Life can throw everyone an unexpected challenge from time to time. Sometimes those challenges lead to bad credit scores. So, does that mean that everyone with a score under 650 should resign themselves to forever paying cash for everything? Of course not.
Getting a credit card, using it responsibly, and establishing a solid payment history is one of the fastest ways to rebuild your credit. Rebuilding your creditworthiness is crucial because your credit score is used for far more than credit card approvals. Not working on your credit score can make it more difficult to rent an apartment, buy a house, and can even affect the types of jobs you are eligible for.
What Kinds of Cards Are Available for Bad Credit
While the specific score you have can impact what options you have, there are cards available for nearly every credit score.
Secured Cards
These cards are a temporary tool that helps you rebuild your credit. They don’t offer you any “perks,” but they are intentionally easy to get. Approval is not entirely guaranteed, and you do need to have verifiable income. Just be honest about your credit history, and the odds will be highly in your favor.
Why are they so easy to get? Because you have to put down a deposit before you can use it. This deposit protects the credit card company if something causes you to stop making your payments. Some companies ask for larger deposits than others, which can be intimidating. Many will let you split up your deposit over a month or two, making it is easier to afford.
Unsecured Cards
More traditional credit cards are “unsecured,” which just means that no deposit is necessary for the credit line. These unsecured cards are slightly harder to get approval for because there is more risk involved for the credit card company.
These unsecured credit cards often have much higher than typical interest rates (as much as 25% or higher). High interest doesn’t have to be a problem, though, so long as you pay the entire balance each month.
They also have one other major disadvantage. Most of these do charge some sort of annual fee. Depending on the card, that fee could be considerable, and over time you end up paying as much (or more) than the deposit on a secured card.
When to Consider a Card for Bad Credit
How do you know you need one of these cards? Take a look at your credit report before applying for any new credit. Many companies view any score below 670 as “bad credit.” If your score falls in the “fair” range (above 580), you will have few more options. No matter what your score is, you should be able to find something.
Use your credit report to see precisely what is on it, and take the time to make sure all of the information is accurate. Taking care of anything that shouldn’t be there will help you get the best card possible.
Credit cards for bad credit serve a beneficial role in the economy. Used wisely, they can help anyone fix their credit.
