Think you can’t get a credit card if you have bad credit? Think again – there are plenty of companies that offer credit cards for those whose credit score isn’t as high as they would like; although, as with any other financial service or product, shopping around to find the best offer is a must. In general, if you have bad credit and are looking for a credit card that will work for you, look for an affordable annual or upfront fee, a pre-qualification check, and the possibility of a credit amount increase in the future. Always read the fine print on any advertisements or applications and make sure you fully understand everything.
However, you shouldn’t make the all too common mistake of applying for as many different credit cards as possible, in the hopes that you will be approved for one of them. The inquiry from each time you apply will show up on your credit report and adversely affect your credit. A better approach is to only apply for a card if you feel confident you’ll be approved, or try to get pre-qualified before actually applying, which won’t harm your credit score.
Even if you have bad credit, applying for a credit card and using it responsibly can actually help you rebuild your credit score over time. In fact, having a card can be one of the most effective ways to make a fresh start and tackle that bad credit that may have held you back up to now. The key is to make your payments on time, so you don’t have late payments reported, and to try to get a card that reports payments to all three major credit bureaus. Make a point of keeping the amount you owe on the card at 30% or less of your credit limit amount, and make sure that your credit limit isn’t too high. That way, you aren’t tempted to spend more than you can comfortably afford.
Some companies offer a secured credit card for those with poor credit. The card works just like any other credit card, but you will need to provide collateral in the form of a refundable cash deposit. For example, your credit limit would be $500 if you put down a deposit of $500. These secured cards can be an excellent option for anyone whose goal is to improve their credit score and can afford the initial deposit. And some banks and credit unions offer a credit builder loan; as the name suggests, this secured loan is aimed at anyone who has poor credit and is trying to improve their score over time. It’s like being given a loan, but you can only access the money once you have made all the payments ahead of time.
The good news is that there are companies ready and willing to give you a card, regardless of your bad credit score. Applying for a credit card really can provide you with a fresh financial start and put you on track to rebuilding your credit.