Getting Credit Cards When You're Starting Out with Bad Credit

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Getting Credit Cards When You're Starting Out with Bad Credit

We all know people with a credit score below 500 who need to borrow have few good options if any when it comes to getting credit cards. This is because the credit card companies look at a person’s credit report and score to determine risk when loaning money. Charging purchases on a credit card is considered an unsecured loan, so the card issuers use a person’s credit when considering issuing a new credit card or increasing a current card holder’s credit limit. If a person’s credit score is low, lenders consider it a higher risk because statistics show they may not receive payment back for credit extended.

This makes it increasingly difficult for people with bad credit to get even a single credit card if their credit score is low. That being said, there is good news on two fronts. It is not entirely impossible for people with low or bad credit to obtain a credit card right away, and it is very possible to fix a person’s credit improving their chances of getting a card moving forward. This makes a profound difference. People are much more likely to be approved for credit cards a few months down the road, even if they’ve had bad credit previously.

So here are some ways you can get a credit card if you’ve had bad credit.

Know Your Credit Score and What's on Your Report

It’s critical to know exactly what’s on your credit report when trying to get a credit card. Many people already know that they have bad credit. Often they have applied for a car loan, home loan, credit card, or other financial services and have been turned down or offered astronomical interest rates and fees. However there are those as well, who have not previously applied for credit, loans, or financial services who truly have no idea exactly where their credit score sits, and even what wrong information may be on their report hurting them in their quest to get credit card accounts.

Know Your Credit Score & Report Information
How Do I Get My Credit Report?

These days people can acquire free credit reports rather easily that tell them their credit score and what is on their credit report. There are many websites out there that do this with varying levels of hassle. Be aware that many of these websites offer free credit scores as a hook to unsuspecting people who get pulled into or automatically enrolled in some type of paid credit monitoring service that may or may not be effective or helpful.

On the flip side, people can buy a full credit report with their credit score and generally all other pertinent information from either a private company or directly with any of the major credit bureaus. Additionally, many people don’t know they can get their credit score mailed to them after being declined for credit. If a person’s credit score is the cause for being turned down for a credit or loan application, they have the legal right to be notified and informed specifically why they were denied.

So How Should You Proceed Once You Know More About Your Credit?

Please understand that your credit score is only a general number that really needs to be backed up by the information on your report to truly understand the current state of your credit. If you’re concerned about the information and specific details most affecting your credit score and stopping you from getting credit cards, then you should pursue obtaining a full credit report with all of the major credit reporting bureaus. You may also want to speak to a qualified and experienced credit repair or credit counseling agency.

Avoid Applying for Credit Cards

Especially for Cards That Require High Credit Scores

In the beginning when you’re first trying to improve your credit, you may not want to even apply for a new credit card at all. This gives you time to bring your score up and hopefully get better card offers. More importantly, if you do need a card right away, don’t waste time on credit cards specially created for people who already have great credit. This could hurt you and even lower your score further. Many people don’t know that applying for things like credit cards or loans that require “hard inquiries” to your credit report will further lower your score making it even harder to get approved.

Don't Make the Same Credit Mistakes. Unsafe Credit Card Risk.

You may ask, “How do I know if a credit card offer is intended for those with good credit?” In most cases, you can tell if a credit card is intended for those with good credit by all of the perks being offered. Credit cards with promotional 0% interest rates, low APRs, and excellent rewards or reward points are almost universally aimed at borrowers with very high or better than average credit. Therefore it’s not surprising that people with bad credit are usually rejected for cards with these types of perks.

Should I Look For Low Credit, Secured Starter Cards?

Secured credit cards can be a good start for people in a pinch with bad or low credit who want or need credit cards. However these cards do not really do much if anything to restore or improve your credit if it’s in the tank. It once helped in times past, but really does not hold true today as times and credit review criteria have changed.

These cards can get people out of a pinch as we just mentioned, but many don’t like them as they require a security deposit in order to obtain a line of credit. This turns a lot of people off. Keep in mind a secured credit card used correctly can help you purchase things when cash is not an option, expenses are more than you have on hand, or you have to buy something online which is the norm more and more.

You’ll have to stay accountable, make timely payments, and never miss payments. If you play your cards right, any security deposits on secured cards can be returned to you. Sometimes secured credit cards can be converted to unsecured accounts after a year or so of good payment history. As you continue to build and/or repair your credit, you’ll be offered better credit cards over time.

Look for Credit Cards from Retail Stores

You can also look into getting cards from retail stores, as they have a reputation for offering cards to and approving borrowers with low or poor credit. And the great thing about it is they most often don’t require a security deposit. Applicants have a higher likelihood of being accepted for a store card that can only be used at a particular retail store, instead of a credit card offered by a bank or financial institution with the popular MasterCard or Visa branding. Just take note that these retail credit cards usually come with high-interest rates and low credit limits, so you’ll want to be sure to not charge a lot to them and pay your bills on time. If at all possible, be sure to pay your balance in full every month and only charge a small amounts.

Retail Credit Cards & Online Shopping

Should I Become An Authorized User on Someone Else's Account?

In the past, it was once a smart way for those with poor credit to acquire a credit card by becoming an authorized user on someone else’s credit card account. If you’re not familiar with what an authorized user on a credit account is, it simply means you have the authority to use the credit card of a family member or friend to charge or pay for expenses. The good thing about this is you do not need to apply for this status using your own credit history.

This used to be a bigger factor in credit worthiness than it is today, and as such it does not bring nearly the benefit it once did. The main benefit of this in the past was becoming an authorized user on someone’s account who had good credit showed up and reflected positively on your credit report history.

The downside as always is, even if it did still work to boost your credit, not everyone has this option available to them. This is because it usually requires a close family member and a very strong level of trust between those involved. Obviously not everyone has this type of support available to them when trying to obtain credit. Sometimes family members also have bad credit, or a family member trying to obtain credit is not mature or trustworthy enough yet.

Again, if you need credit in a pinch and can get someone to vouch for you and add you to their account, it could really help you in tough financial times. Just don’t expect a boost to your credit score. The person adding you as an authorized user simply needs to contact the bank to add you to their account. You will again want to be accountable and respectful to the main credit card holder and keep credit charges low so that the bills are paid on time and you don’t ruin their credit.

Will Trying to Obtain Credit Cards Ultimately Help Me?

It depends on your situation. If you want to build your credit, credit cards can be a good tool to do so. If your credit is very poor right now, it may not be an immediate option however. If you can get approved for at least one credit card right away, it can have the added benefits of letting you earn rewards, making purchases without cash, or enabling you to shop online. Remember, if you have less than outstanding credit, getting a favorable credit card can be difficult. Thankfully, there are some relatively easy steps you can take to successfully get a credit card, especially if you’re ready to start the credit repair process. Once you get a card or two, always see to it that you make the payments and any interest charges on time. Then continue to practice good credit habits to establish and fix your credit.

Just remember improving your credit takes time and expertise, especially when you don’t know what the real problems are or how to fix them correctly in the most timely manner. Consider tapping into the expertise of reputable credit repair and counseling professionals. This will in most cases bring the best improvement possible in the shortest amount of time. When you are well advised, you will also be much less likely to have further problems on your credit due your own actions or the actions of others down the road.

Learn and Don't Repeat the Same Mistakes

Many people have poor credit due to inexperience, repeating the same mistakes, and a lack of time to really research & understand how credit works. Most people just don’t know all of the many details that really affect their credit score and overall report. A large majority simply don’t know how to do DIY credit repair, or just won’t do the necessary work to improve their credit. It can be time consuming and requires specific knowledge and techniques. Many honestly do not have the discipline it takes boost and keep their credit high so they can improve their credit to obtain quality credit cards and lines of credit.

You Can Reap the Rewards of Better Credit & Credit Cards

Whether you work on your credit score to obtain credit cards on your own, or you seek the advice of an experienced professional, don’t give up. It can serve to pay large dividends in your financial future. Saving you more of your hard earned money on loan rates, increasing your buying & investing power, and increasing overall financial freedom are all valued benefits of increasing your credit.

Woman with Bad Credit Getting Card
Woman with Bad Credit Getting Card

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