How To Get A Credit Card With Bad Credit | Credit card
It’s possible to get a credit card with bad credit, so that’s the good news. The worst news? Some of your options can be expensive.
But if you equip yourself with knowledge and pay attention to the fine print, you can choose a card that meets your needs without emptying your wallet. Plus, you can then use your new credit card to help rebuild your credit.
Get your credit score
FICO scores range from 300 to 850. A bad FICO score is between 300 and 579. Most credit card issuers offer free credit scores with your monthly statement. If you don’t have a credit card yet, many websites offer free educational sheet music. Scores may be VantageScore instead of FICO, but you’ll still get valuable information about your credit status.
Knowing your score gives you an idea of how far you have to go to fall into the fair credit score range, which is 580 to 669. But don’t panic if your score is closer to 300 than 500. can boost your credit score, and it can start with choosing the right credit card.
Easy credit cards to get with bad credit
Secured credit cards
There are good cards in this area offered by major credit card issuers, credit unions, and other financial institutions. With a secured card, you must make a deposit to secure the card. The money then remains in the account to reduce the risk for the sender.
You get an actual credit card to use for purchases. As long as the issuer reports your payment history to major credit bureaus, you will increase your credit. If you use the card responsibly, you could possibly be promoted to an unsecured credit card with this issuer. But even if your secure card issuer doesn’t offer an unsecured version, you’ll likely have a high enough credit score to be approved for a credit card with another issuer.
When you switch to an unsecured credit card and close your secured card, you will get your deposit back unless you have an outstanding balance. Be sure to pay your balance in full by the due date each month so you don’t go into debt.
Retail Store Credit Cards
I’m not a big fan of retail store credit cards, but if used responsibly, they can help you build credit. These are easier credit cards to get because they often have low credit limits and high annual percentage rates.
There are a variety of credit cards in this category, including co-branded cards between a merchant and the card issuer. Some of these co-branded cards can be used not only in one store, but also in other stores where the card issuer is accepted. Co-branded cards may be more difficult to obtain than retail cards.
Some brand name credit cards can only be used at this store. Similarly, gasoline retailers also have store brand credit cards for spending only at their gas stations.
Benefits of using a store’s store card can include earning rewards and receiving notifications of upcoming sales. But make sure you don’t have a balance with these cards. It can be easy to get into debt due to high interest rates. And remember that store cards usually have low credit limits, which makes it easier to max out a credit card. Having a high balance on your credit card can really hurt your credit score.
Risky credit cards
- Subprime: credit scores from 580 to 619.
- Deep subprime: credit scores below 580.
Fair FICO scores range from 580 to 669. Although some of this range is considered subprime, some issuers target those with fair credit. Once you get over 580, you’ll have access to better credit cards and lower interest rates.
But for now, you should know that subprime credit cards can have APRs higher than 30%. And they may also have several fees, such as an application fee and even a monthly maintenance fee. Read the fine print carefully before applying for a card in this category. And then reread it!
Become an authorized user
It is possible to increase your credit score by becoming an authorized user on someone else’s credit card. If you have a relative, other relative, or close friend with great credit, ask them if they can help you.
But if you don’t commit to rebuilding your credit, don’t risk hurting someone else’s credit. When you are an authorized user, irresponsible credit behavior can lower the score of the primary account holder. The primary cardholder is also legally responsible for the card balance. Make sure you have an agreement with your credit benefactor that outlines where you can use the card and what your spending limit will be.
5 ways to improve bad credit
It takes time and responsible credit behavior to rebuild your credit history. Pay attention to these five credit habits and you’ll be well on your way to a higher credit score.
- Track your expenses. If your bad credit is due to spending sprees, you’ll be amazed at how effective your spending tracking is. There are plenty of free ways to do this with online money management tools or through free apps. Without structure, you might find it too easy to overspend and get into debt.
- Pay all your bills on time. With the FICO score, payment history represents 35% of your credit score. So get ready for success. Use email and SMS reminders to know when invoices are due.
- Keep utilization low. The second most important factor in your credit score is the amount owed. You have a utilization rate, which is the amount of credit you have used compared to the amount of credit you have. On your credit card, keep your ratio at least below 30%. But keep it below 10% for a bigger boost.
- Do not open new credit. Each time you apply for credit, your score can drop by up to five points. For now, focus on responsible use of your new credit card. After about six months, when your score improves, you can consider opening another new card.
- Pay off your credit card debt. It’s a double win. First, you get to know the freedom to get out of debt. Second, this process increases your available credit, which lowers your utilization rate and increases your credit score.