How to Get a Credit Card with Bad Credit
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Bad credit and credit cards do not typically mix well. But finding a good credit card takes some work and research. Fortunately, the internet has made it much easier to compare different credit cards and find the best one for your situation.
Keep these tips in mind as you search for the best credit card for bad credit.
- You will need to check your credit score before applying for a credit card. This will help you determine which card you are eligible to apply for.
- You should look for a card with a low APR and no annual fees. Full disclosure: this may be impossible if you have a low credit score.
- Once you do get a credit card, use it responsibly. For example, you should keep your balances low and pay your bills on time to improve your credit rating.
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What is a bad credit score?
A credit score is a numerical expression of a person's creditworthiness. It is computed based on the information in a person's credit report at a particular time. Credit scores range from 300 to 850 and are based on the information in the credit report about three major factors: payment history, amounts owed, and length of credit history. This information is relayed to the three major credit bureaus: Experian, Equifax, and Transunion.
Credit scores can take a hit for a variety of reasons. These include late payments, missed payments, high debt levels, bankruptcies, too many credit inquiries, and insufficient credit history. Generally, a FICO score under 579 is considered a bad credit score.
Based on your credit score, your lender will decide your eligibility for a loan and how much interest you will be charged. The better your credit score, the higher the chances of getting a good interest rate from the lender and the lower the loan processing fees. You may have to pay a higher interest rate if your credit score is poor. Therefore, you must keep a close watch on your credit score and ensure that it remains in a healthy range at all times.
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- 90-day money-back guarantee
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Types of credit cards for bad credit
Secured cards
A secured credit card works by linking a monetary deposit to your account; it's like a refundable security deposit
. The amount is usually equal to the credit limit on the card. The money you deposit is used as collateral against which you can make purchases or cash advances.
If your balance is not paid in full at the end of the billing cycle, the remaining balance is subtracted from the deposit. On the other hand, if your balance is fully paid at the beginning of the billing cycle, the deposit remains untouched, and you get to keep the unused amount as a refund. A secured credit card can be an effective way to build your credit as long as you can make timely monthly repayments.
This type of card is ideal for people who do not have enough credit history to get approved for a regular credit card yet but have enough savings to make a modest deposit and secure a credit card. Secured credit cards usually charge higher fees and interest rates than unsecured credit cards, but they are an ideal option for people with poor credit who are looking for a way to start building their credit profile.
Unsecured cards
An unsecured credit card works just like a regular credit card, except that you do not need to deposit to secure your line of credit. Your credit score will determine your eligibility for an unsecured card, and your credit score will, in turn, affect the cost of your borrowing. If your credit score is above 650, you will generally be able to get approved for a personal loan at competitive rates, but if you have a lower score, you may have to apply with a guarantor to qualify for the loan you need.
People with bad credit often have difficulties qualifying for unsecured loans because lenders view applicants with bad credit as high-risk borrowers and may not trust them to repay their loans on time.
Student cards
As the name applies, this card type only applies to students. If you apply for a student credit card, you must provide proof of your studies, such as a copy of your college or school ID card. Some lenders may also ask for additional proof of your student status, such as a letter from your school confirming that you are currently enrolled.
Credit Saint takes action to fix unfair or inaccurate negative items harming your credit.
- 90-day money-back guarantee
- Free consultation
- 200k happy customers
- 19 years experience
- 11,000+ five-star reviews
Best credit cards for bad credit in 2022
Here are a few credit card companies offering cards for people with bad credit.
Opensky Secured Visa Credit Card
OpenSky Secured Visa Credit Card
Card Name
OpenSky Secured Visa Credit Card
APR
25.64%
Annual Fee
$35
Why We Like It
- No credit check required
- Credit limit from as low as $200 and as high as $3,000
- Reports to all three credit bureaus
- 85% average approval rate
Petal 2 "Cash Back, No Fees" Visa Credit Card
Petal 2
Card Name
Petal 2
APR
18.24% – 32.24%
Recommended Credit Score
None
Annual Fee
$0
Rewards Rate
You can earn up to 1.5 percent cash back on eligible purchases (with 12 on-time payments).
Why We Like It
- No credit history need; build your credit
- No annual fees
- No late payment or returned payment fees
Card Details
Credit limit of $300 to $10,000
Capital One Platinum Secured Credit Card
Capital One Platinum Secured Credit Card
Card Name
Capital One Platinum Secured Credit Card
APR
29.99%
Recommended Credit Score
Limited, Bad
Annual Fee
$0
Special Offer
No annual or hidden fees.
Special Offer Terms
See if you're approved in seconds.
Rewards Rate
N/A
Terms
Why We Like It
- No annual or hidden fees.
- You could earn back your security deposit as a statement credit by making on-time payments.
- Be automatically considered for a higher credit line in as little as six months with no additional deposit needed.
- Monitor your credit score for free with CreditWise from Capital One.
How to rebuild credit
Make timely payments
If you are rebuilding credit, you need to make on-time payments every month to prove to creditors that you are a reliable borrower. Payments after the due date can negatively impact your credit score and make it harder for you to obtain new credit. Pay your credit card balance in full each month and avoid carrying a balance from month to month. You can also pay more than the minimum to prevent interest from accruing on your balance.
Related: What To Do If You Can't Pay Rent
Maintain a low balance
The amount of debt you have compared to your available credit limit is known as the credit utilization ratio. Too much debt relative to your available credit can hurt your credit score. It is recommended to have 30% as the maximum allowable credit utilization ratio. You should keep your balance below this level to improve your credit score.
Limit the number of cards you use
Applying for new credit cards can harm your credit score because it involves hard inquiries. Try to limit the number of credit cards you apply for at the same time to three or fewer applications a year.
Avoid opening new accounts
It can be tempting to open new credit cards when you discover that a new credit card would have a lower interest rate than the old one. However, adding additional accounts to your credit report can hurt your credit score because it can appear like you are taking on a lot of new debt. It is better to consolidate your outstanding debts into one or two cards with a lower interest rate than to open several new accounts with high interest rates.
Only apply for new credit when necessary
You will be rewarded for having a history of responsible borrowing by being able to qualify for larger loans at lower interest rates. However, applying for new credit when you already have enough credit may lower your score because you are demonstrating a willingness to overextend yourself financially.
Monitor your credit report regularly
Checking your credit report regularly can help you to spot any errors before they become a big problem. You should check your credit report at least every six months to ensure that it does not contain any mistakes that could harm your credit score. You can use free credit score monitoring services in this regard.
Credit Saint takes action to fix unfair or inaccurate negative items harming your credit.
- 90-day money-back guarantee
- Free consultation
- 200k happy customers
- 19 years experience
- 11,000+ five-star reviews
The bottom line
If you have bad credit, it can be difficult to get a credit card. However, there are a few ways to get a credit card with bad credit. And with a little planning and the right approach, you can find a credit card to help you rebuild your credit. Remember, while you should avoid taking on additional debt, it is still important to establish some positive credit history as you work to repair your damaged credit rating. Credit card issuers offer a number of no-credit-check cards with a no-hassles application process; some even consider your income and credit behavior. As always, do take the time to weigh your options before you make a credit card application
.
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JoyWallet has partnered with CardRatings for our coverage of credit card products. JoyWallet and CardRatings may receive a commission from card issuers.
Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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