If you have bad credit, you shouldn’t worry too much, as you still have options. Although you shouldn’t apply to regular credit cards, there are still two types of cards you can look into: secured and subprime. These cards are intended for people with bad or no credit to help you build your score.
If you are interested in learning more about how to get a credit card with bad credit, keep reading.
Table of Contents
How Secured Credit Cards Work
A secured card is different than a normal card because you are required to submit a refundable security deposit, which is usually equal to the amount of your credit limit, before you can open an account. Once you open an account, you can use your card just like an unsecured credit card. However, if you default, the lender may hold your security deposit in order to cover the debt.
Similar to any other card, you will receive a monthly statement, be required to pay a minimum balance each month, and be charged interest on any balance you have on the card. Be sure that you make all your payments on time, as this is a very crucial factor in determining your credit score. Additionally, if you use your card responsibly, your credit score might increase and you might be eligible for a non-secured card.
How Subprime Credit Cards Work
Similar to a secured card, a subprime credit card is made for people with bad credit. However, it differs in the fact that there is no security deposit required. Instead, credit card issuers impose substantial credit card fees.
Most subprime cards have a one-time fee to open an account, and they also have annual or monthly fees. Additionally, interest rates are usually higher than most cards, and you will most likely have a smaller credit line. If you continue to make your payments on time, eventually you might be able to qualify for a different card with lower rates and fees.
Which Credit Card is Right For You?
In order to decide which type of credit card is right for you, you should consider how much you are going to be spending on the card, if you have cash on hand for a security deposit, and if you are using the card just to build credit.
If you are not able to meet the security deposit, you should consider getting a subprime card or save up before you apply. Additionally, be sure to check out a card with lower APR and fees if you are using the card for purchases.
Finally, you should be sure to pick a card that reports your payment and account information to at least one of the three major credit bureaus: Experian, TransUnion and Equifax. The only way to improve your credit score is if a record of your account is sent to a bureau and added to your credit file.
If you have bad credit, hopefully this post has informed you on the ways to get a credit card and improve your score. Although it can be a difficult process, getting a secured or subprime credit card is the start to building or rebuilding your credit score so be sure to take action as soon as possible.
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