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How Can You Get a Credit Card with Bad Credit?

Having poor credit isn’t a benefit in an individual’s budget, however, it’s not the end of the arena.How Can You Get a Credit Card with Bad Credit?

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. Our opinions are our own.

Table of Content

Having an impecunious credit card puts limits on your credit card options, yet there are card issuers who cater to individuals who have decreased credit counts. Numerous amounts of these cards are simple, no-frills cards. However, they do provide rewards and other perks.

What's the problem?

One of the utmost critical concerns is the expenditure of owning the card. People with the low credit score ratings frequently pay the higher interest costs because the credit card company is assuming more danger by way of extending credit to a person who has no longer established responsible credit score habits.

According to Experian, the average credit score for the United States residents was 703 across all age groups in 2019. This was only 3 points below the average credit score for people in age 50 – 59, which scored 706 points. Adults in the 20 – 29 age bracket had the lowest credit score at 662. This is 13.14% less than those in the age group of 60+ who scored 749 points.    

Chart: Credit Scores in the U.S. 2019, by Age

What Is a Bad Credit Score?

Any FICO Score that runs from 300 to 579, signifying considered as a poor credit score. Applicants with FICO scores in this range may be charged an additional fee or a deposit. Because this is the lowest rating category on the scale, applicants may have difficulty receiving credit card approval.

The two types of credit cards available to those with bad credit are secured and unsecured credit cards. A secured credit card requires a specific amount of money to be placed into a savings account, and the credit limit is often based on a percentage of the amount deposited. The monies are not used for monthly payments and are used as security for a secured credit card.

Prepaid cards, on the other hand, are funded with money you deposit and are not reported to credit bureaus. Unsecured credit cards account for the vast majority of credit cards. An unsecured credit card is a revolving credit line with a limit that you can use without making a deposit.

Those cards may also charge an additional fee in the shape of annual charges or even maintenance charges. Having poor credit isn’t a benefit in an individual’s budget, however, it’s not the end of the arena.

Whether your credit score has taken a disastrous turn due to a loss of career, immoderate medical debt, or negative money management, you always have the opportunity to elevate your credit over the years. There are alternative routes to making the most out of this situation.

How to Choose a Credit Card for Bad Credit?

The principles for choosing a credit card for bad credit are the same as you would if you have an excellent score. You simply need to shop for cards that are designed for your risk profile. Once you have narrowed down which cards are suitable for those with a bad or poor credit score, you can then evaluate their benefits.

Ideally, you should choose the card with the lowest interest rate, but you also need to consider any fees that may apply, such as a late payment fee or annual fee. It is also important to look at the potential benefits and rewards. If you intend to repay your balance each month, you may find it more beneficial to choose a card that provides cash back on purchases at your favorite stores. However, it is not worth getting a small percentage of cash back if you end up paying several percent higher in interest on your card balance.

Based on a survey by CreditCards.com, the national average credit card rate in 2019 stood at 17.57%. Americans who held bad credit cards were charged the highest interest rate of 24.99%, while the credit card for low interest enjoyed lower rates at 14.61%.

Chart: Credit Card Rates in the U.S. 2019, by Card Type

What are the Easiest Cards to Get?

The easiest cards to get when you have bad credit are secured credit cards. Since you’re providing funds as security, there is minimal risk for the card issuer. If you default on your account, they can simply use your deposited funds to repay the debt.

This does mean that your credit limit is determined by your deposited funds. So, if you only have $200 spare to put into your card, your credit limit will be just $200. However, these cards can help you to build your credit. Each time you make a repayment, it is reported to the major credit bureaus, which will boost your score

Can I Get an Unsecured Card?

Conventional credit cards are unsecured and individuals with low credit values may not qualify. A secured card may be less complicated to get but they call for a cash deposit as a security deposit from you (held by the credit card company) to open the account.

The credit line is typically identical to the amount of the cash deposit. However, the deposit isn't implemented to purchases. Similar to a conventional card, you’ll nonetheless want to pay the debt every month.

The annual percentage rate (APR) on a secured card is commonly higher in contrast to a traditional (unsecured) credit card. With culpable use by the cardholder, a secured card can be a stepping stone to better credence and higher credence products.

Don't Waste Your Time 

Avoid applying for credit cards aimed at individuals with high credit rankings, “simply to see” if you may get accepted. You're probably to be denied and the additional packages can damage your credit score rating even greater.

You could generally tell a credit card is aimed at an individual with exceptional credit by the advantages it affords. Credit cards with extremely good rewards, low APRs, and promotional interest fees are always geared toward customers with first-rate credit.

Applicants with bad credit score rankings are generally denied.

Get a Job

A lending group isn't legally allowed to provide you a credit card unless you've got enough annual earnings to satisfy the minimum payments for that card’s credit restrict. You must think twice, prior to making use of for a credit card, if you can’t afford to repay your card in complete every month. Besides- you would be better off using a debit card than entering into debt.

In case you don’t have a permanent career or a dependable source of earnings, don’t apply for a credit card yet. You're in all likelihood to get rejected by principal banks and other credit score lending establishments. This creates every other black mark in your credit file. We also definitely don’t want to peer you falling into the trap of payday lenders.

  • How much is a good career sufficient?

For the ones who are employed as casuals or contractors, you need to demonstrate a long-standing working relationship. This exceeds twelve months along with your present employed company.

  • What if I have more than one job?

Having more than one employer in a short span of time doesn’t clearly help you get a credit card with a horrific credit score (See how to improve your credit score). This is because maximum creditors are seeking out one or more strong sources of income to pay off the card debts.

How to Apply For a Bad Credit Card?

Once you have determined the best cards for your credit profile and needs, you will need to complete an application. You will need to supply your basic personal information and some financial details. Just be sure to be honest about your income, expenses and other debt. Lying on an application is not only acting in bad faith, but it could invalidate your account, if the card issuer determines you lied. In a worst case scenario, it could even be regarded as fraud.

After you submit the application, the card issuer will assess it and determine if you are eligible. Most lenders aim to provide a decision as quickly as possible, and if approved, you can expect your new card within a week or two.

Be Willing to Pay a Deposit

Too many debtors dismiss secured credit cards because the cards require a protection deposit to be made against the credit restriction. A secured credit card that reports to the fundamental bureaus is higher than having no credit card at all. Many secured credit cards may be converted to an unsecured credit card after a year of timely payments.

If it is the safety deposit that is retaining you from getting a secured credit card. Begin crediting $50 in a financial savings account every month. In six months, you will have $300 to place on a credit secured credit card. Some of the cash may be used to take care of the application fee! The rest can be put in the direction of your credit card stability.

Surely you may have a low credit restriction at the beginning, but this is the reality of an unsecured credit card for poor credit, too.

Be inclined to make the sacrifices to satisfy the purpose of improving your credit. As long as you're accountable with your bills and no longer default on the stability, your deposit could be returned to you.

Apply for a Secured Credit Card

Apply for a secured credit card that permits you to make a deposit that serves as your credit limit.

Make sure the card company reviews your transactions to the credit bureaus so you can build credit and graduate to a normal, unsecured card. Some credit cards offer better advantages than others, like a more cash-back or a lower APR.

Apply for a Subprime Credit Card- but Only as a Last Resort. These cards indict very high-interest rates and fees. You should have to continuously pay them off in full, or timely per month. Responsible use of a subprime card can boost your credit and help you qualify for a less expensive card.

What to Watch Out For

Watch out for fee harvester, or subprime credit cards, that accumulates high upfront expense. Why?

These soak up the maximum amount of your credit restriction. Although federal law limits quantity of costs to 25% of the credit restriction, a subprime credit card company has gotten across the law by assessing a $90 fee before the credit card is ever issued. The First Premier Bank Gold MasterCard is an instance of a credit score card to stay far away from.

Prepaid cards are frequently advertised as an alternative for individuals with low credit, but those are not true credit cards. Prepaid cards require you to make a deposit before you can use it to make purchases.

However, unlike secured credit cards, your “pay as you go” card purchases are deducted out of your stability. “Pay as you go” cards don't improve your credit score either, due to the fact they don't report to the major credit score bureaus. They cannot when you consider that they're no longer a credit score product.

Do's and Don'ts When Applying for a Card 

Check your credit score document and credit score prior to applying for a brand new credit card so that you realize what you’re looking at. In case you apply for a card that is available to individuals higher credit scores, it’s possible you’ll take a hit in your credit rating with nothing to reveal for it.

In addition, you may need to check the fee agenda carefully. There are a few credit cards for individuals with bad credit that you may discover that provide a low or no annual rate. Note the APR so you know what you’ll pay in case you bring a balance. If none of this is needing to be evaluated, choose a card that gives rewards.

Don’t apply for numerous cards because it is possible to hurt your score. Do take benefits of tools that permit you to increase your credit rating. These include free credit score monitoring, credit education, gentle prices, and due-date reminders.

If your intention is to construct or rebuild a fine credit history, ensure the card issuer reviews your credit card records to the 3 fundamental credit bureaus: Experian, Equifax, and the TransUnion.

Can I Get a Credit Card With a 530 Credit Score?

A 530 credit score is classified as poor, which will limit your credit options. However, there are still some credit cards that are available for those with a poor credit score. These cards are typically quite basic with low limits, but they can help you to build your credit score, so you may be more successful applying for other cards in the future.

The other credit card option if you have a poor credit score is a secured credit card. These cards involve depositing some funds, and the balance of the deposit will determine your credit card limit. While this is not ideal if you’re low on cash, if you simply want a credit card to make purchases or want to build your credit score, it can be a viable option, regardless of whether you have a poor score or no credit history.

FAQs

A good FICO credit score is anywhere above 670, while a fair credit score is 580 or more. So, if your credit score is less than 580, you will need to consider credit cards designed for bad credit.

However, the key to harness this is to know your score. Fortunately, this is quite easy. Anyone can request a copy of their credit report from the major credit bureaus. You can then check your score and go through your report to determine if there are any errors that may be damaging your score.

Even if you opt for a secured credit card, your card issuer will report your monthly repayments to the major credit bureaus. This will help you to show a pattern of responsible financial behavior.

Another way that a bad credit card can help you to build your credit is that it will increase your available credit, thereby increasing your credit utilization ratio. Just be sure to keep your credit card balance in check or it will negate this benefit

If you have bad credit, you are unlikely to get a high level of rewards, so it is best to look for a card that has a reasonable rate and low fee structure. Try to get a credit card with a low annual fee, but watch out for hefty late payment fees or other charges that may make the card expensive.

You should also ensure that the credit card does report your activity to the major credit bureaus. After all, if you are going to the trouble of ensuring you make payments on time each month, it should be reflected in your credit report.

The quickest way to build your credit score is to pay down your existing debt. This will not only show payments on your credit report, but it will reduce your credit utilization ratio. This is a percentage of your debt expressed in terms of your available credit. So, if you have credit card balances of $2,000 and total credit limits of $6,000, your credit utilization ratio is 33%.

Ideally, to have a good credit score, you need to try and keep your credit utilization ratio below 30%.

Secured credit cards are designed for people with bad credit or no credit history. Since you are providing funds to act as security, there is less risk for the card issuer. If you should fail to make a payment, the issuer can simply use your deposit funds.

So, you should have no problem getting a secured credit card even if you have a very poor credit score.

If you have bad credit and want a no annual fee credit card, there are not a great many choices. You may find the best options are secured credit cards, like the Discover It secured card or the Capital One Platinum secured card.

While these cards do require that you deposit funds to act as security, you won’t need to consider an annual fee.

Getting any credit cards if you have bad credit can be tricky, but there are some store cards that may be a little more lenient about their applicant requirements.

Some examples of these are Target, Macy’s, JCPenney and Kohls. However, you will need to be prepared for quite a small credit limit. However, this can be a great way to build your credit. With regular, on time monthly payments reported to the credit bureaus and your card issuer increasing your limit as a result of good practices, you could end up with a card that has a decent limit and a better credit score.