Are you one of the 68 million Americans with a bad credit score? If so, then you probably know that it can be challenging to get a credit card.
If you’ve been wondering, “Can I get a credit card with bad credit?” you’ve come to the right place.
The short answer to this question? Yes. But, you may have to jump through a few extra hoops.
Read on to learn how you can get a credit card even with a less-than-ideal credit score.
How Can I Get a Credit Card with Bad Credit?
When it comes to getting a credit card with a bad credit score, you can employ a lot of the same strategies you would use to get a personal loan with bad credit.
Some of the best approaches to take when trying to get a credit card include:
Look into Bad Credit Credit Cards
There are a few credit cards out there geared specifically toward individuals with bad credit scores.
These cards often have higher interest rates and annual fees. But, they can still be a good option for people who are looking to build up their credit score and can’t get approved for other cards.
In many cases, you can also get the annual fee on these cards waived simply by asking the lender.
Consider a Limited Use Credit Card
Another way to start building credit or improving your credit score is to apply for a limited use credit card from a retail store that you shop at frequently.
Retail stores typically have low credit limits and higher interest rates, so it’s important to keep up with your payments.
They’re still a good option for improving credit, though. And, retail stores can typically be relied upon to approve applicants with lower credit scores.
Use a Secured Credit Card
A secured credit card is a card requires you to pay a security deposit before you can use it. That security deposit is made against the credit limit.
It may not be ideal to have to pay money before you can start using a credit card. But, it’s better than nothing and still provides you with an opportunity to build credit or improve your credit score.
Remember, too, that after a year or so of on-time payments, you can convert your secured credit card to an unsecured credit card.
Avoid Subprime and Prepaid Credit Cards
Some of the credit cards geared toward people with bad credit come from reliable lenders. But, there are also credit cards are not great options for those with bad credit scores.
Subprime credit cards charge high upfront fees before you can use them. These fees take up a large portion of your credit limit.
It’s also a good idea to avoid prepaid credit cards. These cards don’t improve your credit score, so they won’t help your financial situation long-term.
Work with an Online Lender
If you’ve been turned down for a credit card from traditional banks or credit unions, you might want to consider applying for a credit card from an online lender like Bonsai Finance.
Online lenders typically are more flexible when it comes to granting loans to people with bad credit scores. They may also take other factors into account, like your employment history, income, and education level. As part of this process you will almost certainly want to improve your credit score.
One good way to do this is buy tradelines. Tradelines are basically lines in your credit score, but the term refers to adding yourself to someone who has very good credit. This does work, but it usually has a monthly cost involved.
Credit Card Mistakes to Avoid
Once you are approved for a credit card, it’s important to be smart when using it. Otherwise, you’re going to rack up additional debt and continue to struggle with bad credit.
So, what does it mean to use your credit card in an intelligent way? Start by avoiding these common credit card mistakes.
Learn Your Credit Card Terms
Many people obtain credit cards and don’t realize what kind of terms they’re agreeing to. It’s important to thoroughly understand the terms of your credit card and pay special attention to the following pieces of information:
- How the company handles late payments
- What is the annual fee (if there is one at all)
- Are there balance transfer fees?
- What is the minimum payment?
Go over the terms of your card once or twice a year to make sure you’re up-to-speed.
Pay the Full Balance Each Month
Some people are under the impression that it’s good to leave a balance on their card each month. In reality, it’s best to pay off your full balance every month.
Leaving a balance on your card increases the amount of interest you pay each month. It can also negatively affect your credit score.
Pay Your Bills on Time
This seems like a no-brainer, but a lot of people have a hard time paying their credit card bill on time each month.
If you forget when the payment is due, set an alarm on your phone or set up automatic payments so that you never have to worry about making them on time.
Read Your Billing Statement
Many people throw their credit card billing statement into the trash without ever looking at it. This is a big mistake.
Read your billing statement each month so that you’re alerted to any changes to your credit card terms.
Keep Your Credit Utilization Low
Finally, remember to keep your credit utilization at or below 30 percent. For example, if you have a $1,000 credit limit, avoid charging more than $300 on your card each month.
If your credit utilization is high, you’re at a greater risk of over-the-limit fees and penalty interest rates.
Take Control of Your Finances Today
You now have a clear answer to the question, “Can I get a credit card with bad credit?”
But, remember that there’s more to managing your finances than just having a credit card. You need to make sure you’re using it appropriately and paying it off in a timely manner.
Keep the money management tips in this article in mind so you can take control of your financial situation once and for all.
Need more financial advice?
Be sure to check out the money and finances section of our site today for more tips and tricks.