Bad credit can happen to anyone. Regardless of why your credit is bad, knowing how to get a credit card with bad credit, and using it wisely, can help you get back on the road to better credit. Too many credit applications submitted in a short time frame can work against you, however, so you need to know how to choose your credit card applications wisely to increase your chances of getting approved.
Read more to find out about the best credit cards for bad credit.
Why Your Credit Score Matters for Getting Credit Cards
When you apply for a credit card, the issuer looks at several things to determine if they’ll give you a card or not, such as:
- Your income to see if you can pay back what you charge on your new card
- Your credit score, which reflects things like how many accounts you have, including mortgages, student loans and car loans
- How much available credit you have
- How diligent you’ve been about paying your bills on time.
Credit scores range from 300 to 850 points. The other factors that provide information on your income and credit utilization, in combination with your credit score, paint a picture of your creditworthiness. Knowing what you look like to lenders and credit card issues — and what they see on your credit report — can help you choose the right credit card for your circumstances, take steps to improve your credit, and potentially increase your chances of getting approved.
Find Out: How to Read Your Credit Report
Secured and Unsecured Credit Cards for Bad Credit
There are two kinds of credit cards: secured and unsecured. Before you apply for a credit card with bad credit, make sure you understand the difference.
A secured card requires you to put down a deposit, usually a few hundred dollars. The bank keeps this deposit and issues you a credit card with a credit limit that is equal to the amount of the deposit. If you don’t pay your bill, the card issuer will keep all or part of your deposit. Some secured card issuers will give you an unsecured card after you have shown that you can pay your bill on time.
An unsecured card does not require a deposit. Because the card issuer is extending you credit with no deposit, your credit will have to be better to qualify for an unsecured card than for a secured card. If you apply for an unsecured card, look for one that is a credit card for poor credit. You will probably get a low credit limit to begin with, but it can be raised over time if you pay your bill in a timely manner.
Tips for Getting Approved for a Credit Card With Bad Credit
There are things you can do to help your chances of getting approved despite having bad credit and that can help you improve your credit in the process:
- Boost your credit score if you can: Make sure all of your bills are current. Pay down what you can, but don’t close the accounts.
- Do your homework first: Find the credit card that’s likely to accept you based on your credit score and only apply for that card. The best credit cards for bad credit will indicate that they are for people who are trying to rebuild their credit.
- Apply for a credit card from a company that has a lot of different cards: If you apply for one card, the issuer might offer you a different one instead based on your credit profile. The more cards an issuer has, the better your chances are of getting one of them.
Once you get your new credit card, resist the temptation to rack up a big bill. Only charge what you can pay off each month, and make sure your payments are received on time. Taking these measures can help improve your credit score over the long term.
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