Do you have bad credit? There are still credit card options for you


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Don’t give up a credit card just because your credit isn’t good.

Key points

  • Bad credit can affect your ability to borrow.
  • It is still possible to get a credit card if you have bad credit.
  • Secured cards are a good option for those with bad credit.

Having bad credit can be very frustrating because you can find yourself in a situation where it’s hard to turn things around.

Most companies you want to do business with – from utility companies to mortgage lenders – will check your credit before agreeing to let you become a customer. And if your credit rating is low, they may not allow you to borrow. The big problem with this is that if no one gives you new credit, you will have little opportunity to show that you can be responsible for it. And demonstrating your financial responsibility is key to boosting your credit score.

The good news, however, is that you can usually get a credit card even if your score is low. And if you use this card responsibly, you can improve your score over time and open the door to affordable loans and access to utilities with lower deposits.

How can you get a card even if your credit score is lower than you’d like – and lower than most card issuers like to see?

The best way to get a credit card for borrowers with a low credit score

If you’re hoping to get a credit card with a low credit score and you’re struggling to do so, secured cards might be your best bet.

Secured cards work a little differently than traditional credit cards. With most cards, you apply and the card issuer gives you a line of credit based on how confident they are in you to repay what you borrowed. The only money-back guarantee they have is your word that you’ll cover at least the minimum owed each month – and it can be difficult for them to take effective legal action to collect what’s owed if you choose not to. pay as promised.

With secured cards, however, creditors eliminate the risk of non-payment. This is because you need to secure the card with a guarantee. This usually means making a deposit with the card issuer which is held in a special account. The amount you deposit is equal to your credit limit. So, if you opt for a secured card with a limit of $500, you will deposit $500 and have access to a line of credit of $500.

Secured credit cards work a lot like regular credit cards

Besides the fact that you have to make a deposit, secured cards work the same way as regular credit cards. You are authorized to charge up to your assigned credit limit and must make payments monthly. As you pay down your balance, you free up your credit and can charge again. And your payments are reported to credit reporting agencies so you can build a positive payment history. Depending on the secured card, you may even be able to earn rewards for the charges you make.

Since there is no risk to creditors since they could seize your deposited funds with a secured card, you can usually obtain this type of credit no matter how bad your rating is, even if you have recently filed for bankruptcy. If you’re confident you’ll avoid building up a large balance or missing payments, you should consider getting a secured card as soon as possible so you can start using it to improve your credit score and open the door to new borrowing opportunities. .

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