What to look for in a credit card for bad credit
The most important thing to look for in a credit card for bad credit is its fees, but you should also check its APR, its minimum and maximum security deposits, and what kind of credit limit you can expect. Here’s an explanation of each item.
Most credit cards have fees, but what you don’t want are unavoidable fees. Fees for cash advances or balance transfers shouldn’t scare you off from a specific credit card — you can easily avoid both by not making those types of transactions.
Fees that should make you think twice are annual fees, monthly maintenance fees, and any other regular fees the card issuer charges no matter what. These are expenses you don’t need, especially from a card that probably doesn’t have many benefits.
Ideally, you’ll pay your full statement balance and never incur interest charges. But it’s also nice to have a credit card that won’t gouge you in interest if you ever need to carry a balance. You can calculate your interest payments by using this calculator.
Minimum/maximum security deposit
With secured credit cards, you should check what the minimum and maximum security deposit amounts are. The one that’s more important for you depends on how much you have saved for a security deposit.
If you don’t have much saved, you’ll need to ensure you can pay a card’s minimum deposit amount. If you have solid savings and you’d like to pay more up front for a higher credit limit, then you’ll need a card that allows a high maximum deposit.
If possible, you should research the credit limits a card offers. This information is usually available with secured credit cards, but you can sometimes get it for an unsecured card as well.
You don’t need a ton of available credit. But if your credit limit is too low, it can be difficult to maintain a low credit utilization ratio, and that can affect your credit score.
Not all credit cards for bad credit offer rewards, but some do. As you consider your options, you may want to prioritize cards that offer rewards because they can provide value to you.
You can expect to earn anywhere from 1% to 3% cash back for most credit cards for bad credit with rewards potential. It’s worth noting that cards that offer higher rewards rates may have a cap on how much you can earn. You may be able to earn unlimited rewards at a lower earning rate. Remember, some cards for bad credit offer no rewards at all.
How to get a credit card with bad credit
If you want to get a credit card with bad credit, your best bet is to see if you can get prequalified for a card. That way, you can make sure you will be eligible for a card without hurting your credit score with a credit check, only to find that you don’t qualify.
While it depends on the card issuer, most of the major credit card companies have prequalification pages on their websites that let you check offers you’ll likely be approved for.
To find out if you prequalify, you’ll just need to enter some basic personal information. Most card issuers ask for at least some of the following:
- Full name
- Date of birth
- Last four digits of your Social Security number
Once you’ve submitted the required information, you’ll see any cards that you have a good chance of qualifying for with that card issuer. Remember that this doesn’t guarantee your application will be approved.
If you’re not able to get prequalified for a credit card for bad credit, it’s a good idea to take some time to work on improving your credit. Ready to get started? Here’s how to apply for a credit card and get approved.
How to improve your credit
You can improve your credit score with time and effort. Remember that there is no instant fix. You can’t build credit quickly, but you can build it up over time. In order to do this, you need to understand the elements that make up your credit score. Working on each of these can allow you to improve your credit and increase your credit score.
Here are the five factors used to calculate your FICO® Score and how you can get high marks in each one:
- Payment history (35%): On-time payments are the key to excellent credit. While you can’t undo previous late payments on your credit file, you can avoid late payments in the future. That’s the number one habit you need to raise your credit score.
- Credit utilization (30%): Your credit utilization is the sum of your credit balances divided by your combined credit limit. For example, if you have one credit card with a balance of $200 and a limit of $500, then your credit utilization is 40%. The lower you can keep this number, the better. A good goal is to always have your credit utilization below 30%. If yours is higher, then you should focus on paying off debt.
- Length of credit history (15%): Creditors will obviously consider a borrower who has had a credit card for 20 years to be less risky than one who has only been using credit for three months. The best way to improve in this area is to open a no-annual-fee card and keep it open forever.
- Credit mix (10%): It gives you a slight credit score advantage if you have both revolving credit, such as credit cards, and an installment loan on your credit file, instead of just one of the two. But since this has only a small impact on your credit score, you shouldn’t take out a loan solely to boost your credit. You can attain an excellent credit score even if you only use credit cards.
- New credit inquiries (10%): When a company looks at your credit report to make a credit decision, this inquiry is reported on your credit report for two years. Credit inquiries only affect your FICO® Score for one year, though. Don’t avoid opening a new account just because of the small impact to your credit score, but don’t open a bunch of accounts in quick succession, either.
Can I get a credit card without a bank account?
Having a bank account is not a requirement when applying for a credit card. However, application requirements can vary by credit card company, so you may need a bank account to get approved for certain cards.
Even though a bank account isn’t required to get a credit card, it does make your credit card payments more convenient. Just about every credit card company lets you pay online if you have a bank account. You can make an online payment that counts toward your bill that same day, so you don’t need to worry about making a payment days in advance. Another option is to set up autopay.
If you don’t have a bank account, you’ll need to find an alternate payment method. There are other options available. For example, you could pay by mail using a money order, or you could pay in cash if your credit card company has a branch in your area. But there’s nothing as convenient as paying online. To simplify your payments and better protect your savings, it makes sense to open a bank account.
What is the easiest credit card to get with bad credit?
The easiest credit card to get when you have bad credit is a card that is marketed towards people with bad credit. These cards have less strict requirements in place for applicants. You’ll be more likely to get approved for a credit card for bad credit if you have a lower credit score, poor credit history, or limited credit.
Some bad credit cards have easier approval odds than others. Here is one option:
OpenSky® Secured Visa® Credit Card: While this is a secured credit card and will require you to make a deposit before using it, this card has a low annual fee and is a good choice for people who are rebuilding their credit or who have very limited credit. There is no credit check requirement when going through the application process — making it a good option for many.
If you’ve unsuccessfully tried to get other secured cards with no annual fee or any other credit card for bad credit, this one may be an easier and better option for you to consider.