Your credit score may be languishing at the bottom of the range, but there are still plenty of ways to put some plastic in your wallet.
Credit cards for people with poor credit target those with scores below 630, so before you apply check your credit score and make sure you’re looking at the right credit card offers. If your score is higher than you thought, there’s a whole separate category of cards for people with fair credit, or average credit.
Most credit cards for bad-credit applicants are secured cards, which means they require a deposit. That’s an upfront payment that the card issuer can keep if you default on the card.
Although it’s possible to find an unsecured credit card for people with poor credit, you’re likely to be exploited by high annual fees and interest rates. Sticking with a secured credit card is probably your best bet.
In many cases, the deposit is equal to your credit limit. But don’t confuse secured cards with prepaid debit cards, which work almost the same way but don’t build your credit score.
Look for the right secured card
Figure out how much of a deposit you can afford to pay, and then look for a secured card that matches that amount. Some secured cards give you a credit limit that’s higher than your deposit amount, but weigh that against annual fees to make sure it’s worth it.
If you can, find a card with an annual fee below $100. That’s not an unusual fee level for a credit card of any type, although if your credit is better you can expect to get a good deal on a rewards credit card for that kind of fee.
Use a bad credit credit card comparison tool that lets you look at a lot of different offers at once, and choose one or two with good terms that suit your needs. If you’re pretty sure you won’t carry a balance, the interest rates are not an important factor so you should focus on looking for the lowest fees.
Don’t apply for too many cards
You want to avoid applying for a lot of different cards because that can lower your credit score. If you’ve applied for one or two cards and haven’t gotten approved, take a step back. Talk to your bank or credit union. Because you already have a relationship with it, it may be more willing to approve you for a card.
But as long as you stick to a credit card that’s specifically designed for someone in your situation, you probably won’t have a hard time getting approved. So go for it. Apply for a credit card, and once you have a year or so of on-time payments under your belt, check your score again and see whether you’re ready to progress to an unsecured credit card for people with fair credit.
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