Your credit score is a reflection of your financial health, not just a simple three-digit number. When you apply for loans or credit lines, lenders consider your credit score among other things before deciding whether to approve you and how much interest to charge. If you can't get accepted for a regular credit card, you might have to choose a secured credit card. Read the terms of every credit card offer carefully before accepting it to ensure that you are aware of all the fees, interest rates, cash back, rewards, and other details.
What Is a Bad Credit?
Credit scores can be anywhere on a scale. Depending on where you fall on that scale, you will either be regarded as having excellent credit, good credit, or bad credit. The range of credit scores is 300 to 850. A score between 800 and 850 is regarded as exceptional, while one between 300 and 579 is regarded as poor. 16% of people with credit scores fall into the poor category. Additionally, more serious conditions like declaring bankruptcy or starting a foreclosure process can be linked to bad credit. Both can result in significant point losses, and the negative information may remain on your credit report for up to seven years or ten years in the case of some bankruptcy filings.
How to Get a Credit Card With Bad Credit?
There are a few considerations to make if you want to apply for a credit card in your name with a low credit score to repair or rebuild your credit. To start, determine the type of credit card in which you are most interested. For example, do you prefer a credit card with a low annual percentage rate or one that offers rewards on purchases?
Next, think about the card categories you have the best chance of being approved for. Many card issuers outline the kind of credit that must be present to be approved for a given card. For example, there are cards available for those with good credit, excellent credit, etc. If you are aware that your credit score falls into the "bad credit" category, it is important to look for cards that are a good fit rather than wasting your time applying for ones you won't be approved for.
Consider a Secured Credit Card
Cash deposits are necessary for secured credit cards, and these deposits typically serve as your credit limit. This could be the simplest way to get a credit card even with bad credit if you can come up with the money for the deposit.
Secured credit cards are made for people with little or no credit history, bad credit, or who need to repair their credit. Here are a few of their advantages and disadvantages:
Advantages:
If you have bad credit, it might be simpler to get approved for a secured card.
You can earn rewards when you make purchases with some secured cards.
With wise use, secured credit cards can assist you in establishing a solid credit history.
Disadvantages:
You must have cash on hand to pay the security deposit.
Secured credit cards may have higher APRs and fees than unsecured credit cards.
Bottom Line:
Credit cards are useful for purchasing items and earning rewards, as well as for helping to build credit. Opening a credit card account could be a simple way to improve your credit score and rating if you have poor credit. Just be sure to pay attention to the interest rate and other costs associated with the card so you are aware of what you are paying to use it.
Additional Reading: Credit Card Facts Every User Should Know