How to Apply for a Credit Card with Bad Credit

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Finding a way to apply for a credit card with bad credit has become quite the popular financial puzzle over the last few years.

Whether you need to repair your credit score, start building it from scratch or need one for other reasons, credit cards have become a must in certain financial situations.

Bad credit reports often have a negative influence on whether or not you’ll get approved for a new credit card, but shopping around can help you find some great options you can look into.

There are a few steps you can take in order to get approved for a credit card even if you have a poor credit history.

STEP #1 – How bad is your credit score?

As already discussed here, credit scores range from bad to excellent. So, the first thing you need to do is know what your credit score is.

Request your free credit report at annualcreditreport.com and know where you stand.

STEP #2 – Try applying for an unsecured credit card

When applying for a new credit card, the lower the fees, the better.

Unsecured credit cards have the advantage of having lower fees, when compared to secured ones. However, if your credit score is bad, you could risk ‘staining’ your credit report even further if you get rejected.

What you could do is find credit card companies that offer pre-qualification options. See if you pre-qualify for a credit card with bad credit, no strings attached!

The downside though is that, even if you’re pre-approved, it’s not a guarantee that you’ll be approved ‘for real’. Credit card companies use pre-qualification tools to minimize rejections, but when it comes to approving your real application for a credit card, bad credit could have a negative impact after all.

STEP #3 – Get someone with good credit score to co-sign

If you can’t get approved for an unsecured credit card on your own, find someone with a good or excellent credit score to co-sign.

A reliable co-signer is a big help. They can help you get approved a lot faster because they can guarantee the credit card balance will be paid for.

However, there are 2 major downsides to having someone to co-sign.

  • First, it’s going to be very difficult to find someone to co-sign for a credit card. Doing so implies that they are equally responsible for your possible financial mistakes.
  • Second, this still won’t guarantee you’ll get approved.

STEP #4 – Apply for a secured credit card

If your credit report is keeping you from getting approved for an unsecured credit card, then try the next best thing: apply for a secured credit card.

Secured credit cards are great financial tools for anyone who has bad credit. You’ll need to make a deposit first, to prove to the credit card company you’re good for the money.

Pay your balance in full each month and start improving your credit score. You could get updates on your credit score after a few short months and see if you’re making good progress.

STEP #5 – Become an authorized user

If your credit report is really that bad, and nothing works, try becoming an authorized user.

Becoming an authorized user is not the same as having someone co-sign for a credit card. You would be able to spend money from the same account as the primary account holder, but without being responsible for paying it back.

Becoming an authorized user has it’s pros and cons though.

  • You will have your name on a credit card, but it won’t be yours.
  • Your credit score will improve, but a lot slower than it would if you were the primary account holder.
  • You won’t have any direct financial responsibility to worry about, but you risk damaging friendly relationships.

Having bad credit doesn’t necessarily mean you won’t get approved for a brand new credit card.

There will be obstacles, of course, but with a little patience, you’ll get your second chance.

What’s important to remember is that financial mistakes are costly. Getting approved for a credit card with bad credit is not an easy process.

Have you ever been in need of a credit card but your credit rating was low? What helped you get approved?

2 COMMENTS

  1. Very interesting article. I don’t know if it’s the same in the US, but here in the UK the credit cards you can get with bad credit have enormous interest rates. While they’re good to get your credit rating back up, it’s best to pay them off each month so you don’t have to pay that high interest.

    • Interest rates are a common problem everywhere, I assume. You’d have to do a lot of shopping around to compare enough rates and find something convenient.

      Paying them off in time is also a smart move, not only for the high interest rate, but also to ‘prove’ you’re financially responsible, especially if your credit score is (currently) bad.

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