7 Ways To Get A Credit Card With Bad Credit

Stack of Credit Cards with shallow DOF (focus on cards tips)

If your credit score is lackluster, you know how difficult it can be to get a credit card. People get into dire financial situations for many reasons, including being laid off in a poor economy, but regardless of the reason, a bad credit score can stop you from getting credit and make it harder to purchase necessities. Often, those with poor credit do not know their options.

Even if you have a bad credit score, you can still get a credit card, but it is important to know all of the obstacles you will face. You will need to accept that you won’t be given the same offers as those with excellent credit, but you can find a line of credit if you know where to look.

Explain Your Situation

You may not know it, but you can add a 100-word statement to your credit report that explains your circumstances. Here, you would describe what led to your poor credit situation, such as job loss, divorce or illness. If your explanation proves to creditors that you are taking steps to improve your credit, they may trust you are a good credit risk and will pay back your debts. It is imperative your story is true.

Credit Cards for Those with Poor Credit

Visa and Mastercard both offer a number of credit cards for those with poor credit. These cards will likely offer a low credit limit and carry fees and high interest, but it may be your best option. You can talk to your current credit card company or your bank’s administrator to see if they can give you a credit card that will meet your needs.

Secured Credit Cards

Secured credit cards are different than traditional credit cards, as you have to make a deposit on the account to open the card. The creditor will provide you a line of credit that is equal to the amount of money you deposited into your account. If you do not pay your bill, your card issuer is entitled to the money in your account. Secured credit cards can be a great way to build or rebuild your credit, but make sure the card issuer reports positive information to a credit reporting agency. The reports will help you build a positive credit history.

Store Credit Cards

Sears and Macy’s both offer store credit cards to their customers, and retail stores are usually more willing to approve applicants with limited or poor credit. Be warned, though. These cards come with high interest rates and low credit limits, so it is important to make sure you fully understand the terms and conditions before applying.

Cosigned Credit Cards

Cosigned credit cards work as you may expect–you ask a friend or family member to cosign for you, and you will be given a card for which you ordinarily would not qualify. Your cosigner will need to have good credit, though, as creditors will look to them for payments if you do not pay your debt. You will want to make sure your cosigner understands they are obligated to pay the debt if you are unable.

 

Subprime Credit Cards

Since the recession, “subprime” has become a bit of a dirty word, but subprime credit cards can help people with bad credit. However, they often carry high fees that could be hard for people to pay if they are already short on cash, and the interest rates can also be extremely high. While these cards are best avoided, they can work as a last resort for people who desperately need credit. It is imperative that you read the terms and conditions of the card before you apply for a subprime card. It is also important to verify that the issuer will report information to a credit reporting agency so you can build or rebuild your credit.

Improve Your Credit

It can be difficult to rebuild poor credit, but you do have options. It will just take a long period of time to improve your credit score. To improve bad credit, open bank accounts and pay your credit cards and loans on time. If you make payments on time, your credit score will slowly grow, and you will start to qualify for better credit cards.

Finding a credit line can be difficult, but if you know what you are looking for, you can find a credit card to meet your needs and help rebuild your credit without bankrupting you. There will be pros and cons to each credit card, and there are limitations to the cards offered to those with poor credit, but these options will give you more financial freedom than you may otherwise have. Most importantly, they will help build or rebuild your credit, so you will soon have access to better options.

About Bill Hardekopf

Bill Hardekopf is the CEO of BillSaver.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
View all posts by bill