Getting Credit Cards With Bad Credit
Getting a new credit card with bad credit can be extremely difficult, but not always impossible. There are different types of credit card offers out there for different types of “bad credit,” or poor credit.
First, you need to ask yourself why you want a new credit card. A lot of times your answer will be the reason you should not attempt to get a new/another credit card. Debt can be stressful, but credit cards are almost never the answer to debt. Unless you’re simply having a bad month or two, new credit cards will only cause more debt and more stress down the road.
With credit cards there is no such thing as temporary if you don’t have the money, or a real, solid plan to pay back that debt quickly. Is it really worth paying extra (APR) for that credit card?
I understand that there are a lot of legitimate reasons that you may need to get a new credit card, but you need to be mentally prepared for the bills that will come along with it. Credit can be a nasty habit for some people and they always regret it down the line when they try to take advantage of the system and fail to do the right thing (ie, paying bills on time).
With that being said, let’s take a look at some situations and credit cards that may be of some use.
Health issues always arise when we least expect it. It’s difficult for most people to come up with money for the Dental work that needs to be done immediately, so this could be a good case for a credit card.
In this case, you may be interested in checking out CareCredit for those types of incidents. This is a card that you may be approved for, although you can only use it for health care. This isn’t an actual credit card for any type of purchases, it’s strictly for health care!
Can you get approved? This depends. CreditKarma suggests that you have less than a 13% chance (or much lower) when your score is under 600, or a 23-32% chance when your credit is between 600-700. So it can be a bit risky when you apply for the card, but it may be worth it for some people.
There are plenty of situations that pop up that require emergency cash/credit. As mentioned above, health care can be one of those situations. But what if you take a trip out of town and lose your cash, run out of gas or are required to have a credit card? There’s plenty of people who have run into similar situations.
Depending on your credit you could go 2 routes: apply for an unsecured credit line, such as a Discover card, or simply setup a secured credit card with Capital One or your local Credit Union.
I highly suggest that you start with a Capital One secured credit card if you have poor credit, as it may be too difficult to get approved for a Discover Card.
Why Discover? I have noticed a trend with people that have lower credit scores (below 700) that are approved for this card. However, I do not know the specifics of the approval process, so please note that I am only suggesting to apply for this card if your score is higher than 680. This doesn’t necessarily mean that you’ll be approved, but it definitely increases your chances.
A Secured Credit Card requires you to put money up front that you will be using as credit. So, for example, let’s say that you setup a $500 Secured line of credit. This card now has $500 worth of credit that is actually your money. This may not sound ideal for most people, but this is a great way to not only increase your creditworthiness, but it also gives you a real credit card that you can present if needed.
In any case, just be sure to keep your credit utilization below 20% so that your score doesn’t sink too low. Make all payments on time each month, every month, and you’ll notice that your score will increase over time. With secured cards you will be allowed to add more money on the card. This may sound odd, but it actually helps your score as it appears that you have a larger ‘credit line’.
If you’re just starting out with credit this could be a great way to build your profile. In fact, you could even get 2 cards (local credit union and Capital One) so that you can diversify your credit history and card type (MasterCard and Visa) for various reasons. The biggest reason is that having multiple cards will improve your creditworthiness, showing that more creditors trust you enough to give you credit. While this may not necessarily be true with secured cards, it doesn’t show that these cards are ‘secured’ on your credit report.
Credit Cards are not easy to get, especially if you have poor credit. Unfortunately, many people think they need credit cards for the wrong reasons. Unless you have the cash to pay for the purchase you shouldn’t be putting it on credit, as it will come back to bite you down the road.
Having credit cards can be useful for emergency situations, or even just to rent cars, motel rooms, etc. There’s an easy way to get a card, even with terrible credit. Secured Credit Cards allow you to use credit against your own cash that you put onto the card (hence “secured”). This helps you build up your credit profile as well as the ability to show a legitimate credit card if needed.
Always pay your bills each month and your credit profile will improve. If you keep your card utilization below 20% you will also see an improvement in your score. However, if your utilization is too high you will notice that your score will take quite a hit. Be smart and you should see a drastic improvement over time.