Getting approved for a credit card with poor credit can be rather difficult, and you'll often have to deal with unfavorable requirements. But just because you have poor credit rating doesn't mean you should settle for poor terms and conditions when applying for a credit card. The credit cards you'll find compared below are ideal for those with poor credit ratings. They offer a wide range of rewards and incentives and could help you rebuild and strengthen your credit score. We've compiled a list of cards from reputable issuers who specialize in bad credit credit cards, so browse through your best options, compare and contrast these different credit cards, and find the one that's best suited for your needs.
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When you have poor credit, you need a card to improve your score. However, it can be surprisingly difficult to get a card with poor credit. Many issuers have very high requirements for their credit card applicants, and you’ll normally have a hard time getting approved if your score is under 650. If you do get approved, you’ll be hit with high fees, abnormal interest rates, and your card can do you more harm than good. This doesn’t have to be so if you choose the right Bad/ Limited card. Let’s take a look.
How Cards for Bad Credit Work?
If you have a poor score, it’s difficult but not impossible to get a typical card. Your credit score is in most cases the determining factor in being approved for a credit card, but card issuers also look into your income, place of employment, and take into account whether you own your home or rent it.
Regardless, if you aren’t eligible for a typical card, you can opt for bad/ limited offers. They’re designed to help people improve their scores. You do want to be careful in your choice, as many bad credit cards are far from ideal, so make sure you do your research to find the best option for yourself.
If your credit card application’s been rejected, it might not be because of your credit score. The issuer will inform you about why you’ve been rejected, so you can use this information to improve your chances of being accepted next time.
What Can You Expect from a Bad Credit Credit Card?
Bad/ Limited Credit credit cards differ from the typical ones in a few ways.
Primarily, the issuers will have fewer requirements, and there are even a few cards that don’t require you to go through a credit check at all.
Secondly, you can expect to receive less favorable rates and fees. Of course, just because the rates and fees for these cards tend to be higher, they shouldn’t be abnormal, and you should always compare the rates and fees from a few different issuers. This will let you know the average price you’d have to pay for your card, so you’ll be able to make a smarter decision.
Lastly, these cards don’t normally have very valuable rewards and benefits, and some don’t even have them at all. Bad credit credit cards are designed to help you improve your score, so you shouldn’t expect to get much else from them. Once your score has improved, you can upgrade to a more valuable card.
Before you apply for a bad/ limited credit card offer, check with your issuer whether they allow credit card upgrades. It’s in your best interest to go for the issuer who offers card upgrades since you won’t need to close your bad credit credit card account and open a new one (which damages your credit score).
Guaranteed cards will usually have next to no requirements for the applicants, but if you don’t meet those few requirements, your application can still be denied. Since the requirements are so low, you can expect to pay much higher rates and fees and receive much fewer rewards and bonuses, if any.
Secured cards are possibly your best choice. They offer all of the benefits of regular cards, they often come with much more favorable rates and fees, and you’ll often be able to collect reward points, receive a cashback, and more. Their only downside is that you need to make a deposit to get the card, but if you pay all of your card debts and bills on time, the deposit will be returned to you when you cancel the card.
Secured credit cards normally have very low limits. Pay very close attention to how you use the money from these cards, as this can damage your credit score. It’s recommended that you use no more than 30% of your credit card limit. Otherwise, your credit utilization ratio will be too high, and the card won’t help you improve your credit score.
Making Multiple Applications
Whether you’re applying for Bad/ Limited Credit offers or some other type of a card, you should always avoid making multiple applications. When you apply for a new line of credit, such as a credit card, the lender will have to do a full check on you. This leaves a trace on your credit report and temporarily damages your score.
The effect this has on your score fades over time, and your score will go back to normal within a year, although the inquiry will be visible on your report for about 24 months. Multiple applications within a short period of time will have a much stronger effect on your score and will raise red flags to the lenders, telling them you’re desperate for money. This is why it’s recommended that you wait for at least 3 to 6 months between credit applications.
Bad Credit Card Offers Recap List
Frequently Asked Questions
Can I make multiple applications for bad credit cards?
You can make multiple applications for a bad credit credit card, but you shouldn’t. If possible, you should always avoid making multiple applications in a short period of time. When you apply for a card, the issuer will perform a full credit check which will leave a trace on your credit report and damage your score. Too many applications in a short period of time will make it seem like you’re in a bad financial situation and are in a hurry to get some cash. Many issuers won’t like this. The full credit check will temporarily lower your score, but its effect will fade over time. Within a year, your score will return to normal, and the credit check will be visible on your report for about 24 months. You should wait at least 3 to 6 months before applying for new lines of credit.
Do bad credit credit cards have rewards?
Unfortunately, you’ll rarely encounter a bad credit card with many valuable rewards and bonuses, especially if you’re applying for a guaranteed approval card offers. These offers are primarily designed to help you improve your credit score, and rewards and bonuses are few and far between. Secured cards do come with nice rewards, and you can easily get cashback, collect points, and earn shopping rewards. If you’re looking to save money, you might want to apply for a shopping card. These cards are often available to those with poor credit, and they can offer you special deals and discounts, their only drawback is that you can usually only use them in a select few stores.
How can I improve my credit score?
There are a few ways to improve your credit score, and unfortunately, there are no shortcuts. Improving your score takes time and effort. To improve your score, you will first need to pay all of your card bills on time. Being late with your card payments won’t only affect your score, but you will also have to cover the hefty late payment fees that can easily add up. You should also ensure that you have a credit utilization ratio of less than 30% of your credit limit. A low credit utilization ratio shows that you can manage your money well and are a responsible cardholder. If you want to improve your score, you should avoid frequently opening and closing your credit accounts. Closing your accounts increases your credit utilization ratio and lowers your account age. Opening many new accounts will create many hard inquiries on your credit report and damage your score temporarily.
Should I get pre-approved for a bad credit card?
There is usually no need to be pre-approved for a card, as this is only useful if your pre-approval is denied. In the case that your pre-approval is denied, you can know for sure that you are not eligible for a card, and you will not get it if you apply for it. Having your pre-approval denied won’t have an effect on your score. On the other hand, if you are pre-approved for a card, this isn’t a guarantee that you will get the card. Issuers pre-approve you based on a soft credit check, and once you actually apply for the card and they do a full check, you might still get denied.
What rates and fees can I expect from a card for Bad Credit?
Bad Credit credit cards normally have higher rates and fees than typical cards that are designed for those with good or excellent scores. However, the rates and fees shouldn’t be extremely high, and if you encounter a card for bad or limited credit that has an interest rate higher than 30%, for example, you should avoid applying for this card. Some of the common fees that you can encounter with such cards include annual fees, cash advance fees, up to 30% interest rates, and more. However, even though these cards have an abundance of fees, you should avoid those cards that charge processing fees to open the card and those with monthly or sliding annual fees.
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