How to Get a Credit Card with Bad Credit

When you have bad credit it can be challenging to qualify for a credit card. You can’t get approved, but it’s difficult to efficiently improve your credit score if you don’t have regular payments that are consistently reported to the three major credit bureaus.

woman holding credit card

Luckily, there are viable options for you to not only get a credit card, but also restore your credit score in the process.

What is the best credit card to build your credit?

Ready to build your credit with a credit card, but you’re not sure where to start?

Consider applying for a secured credit card. It’s not the same as a traditional, unsecured credit card, but it certainly puts you in the right direction.

So, what’s the difference between secured and unsecured credit cards?

With a secured card, you’re required to make a refundable security deposit to serve as collateral in case you don’t make your credit card payments. If you make a $500 deposit, for example, you’ll receive a $500 credit limit.

You can use your card just as you would any other credit card. When your statement comes each month, you make your payments but you can’t touch the security deposit until you close the account. The benefit is that you get your on-time payments reported to the three major credit bureaus each month.

What are some things to look out for with secured credit cards?

First, familiarize yourself with any fees that come with the card. Many financial institutions charge an annual fee so compare your options before deciding on one. You’ll have the best luck finding a secured card online or at community banks and credit unions.

Next, keep monitoring your credit to watch for improvements. The biggest thing is to make your payments on time and keep your card balance under 30% of your total limit. Ideally, you’ll even want to pay off your entire balance each month to keep growing your credit score and avoid costly interest payments.

What is the easiest credit card to get?

Once you’ve had a secured credit card with a positive payment history for a while, you can likely graduate to an unsecured card with the same financial institution. You may even be able to skip the secured ard if you can meet a few extra criteria.

For example, it’s often easier to get a credit card with a bank where you have a deposit account and can provide proof of regular income. When you shop around for credit cards for bad credit, you may find many that charge an application fee, so don’t be surprised.

You’ll probably also have to pay higher interest rates and potentially have other fees as well. It’s important to shop around to ensure you get the very best deal possible because it’s going to be more expensive to get a credit card with bad credit.

The upswing, however, is that these unsecured cards don’t require a deposit to get started and they act as a traditional line of credit. That means you get all of those extra benefits that come along with any credit card, including regular reporting to the credit bureaus.

How fast can you raise your credit score?

When you’re applying for a credit card and think you have bad credit, be sure to check your score first. If it’s not where you want to be, there are a few things you can do to get a quick bump. However, most major changes usually take several months before significantly increasing your credit score.

What are the most important actions you can take to raise your credit score quickly?

First, pay down as much debt as you can. Yes, you’re looking for a new credit card, but your score can really suffer when you have one or more existing cards maxed out.

Next, pay all of your bills on time. Any creditor can report a late payment to the credit bureaus after 30 days, so take care and be meticulous with your monthly bills.

When shopping around for credit cards, try to do it within a month or two. That way, all of those application inquiries are generally treated as a single entry. When spread out over too much time, it simply looks like you’re applying for tons of different credit cards and your score will drop a little with each one.

However, they should stop affecting your credit score after a year and should drop off completely after two years.

What should you do if you see an old inquiry listed on your credit report?

Ask the credit bureau to remove the negative item. If you have numerous negative entries on your credit report, particularly if you see errors or incomplete information, consider working with a professional credit repair company.

How do you build credit without a credit card?

In addition to getting a secured credit card, there are other ways you can work on your credit score as well. One option is a credit builder loan. It acts similarly to a secured credit card, except that you don’t need cash upfront.

Instead of making a deposit, you make all of your principal and interest payments. Thereafter, you receive your loan funds. While it sounds like a rigorous savings plan, the advantage is that all of your payments are typically reported to the credit bureaus.

Another way to build your credit without a credit card is to get a loan with a co-signer. This allows you to use someone else’s credit history to vouch for your ability to repay the loan. The downside is that if you get behind on your payments, those actions affect your co-signer’s credit as well.

If you simply worry about qualifying for a credit card on your own and want to build credit without the responsibility of managing your account, consider becoming an authorized user on someone else’s credit card. You automatically get all of their positive credit history associated with the account imported directly onto your credit report.

If you don’t want the temptation to make charges on that person’s account, just don’t get a copy of the card. Of course, just like with a co-signer, all activity on that credit card will impact your credit. If your partner or friend suddenly stops making payments, all of those late entries will appear on your credit report and consequently lower your score.

Bottom Line

Bad credit isn’t a final sentence. There are plenty of proactive solutions you can take to rebuild your credit while simultaneously getting the access to credit you need.