How to Choose a Credit Card to Help With Bad Credit

Credit Cards
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3
 Min read
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April 27, 2022

How to Choose a Credit Card to Help with Bad Credit

Credit problems can happen for many different reasons, from medical problems, to job loss, to divorce, to simply forgetting to make a payment. If you’ve never established a credit history at all, you’re seen as a high credit risk to potential lenders. If you have bad credit or no credit, you may be looking for information on how to choose a credit card to help with bad credit.

Secured Credit Cards

The best place to start if you’re building or rebuilding your credit is with a secured credit card. To get this type of card, you’ll need to make a deposit that represents the amount of your credit line and will be held as security. Since the lender has a deposit to protect them against loss, it’s not risky for them to extend a credit line allowing you to borrow against your own money. By doing this, you can start to establish a history of making on-time payments. After you’ve made on-time payments for several months, the creditor may be willing to change your secured credit card into an unsecured credit card.

Retail Stores

Being approved for a retail store credit card is often easier than getting approved for any other unsecured card, so you may be able to obtain this type of card even if you have bad credit. Typically, the card can only be used at that one store, and the interest rate being charged may be high. Despite these drawbacks, a retail store card is another way to make on-time payments on purchases in order to improve your credit score.

Credit Cards for Bad Credit Customers

Some credit card companies target people who have bad credit with credit card products geared specifically to people in that category. You may be able to get approved for one of these cards but the interest rate being charged may be very high, and there may also be an annual fee. When you’re choosing a credit card to build or rebuild your credit, try to find a card without an annual fee if possible, and make sure the creditor reports to the credit bureau. Plan to use this card only on a short-term basis until your credit starts to improve. Keep your balance low, make all payments on time and pay back the balance in full as soon as you can.

Check Your Credit Report

Before applying for a new credit card, find out your credit score and what’s on your credit reports. If there is any misinformation on one of your credit reports, it may be even more difficult to be approved for a new credit card account. Look for accounts that are being reported as open if you’ve paid them off, or late payments being reported that aren’t accurate. Make sure there are not any accounts listed that you don’t recognize.

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