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Bad credit can haunt you, but with the right steps, you can turn it around. Before you do, you may be able to get a credit card with a low credit score.
Here is how you can get a credit card with bad credit. The steps you take now will only help you later on.
What is Bad Credit?
You hear the term ‘bad credit’ and wonder if you have it too. What do lenders consider ‘bad’?
Overall, a FICO score lower than 580 is bad or poor credit. But every lender or credit card company is different. Some prefer credit scores of 660 or higher – anything below it they consider bad and won’t lend to you.
Sometimes it’s not just the score. Lenders look at your credit history. Do you have a history of paying your bills on time and using your credit responsibly, or is it the other way around?
Did you have a bankruptcy or foreclosure in your past? Did someone steal your identity? Each factor contributes to poor credit, even if they aren’t your fault.
Bad credit makes getting new credit harder, but it does not mean you can’t get a credit card.
Related: What Affects Your Credit Score?
How to Get a Credit Card with Bad Credit
If your credit score is low (no matter the reason), try these steps to get a credit card with bad credit.
Opportunity #1. Apply for a Secured Credit Card
Secured credit cards are the least risky for credit card companies. You make a deposit on the card, which is your credit line.
If you don’t pay your bill, the credit card company keeps your deposit. It’s the easiest card to get when you have a low credit score.
- Easy to get even with a low credit score
- Helps you build a positive credit history
- Keeps spending under control
- May offer the option to convert to an unsecured card after 6+ months of on-time payments
- You need cash to obtain a secured card
- The APRs are often much higher than unsecured cards
- Most don’t include extensive benefits like you’d find on unsecured cards
What is a Secured Credit Card?
Secured credit cards differ from subprime credit cards. Secured credit cards always have a security deposit, limiting your credit line, but are easier to obtain.
What is a Subprime Credit Card?
A subprime credit card can be secured or unsecured. It is an opportunity for consumers with bad credit to get a credit card.
They often come with a higher APR and include annual fees. Some subprime cards also require a security deposit and most keep credit limits low.
Opportunity #2: Retail Credit Cards
Retail credit cards are for a specific store or group of stores. For example, you can use a Walmart credit card at Sam’s Club because they are affiliated.
You can’t, however, use them at McDonald’s or for your monthly online subscriptions. Retail cards are often the first step for people with no credit or bad credit because they are easier to get.
- Most stores offer discounts for your initial purchase with the credit card
- You may get exclusive offers and discounts as a cardholder
- You can build a positive credit history (ask if they report to the credit bureaus)
- They are easy to get
- You can only use the card at the specified store (example: you can only use a Target credit card at Target)
- Many retail store credit cards have high APRs
- Not all stores report the credit card to the credit bureaus
Opportunity #3: Become an Authorized User
If you have close family members or friends with great credit, ask to be an authorized user. You don’t have to use the credit card to get the ‘credit’ for responsible use of the card and on-time payments.
Before choosing this, make sure the credit card company reports authorized users to the credit bureaus. Not all do.
Here are the other risks:
- The good credit won’t have as much weight on your credit score as it would if you had a card in your name
- If the cardholder doesn’t make a payment or exceeds his credit limit, it hurts your credit too
What to Do if You Have Bad Credit and You Want a Credit Card
If you have bad credit or know it could be better, do this:
Step #1: Rebuild Your Credit
This sounds a lot like climbing Mt. Everest, right? It’s not.
Take it slow. Start with a secured credit card and work your way up, doing some or all the following.
Learn More: How to Build Credit
Step #2: Form Strong Credit Habits
Here are a few of our favorite strategies to help you turn a new leaf on your credit score.
- Make Payments on Time: This is IMPERATIVE. Your payment history is 35% of your credit score. Even one late payment can derail your efforts. Credit bureaus consider late payments anything over 30 days late. Make your payments on time and watch your credit score increase.
- Monitor Your Credit: Watch your credit. Mistakes happen, as does identity theft. Don’t let it. Pull your free credit reports or join Experian for free. Your credit card and/or bank may provide access to your credit scores too.
- Lower Your Credit Utilization: This is another BIG factor of your credit score. Limit your credit balance to 30% or less of your credit line. That’s $300 for every $1,000 credit line. Carry higher balances, and it hurts your credit score.
- Remove Credit Report Errors: If you find any errors or notice identity theft, dispute the issues right away. TransUnion, Experian, and Equifax all have online dispute processes.
Step #3: Consider Credit Repair
If disputing your credit or even monitoring it feels like too much, consider a reputable credit repair agency.
Credit repair companies go over your credit report with a fine-toothed comb. They find any detail they can dispute and do it for you.
This could lead to improved credit scores or at least an idea of what you need to clean up to build your credit score up again.
Can I Get a Credit Card with a 450 Credit Score?
A 450-credit score is lower than most credit card companies allow. But you may get a secured credit card. Start there, build up your credit, and work your way to an unsecured card with better terms.
Can I get a Credit Card with a 500 Credit Score?
You’ll have your work cut out for you, but you may find a credit card even with a 500-credit score. But prepare yourself.
It will come with high fees (sometimes even setup fees) plus high APRs. Use it only to build credit and try not to carry a balance – the fees and APRs will drown you.
Can I get a Credit Card with a 550 Credit Score?
A 550-credit score is closer to ‘fair credit.’ You may find it easier to get an unsecured credit card, but you’ll still have higher APRs, and most likely annual fees and low credit lines.
Who Will Give Me a Credit Card with Bad Credit?
Most large banks have programs for consumers with bad credit. Discover, Capital One, and Credit One are just a few options.
Look around for secured credit card options first, such as Discover It or the Secured Mastercard from Capital One.
Once you’re above the 500-mark, Credit One may be a good option for an unsecured card, just watch the annual fee (charged monthly).
Bottom Line: Can You Get a Credit Card with Bad Credit?
A credit card is a great financial tool to have if you use it right. If you have bad credit, there are options available.
Start at the bottom (secured credit card) and work your way up. Believe it or not, they can be a great tool to build credit, but keep your outstanding credit to less than 30 percent of your credit line for best results.
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