At some point or another most of us have found ourselves going through a rough financial situation. You don’t just wake up one day with a bad credit score.
Most of the times bad credit happens as a result of a tough financial period in our lives. Perhaps you didn’t know the repercussions of bad credit until you realized you can’t get a mortgage with your credit score.
Whatever the case, having bad credit is not the end of the world. You still have a chance to rebuild a good credit score for yourself. So is getting a credit card with bad credit possible? Absolutely!
Credit cards are available to nearly everyone regardless of the situation of your credit score. However, the difference lies in the type of credit card you get when you have bad credit. It won’t be quite as glamorized as the cards you see being advertised.
Say goodbye to exclusive perks or rich rewards. You will get a functional card, but that’s alright. The beauty of credit is that it can be built. As long as you make timely credit card bill payments, you can climb back up the credit ladder and quickly move on to a more “glamorous” service.
How to Get a Credit Card with Bad Credit
A big mistake many people make when applying for a credit card is choosing a card that they do not qualify for. Here’s how you can get a credit card even if you have bad credit.
1. Be Aware of Your Credit Score
If you are not sure of your credit score and you apply for a card that you are not even eligible to receive, you will get an automatic rejection. A simple rejection may not seem like a big deal but it is. Each application you make goes on your credit report which ends up negatively affecting your credit score.
Persistent applications further damage your credit score so it is best not to experiment. Know your score and find out where you stand before applying.
2. Look for a Card That Suits Your Score
Once you are aware of your credit score, stick to the cards that match your score. Most credit card sites have a recommended credit score graph. This makes the search faster because you can check how your credit score relates to the various credit cards available and the recommended range.
3. Pay for the Security Deposit
If you are applying for a secured credit card, the issuer will not even open your account until a security deposit is provided. Many cards have a minimum range of $200 to $300.The deposit you leave is the determining factor of your credit limit.
If your deposit is $1000 then your credit limit will be $1000. If you deposit $2000 then you will get a credit limit that is equal to that amount. If you don’t have a bank account, some issuers may allow you to pay via money order. Most issuers prefer a direct transfer from a checking account to fund the deposit.
If you follow these three steps correctly, you are sure to receive the card within no time. Use the card to positively impact your credit score and take you to greater credit heights.
The Best Credit Cards for Bad Credit
The best credit cards for bad credit are secured cards. They are the best choice because the person in need of a credit card provides a deposit amount which acts as collateral. This deposit protects the creditor in case the person credited defaults.
Once a person closes the account or upgrades it, he/she can get their deposit back. As with getting a secured loan, a secured credit card is much easier to get because of the reduced risk.
Credit card approval for bad credit isn’t guaranteed but it is slightly easier to obtain. You would still need to prove your ability to pay or source of income. Serious credit report issues such as bankruptcies on your credit report may also be a reason for credit card denial on my end.
Top Five Credit Cards for Bad Credit
Here is a short, compiled list of the top 5 absolute best credit cards you can get with bad credit.
1. Discover it Secured Credit Card
The advantage of this card is that it has the well-known Discover feature of getting twice your cash back at the end of the first year using the card. Therefore, you get back 2% up to $1000 a quarter at restaurants and gas stations.
The downside is that although the Discover card is widely accepted in the US, it doesn’t have much traction abroad therefore if you plan to travel and use your credit card, you may need to rethink this option.
The Discover card has a 0% annual fee. It can really help one build their credit as long as the card is used responsibly. You can establish your credit line by putting a security deposit forward ranging from $200 – $2500 after approval. Information details such as your full name and social security number must be presented upon submission of deposit.
After 8 months of card activity, you may have automatic reviews that could push you to an unsecured credit line and your deposit returned. You also get an alert if your social security number is spotted on any of the thousands of mysterious websites associated with fraudulent activities.
2. Credit One Bank Visa Credit Card
The Credit One Bank Visa Credit Card has quite some noteworthy features. You get to choose your own due date and the bank allows you to boost your credit score easily. You also get to show off your personality by choosing from a wide range of various card designs, though at a cost.
The downside is that the rewards are lower than the Discover it card earning 1% back on transactional purchases/ services such as the internet, mobile phone, satellite TV, groceries, gas, etc.
With the Credit One Bank Visa Credit Card, you can find the right card for you without having any effect on your credit score. Once you have the card, you can set up customized emails or text message alerts to remind you of your payment due date or whether your available credit has run low.
The issuers are constantly evaluating each account so that when the opportunity to increase your credit line presents itself, you will be notified. You are also protected from unauthorized charges because of the Zero Fraud Liability.
3. Capital One Secured Mastercard
The Capital One Secured Mastercard is great for credit building. It is one of the best because there are no annual fees and no hidden fees. The other benefit is that once you have 5 consecutive months of timely payments, you could get a higher credit line without having to add on to your deposit.
It does have advantages such as no foreign transaction fees. With online access, phone calls or using the mobile app, you are able to easily manage your account. It is also a card that is accepted in multiple locations across the globe.
However, you will not receive any ongoing rewards with this card, and neither will you get a sign-up bonus.
4. Indigo Platinum Mastercard
With the Indigo Platinum Mastercard, you get a foreign transaction fee of as low as 1%. You don’t require a security deposit for this card and the hidden fees are kept to a minimum. Although the security deposit isn’t required, you do get a rising annual fee.
Your initial credit limit mostly ranges between $225- $300. There also no sign-up bonus and there are no ongoing rewards.
The Indigo Platinum Card is accepted in very many locations worldwide and you are protected from fraud in the event that you lose your card or it’s stolen. You are also entitled to free mobile-friendly online account access. The pre-qualification process is fairly easy and you receive a swift response from the bank in regards to your application.
If you have previously filed for bankruptcy, it is alright and you can still apply. Pre-qualification is available and it has no impact on your credit score.
5. Total Visa Unsecured Credit Card
The Total Visa Unsecured Credit Card offers the convenience of being in the Visa network and transactions on it are accepted by merchants all over the United States. It is used in credit building because your credit-building habits are reported to the 3 major credit bureaus by the issuer. You also don’t have to make an upfront security payment because it’s an unsecured card.
There is, however, a one-time fee of $89 that can really chew into your savings. The purchase APR is extremely high and there are many other fees that can cause a dent in your savings. The application process is simple and a checking account is required.
The monthly payments are manageable and once you are approved, you just have to pay the Program Fee to open your account and immediately access the credit you have available. You are also able to choose a card design from the gallery at no extra cost.
What Other Credit Card Options Are Available for Bad Credit?
Unsecured cards are also available for bad credit. You don’t have to leave a deposit but the charges are normally higher. These charges accumulate over time and add up to even more than what would have been a deposit on a secured card.
You also have the option of a store credit card. This generally has a low credit limit and high-interest rates. Before taking such a credit card, it is important to weigh out your options very carefully and choose a card that is suitable for you.
Cards You Should Avoid with Bad Credit
You may still want to browse and check your options on cards. However, there are cards you really should avoid especially if you have a bad financial track record:
Cards with High Annual Fees
A card could be packaged as a snack. It may have great rewards, annual credit, and other interesting perks. However, if it has high annual fees and you have limited cash output, you will not be able to fully take advantage of the card’s features.
Balance Transfer Cards
If you have an issue of paying bills, please avoid using a balance transfer card. What the card does is it makes the issue worse by making a transfer from a card with a lower APR to one with a higher APR after the end of the 0% offer. It is best to rebuild your credit with a less complicated card.
Cards Which Require a High Initial Spend
Take a minute before you rush for the 50,000 points sign-up bonus. Remember that with that beautiful bonus comes a requirement of expenditure that you might not be able to afford at the moment. Don’t commit to spending cash you don’t even have to buy things you know very well you won’t need.
Cards That Require High Credit Scores
If your credit score is low, don’t even bother considering a card that requires a high credit score. You will definitely not qualify for the card and you will now have given your personal information to the company.
Bad Credit Is Not Permanent
Credit cards really help with improving your credit so don’t do away with them. The key is to make your payments on time and to use your credit limit. Don’t use it all but have enough activity (transactions) on your credit card to warrant your timely payments and increase in credit score.
Make sure you properly peruse through the rates and fees document to ensure that you are aware of the fine print. Also, ensure that you have a grip on the interest rates. Calculate how it all works out with your earnings.
For more information on dealing with bad credit or learning more about credit, contact us or go through our blog for more informative articles.
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The Basics of the Wells Fargo Platinum Card
5 Things to Know Before Applying for a Bad Credit Loan
Top 7 Ways To Get A Payday Loan