Can I Get a Credit Card with Bad Credit?
Have you recently been denied for a credit card due to bad credit? Unsure of how it’s gotten to that point? If you’re suffering with bad credit, you’re one of many Americans. This article will describe how bad credit is determined and how to get approved for a credit card despite a low credit score.
What is Bad Credit?
Where does bad credit fall with your credit score? According to PrivacyGuard.com, average/fair credit scores begin around 620 and improve with any number higher than that. This means that any number around 600–620 can be considered “bad.”
What Causes Bad Credit?
Bad credit is mainly determined if you have a troubling history with credit. If you open a credit card, you don’t just automatically get bad credit and work your way up from that. Bad credit occurs when you haven’t paid your past credit obligations on time or paid them at all (TheBalance.com).
When you skip or are late paying credit card bills, companies inform credit bureaus of this and affects your credit score. Another negative effect on your credit score is if your account has filed for bankruptcy or been sent to a collection agency. If all of these factors have occurred in a short period of time, then your credit score will significantly drop.
Kinds of Credit Cards for Bad Credit Score
Did you know that you could still get a credit card if you have a bad credit score? There are two main kinds of credit cards for bad credit: 1) Unsecured cards with no deposit required; and 2) Secured cards with approval upon deposit.
If you can guess, the main difference between the two cards is a deposit requirement. An unsecured card doesn’t require a security deposit and is a true line of credit from the card issuer (CardRates.com). Since they don’t require a security deposit, they typically come with high fees and a high interest rate: these are implemented to make sure you pay your credit card bill off and on time.
If you prefer to avoid high interest rates and fees, you can get a secured card instead. But the drawback from a secured card is the required security deposit, which usually is the amount of credit that has been extended to you (CardRates.com). If you maintain your credit card and pay your bills on time, the security deposit is fully refundable. Not only this, secured cards usually have less processing fees and might even earn a little interest.