How to Get a Credit Card With Bad Credit History
It’s one thing to get a credit card when you have no credit history , but what if the history you do have isn’t very good? Of course, a low credit score will make it difficult to get a traditional credit card, but it’s not impossible. Let’s look at the options available to help you secure your credit card, even with bad credit.
Consider secured credit cards
Secured credit cards are a great starting point for people with bad credit. With a secured card , you pay a refundable security deposit, usually $200 or more, which becomes your credit limit. The deposit acts as collateral, reducing the issuer’s risk. Many major banks and credit card companies offer secured cards .
Of course, be sure to make all payments on time and keep your balance low. After 12 to 18 months of responsible use, you can often upgrade to a regular unsecured card and get your initial deposit back.
Look for cards designed for bad credit.
Some issuers offer unsecured credit cards specifically designed for people with bad credit . However, keep in mind that these cards often have higher fees and interest rates, as well as lower credit limits. Please read the terms and conditions carefully to understand all associated costs before applying.
Become an authorized user
This strategy involves asking a family member or close friend to add you as an authorized user on their credit card account. You’ll receive a card in your name associated with their account, and their positive payment history can help improve your credit score. Make sure the primary cardholder has a good credit history and responsible habits. Not all issuers report authorized user activity to the credit bureaus, so check first.
Try storing credit cards
Goal, Kohl’s, Everything You Like – Retail store cards are easier to get than traditional credit cards. Retail store credit cards, while not ideal in the long term, can at least help improve your score since they often have more lenient credit requirements. However, it’s important to be wary of the high APRs on these bad boys, which can often exceed 25%. However, their limited use (only at a specific store or chain) can help control costs. Some stores offer instant approval, allowing you to make immediate purchases.
Explore alternative credit cards
Some new companies offer credit cards based on alternative data, taking into account factors such as income, employment and bank account history, not just credit score. While I don’t have personal experience with them, examples include the Petal card and Tomo credit card .
Improve your credit rating
As you work toward getting a credit card, take steps to improve your overall credit :
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Pay all bills on time, every time.
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Reduce your credit utilization ratio by paying off existing debts.
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Dispute any errors on your credit report.
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Don’t apply for too many cards in a short period, as this could lower your score further.
As your credit improves, you’ll be eligible for better card offers.
Get a construction loan
With a credit builder loan , you borrow an amount, such as $500 or $1,000, and make fixed payments over six to 24 months. The lender places the borrowed amount in a locked savings account, and once you complete your loan payments, the money is released and transferred to you. These loans are intended solely for building a credit history.
Be wary of predatory lenders
When you’re desperate for credit, it’s easy to fall prey to predatory lenders. Avoid:
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Cards with extremely high fees or interest rates.
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Offers that seem too good to be true.
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Lenders who use high pressure tactics or rush you into making a decision.
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Payday loans or cash advances, which can trap you in a debt cycle.
Check pre-qualification
Many credit card issuers offer pre-qualification tools on their websites. These tools perform a soft loan process that does not affect your credit score. Pre-qualification gives you an idea of your chances of approval before you apply, but does not guarantee approval.
Remember, the key to rebuilding your credit is using any new credit responsibly. Make payments on time, keep your credit utilization low, and avoid overspending. With patience and good financial habits, you can improve your credit score and qualify for better credit cards in the future. Moreover, here are some of the best credit cards for people with bad credit .