Understanding bad credit
Having bad credit can make it challenging to obtain a credit card in the United States. However, it’s not impossible to get one. There are several ways to improve your chances of getting approved for a credit card, even with bad credit. In this article, we’ll explore those ways and provide you with tips on how to get a credit card in the United States with bad credit.
Firstly, it’s essential to understand what bad credit means. Bad credit is a term used to describe a low credit score resulting from late payments, high debt utilization, or defaulted loans. A credit score below 580 is considered bad credit. Lenders view people with bad credit as high-risk borrowers, and getting approved for a credit card can be difficult.
Options for obtaining a credit card with bad credit
One option for obtaining a credit card with bad credit is a secured credit card. A secured credit card requires a security deposit, which acts as collateral for the credit limit. The deposit can range from $200 to $2,000, depending on the lender’s requirements. Secured credit cards are an excellent option for people with bad credit because they report to credit bureaus, which can help improve your credit score over time.
Another option is a credit builder loan. A credit builder loan is a loan that is designed to help improve your credit score. Instead of receiving the funds upfront, the lender deposits the loan amount into a savings account. You make monthly payments on the loan, and once it’s paid off, you receive the funds. Credit builder loans are an excellent option for people with bad credit because they report to credit bureaus and can help improve your credit score.
You can also consider becoming an authorized user on someone else’s credit card. Being an authorized user means that you can use someone else’s credit card, and their payment history is reported on your credit report. This can help improve your credit score over time, but you need to ensure that the primary cardholder makes timely payments.
Finally, you can apply for a credit card specifically designed for people with bad credit. These credit cards have higher interest rates and lower credit limits, but they can be a good option to rebuild your credit score. Some credit cards designed for people with bad credit are:
- Capital One Secured Mastercard
- Discover it Secured Credit Card
- Credit One Bank Platinum Visa
Other tips to improve your chances of getting approved for a credit card with bad credit
To improve your chances of getting approved for a credit card, you need to take steps to improve your credit score. You can do this by paying your bills on time, reducing your debt utilization, and disputing any errors on your credit report.
In conclusion, getting a credit card with bad credit in the United States is challenging, but it’s not impossible. You can consider a secured credit card, credit builder loan, becoming an authorized user, or applying for a credit card designed for people with bad credit. To improve your chances of getting approved, you need to take steps to improve your credit score. By following these tips, you can rebuild your credit score and get approved for a credit card.
Table: Credit Cards for People with Bad Credit
| Credit Card | Annual Fee | Minimum Deposit | Interest Rate |
|---|---|---|---|
| Capital One Secured | $0 | $49, $99, $200 | 26.99% |
| Discover it Secured | $0 | $200 | 22.99% |
| Credit One Bank Platinum | $0-$99 | N/A | 17.99%-23.99% |
It’s important to note that even with a credit card designed for people with bad credit, you should use it responsibly. Making on-time payments and keeping your credit utilization low can help improve your credit score over time.
In addition to the options mentioned above, there are a few other things you can do to improve your chances of getting approved for a credit card with bad credit. One is to check your credit report and dispute any errors you find. Mistakes on your credit report can negatively impact your credit score, so it’s important to fix them as soon as possible. You can obtain a free copy of your credit report from each of the three major credit bureaus once a year by visiting annualcreditreport.com.
Another thing you can do is to ask a family member or friend with good credit to co-sign on a credit card application. A co-signer is someone who agrees to be responsible for the debt if the primary borrower is unable to make payments. Having a co-signer can improve your chances of getting approved for a credit card and may even result in a higher credit limit.
In conclusion, getting a credit card with bad credit in the United States is challenging, but there are several options available to you. Consider a secured credit card, credit builder loan, becoming an authorized user, or applying for a credit card designed for people with bad credit. To improve your chances of getting approved, take steps to improve your credit score by paying your bills on time, reducing your debt utilization, and disputing any errors on your credit report. Remember to use your credit card responsibly and make on-time payments to improve your credit score over time.
FAQs:
Here are some frequently asked questions about getting a credit card with bad credit in the United States:
Can I get a credit card with bad credit?
Yes, there are options available for people with bad credit, such as secured credit cards or credit cards designed for people with bad credit.
What is a secured credit card?
A secured credit card is a type of credit card that requires a security deposit, usually equal to the credit limit. It is designed for people with bad credit or no credit history.
Can becoming an authorized user help me get a credit card with bad credit?
Yes, becoming an authorized user on someone else’s credit card can help you build credit and improve your chances of getting approved for a credit card with bad credit.
How can I improve my chances of getting approved for a credit card with bad credit?
You can improve your chances by checking your credit report for errors and disputing them, reducing your debt utilization, and making on-time payments on your bills and credit cards.
Will getting a credit card with bad credit negatively impact my credit score?
Applying for a credit card may result in a hard inquiry on your credit report, which can temporarily lower your credit score. However, using a credit card responsibly and making on-time payments can improve your credit score over time.
What are some things to look for when choosing a credit card for bad credit?
Look for credit cards with low fees, reasonable interest rates, and that report to the major credit bureaus. Avoid cards with high fees or interest rates that are not competitive with other options available to you.