Credit Cards for Bad Credit

How to Get a Credit Card with Bad Credit

Wondering if you have bad credit? Typically, a bad credit score is anything below around 600. Bad or even fair credit can limit your credit card and loan options. Unless they specifically provide credit card options for bad credit, credit card companies are less likely to approve credit cards for those who don't have good credit because it's a bigger risk for them.
Don't worry-you can get a credit card with bad credit. Follow these six steps to open a new credit card account and start working on improving your credit. Don't worry-you can get a credit card with bad credit. Follow these six steps to open a new credit card account and start working on improving your credit.

Check Your Credit Score

Either gaining or losing a few dozen points can make a huge difference when you're applying for credit cards. So before you start looking for a card, make sure that you know your score. You can start with your free credit score from Credit.com, updated every 14 days.

Knowing your credit score before you apply for credit cards is important for several reasons:

• It lets you apply more strategically, focusing on the cards that you are more likely to be approved for, which increases your chances of approval
• It reduces the chance you'll apply blindly for cards you can't get approved for, which causes wasted credit pulls. Each hard inquiry can reduce your score. A few in a row could even drag you down to bad credit score levels.
• You gain an understanding of your credit score and whether you should try to improve it before you apply for cards.

Take Actions to Raise Your Score

Now that you know what your credit score is, you need to understand what affects it. This is especially critical if you want to improve your credit score. There are five main factors that affect your credit score:

• Payment history: A history of credit payments you've made, including late or missed payments.
• Credit utilization: How much credit you've used compared to your total credit. Try to keep your credit utilization ratio to 30%.
• Credit age: The age of your credit accounts. Lenders like to see a long history of open credit accounts that've been paid on-time.
• Account mix: The different types of credit accounts you have on your credit report. Lenders like to see a mix of revolving and installment accounts.
• Credit inquiries: The amount of times you've applied for credit. Hard inquiries can ding your score, and having a lot of them can indicate that you're not doing well financially.

Knowing everything that's involved in your credit score is key to understanding how you could improve it. Take a look at your credit report to see what you're lacking. Maybe you haven't made on-time payments lately. Or maybe you have a ton of hard inquiries on your score. Take note of what you can improve on and get to work.

Keep in mind that improving your credit score is a process that doesn't happen overnight. It takes consistent and continuous effort on your part, and it might even require the need for credit repair. Eventually, you could see an improvement in your score. But don't get frustrated if you don't see a difference right away.

Become an Authorized User on Someone Else's Card

If your score is so low you're certain you won't be approved for a card—or you've already been denied—there are other ways to build your credit score.

You can gain a positive credit history if someone agrees to add you as an authorized user on their card, as long as they pay their bill on time. Make sure to choose someone who you trust and who you know is financially responsible. You don't want to be impacted negatively if they miss payments or run up high credit card debt.

Opt for a Secured Credit Card

What is the easiest credit card to get with bad credit? Many times, it's a secured credit card. That's because these cards are typically less risky for the bank because they are secured by collateral; your security deposit.

Secured credit cards are ideal for those with bad credit, or even no credit. That's because you typically don't need a stellar credit score to get approved. Instead, you need a security deposit. The way secured credit cards work depends on the lender, but here's what you can typically expect:

• You pay an up-front security deposit. It may be equal to your credit limit, though it isn't always. And this security deposit is sometimes refundable.
• This security deposit is used to cover your payments if you don't make them in a timely manner.
• You're usually approved for a relatively low credit amount, though it can increase as you manage the account well over time.
• The card company reports to the credit bureaus, so using your card and making timely payments could help increase your score.

Find Out What Kind of Credit Card You Can Get with a Bad Credit Score

In addition to secured credit cards, you may also be able to qualify for store credit cards. Other options can include general or secured credit cards that come with low credit limits for those trying to rebuild their credit score.

It's important to research the best credit cards for those with a bad credit score to ensure you understand all the fine print. Compare factors such as interest rates, annual fees and available perks. Make sure that you find the right credit card for your specific financial goals and situation. Can you get a credit card if you have a 550 credit score? Yes, but you probably won't get approved for cards with the lowest fees and interest rates. And the cards with the best rewards perks, such as cash back or travel points, typically require good to excellent credit.

Once you understand your options, apply for a credit card that best meets your needs and your credit history situation. But take your time-applying for a credit card, especially if you have bad credit, can be a big step.

Manage Your New Credit Card Responsibly

Credit cards that are available to those with a bad credit score are designed to help build your positive credit history and score rather than offer perks. For many, the purpose of applying for and getting one of these cards is to improve credit so you can get approved for a higher credit tier card one day. If you're climbing the credit score ladder, make sure to do things that can help improve your credit score:

• Only charge what you can pay for
• Pay the balance off each month
• Make payments before the due date
• Don't carry over a balance that's a large percentage of the credit limit
• Keep your credit utilization ratio at no more than 30%

Start Building Your Credit Today

Whether you're new to the credit world or you've been around the block a few times, building or improving your credit is an important goal. That's why applying for a credit card, especially when you have bad credit, is so important. Take a good look at your finances, your credit and your goals to find the right credit card for you.