Can You Get a Credit Card If You Have Bad Credit?

People with bad credit have options to acquire a credit card.

Getting a credit card with bad credit can be difficult, but it is possible. There are a number of specialized credit card products that people with bad credit can get. Those with bad credit who still want a credit card should understand the advantages and disadvantages of the credit cards available to them.

Traditional Credit Card

To qualify for a traditional credit card, consumers need to have a credit score of about 600. Even at 600, consumers may have difficultly getting a card. There are a number of websites that consumers can use to identify credit card companies that accept applicants with low credit scores. Smaller local banks and credit unions may allow established clients with bad credit to obtain a credit card. Some store credit cards are easier to qualify for as well. Traditional credit cards usually have lower fees and lower interest rates than other types of credit cards, but those with poor credit will pay higher rates.

Secured Credit Card

A secured credit card works just like a traditional credit card, except that the consumer must place a deposit when opening the account. The amount of the deposit then becomes the consumer's credit limit. The credit card issuer reports the activity on the account to the credit reporting agencies. With responsible use, a secured credit card can help consumers to improve their credit score, and the card issuer may convert the secured credit card into a traditional credit card.

Cosigned Credit Card

A co-signed credit card is a credit card that has two names on the account. It is similar to using a co-signer to get a car loan. In the case of a co-signed credit card, both parties are fully responsible for any debt incurred. Typically, these cards report the account activity for both people to the credit reporting agencies. These cards are useful for a person who needs to build or rebuild credit. Interest rates and expenses for these cards are generally less than those of a secured credit card.

Considerations

Before applying for a credit card, consumers should request a copy of their credit report from one or more of the three major credit reporting agencies (Experian, Trans Union and Equifax). Consumers can then identity inaccurate information that can be corrected to improve their credit score. Consumers should avoid applying for multiple credit cards at one time. Credit card issuers will pull a copy of the consumer's credit report when receiving an application. Multiple inquiries by different companies may reduce the consumer's credit score.

References

• Bankrate.com: 10 Questions Before Getting Secured Credit Cards; Pat Curry; August 23, 1999
• NOLO: Getting a Credit Card When You Have Bad Credit
• Bankrate.com: Bad Credit Doesn't Mean No Credit; April 1, 2005