While many Americans don’t know if they have good or bad credit until they need a loan, you can be smart and savvy and get your credit report, which shows your score. Of course, scores are dependent on the information provided and other factors, which means your score might fluctuate. If you have poor credit (between 600 and 649), you may wonder if you can get a credit card or if you should. Finding the best credit cards for poor credit is essential because they can help you rebuild your credit and help you get the flexibility you need with money.
How Bad Is It?
The first step is to see how bad your credit actually is. Many Americans feel that they have low scores when they aren’t that bad. You might have an average score, which improves your chances of getting a decent credit card.
Don’t let that deter you if you do realize that you have a lower score than average. You can still find the best credit cards for poor credit, but it is going to take some research and patience. The best thing you can do is not apply for and accept the first card you get. Shop around to find the best interest rates and deals possible.
Unsecured vs. Secured Cards
Most people with poor credit believe that they can only get secured cards, where you put money down in the amount of the credit limit. You spend money on the card as normal and pay your minimum payment or pay off the card each month as normal, but that deposit sits there. The goal is that if you don’t pay your bill on time, the credit card company can use the deposit to pay it.
Unsecured cards are usually the best choice because you don’t have to fork over any of your hard-earned money. However, they usually come with high interest rates, especially if you have a low credit score. Creditors don’t think of you as creditworthy, so they up the interest rate, which can keep you in a recurring debt structure if you only pay the minimum payment due.
Best Credit Cards for Poor Credit: Factors to Consider
The low-down is this: If you have poor credit, you probably shouldn’t apply for cards that require excellent or good scores. It wastes your time, but it also shows up on your credit report as a hard inquiry. Having too many of these inquiries can actually lower your score.
It’s best to pay close attention to the terms and conditions listed before applying for the card. Some companies make this information transparent, so you can easily see what the interest rate will be, what fees are included, and the rest.
It’s always a good idea to make sure the credit card you want to apply for doesn’t have any annual or monthly fees. Some credit card companies also charge a fee to pay the bill each month. Make sure that there are no fees to use or pay for the credit card to avoid spending part of your credit limit for nothing.
You should also make sure that the credit card company reports to the three major credit card bureaus. Many prepaid and secured cards do not. The goal here is to improve your credit score with time, and to free yourself from bad credit. To do that, you need to pay your bills on time and try not to keep a balance on the card (or keep it below 30 percent of the total credit line). However, this does you no good if the credit card company doesn’t report this good information to the credit bureaus. Therefore, the best credit cards for poor credit report your good standing to the credit bureau.
Here are some other articles you might find interesting:
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Loans Customized for You: Online Installment Loans
Let your Credit Score Work for You: Unsecured Personal Loan