, there are a few benefits that you should be aware of when it comes to these cards. For example, they let you access credit without a security deposit, as mentioned previously. They let you build your credit, graduate to a better credit card once you prove yourself, and you can even earn cash back rewards on purchases.

As for the downsides of these cards, there are only three – low credit limit, high-interest rates if you miss paying out your balance in time, and the potential to actually rack up debt if you spend more than what you can afford to pay off.

A store card

Our third option is to turn to the retail credit card, or a store card, as it is also known. These cards usually have lower application requirements than most other types of credit cards, so you might be able to qualify even with a bad credit score. With that said, these cards are not necessarily the best option, and you might want to consider our previous entries first, if possible.

The reason for this is the fact that most retail credit cards charge extremely high-interest rates – much higher than your standard credit card. Plus, they might also include a deferred interest plan that might end up costing you a lot more than what you may expect.

The benefits of this card include better chances of actually getting it, the ability to build up your credit score, and certain discounts and rewards. On the other hand, we have high-interest rates that make it very expensive to use, and the fact that the mentioned rewards are typically retail-specific, which means that store credit cards are less flexible than standard ones.

Become an authorized user of someone else’s credit card

Finally, we have a solution that is meant to help you increase your credit score, but it will require help from someone who trusts you enough to make you an authorized user of their credit card. This is a good way to piggyback on your parent’s, spouse’s, or close friend’s good credit habits, and if they are a responsible user, your credit score will quickly increase.

In other words, you can increase your credit score simply by sharing a card with someone who knows how to use it responsibly.

The benefit of this is that you can build a credit score with someone else being responsible for managing the card, getting started even if you have no previous credit history, or, if you are a parent and you wish to help out your child get a head start, you can add them as an authorized user of your card.

However, there are also a few downsides to this deal. For example, if the credit card issuer doesn’t report to the three major credit bureaus, sharing the credit card will not help improve your credit score. Next, if the credit card owner starts missing payments, not only will your credit score not improve – it might start sinking further down. And lastly, you and the credit card owner will have to agree about every purchase in order to avoid overspending, provided that you will actually use their card and not simply end up being tied to it for the purpose of boosting your score.

Conclusion

Having bad credit brings a number of limitations, including the inability to get a standard credit card of your own. However, there are other types of credit cards that you can get, even with bad credit, and use them to boost your credit score. Each of them has its own benefits and downsides, so we recommend considering your options very carefully. But, in the end, with good planning, discipline, and responsible handling – each of the mentioned options will quickly start improving your credit score and unlocking new options.

For most people the next step is either to apply for one of these options:

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