How to Get a Credit Card With Bad Credit – And Use It to Boost Your Score

In today’s world, having a good credit score is essential for many financial transactions, such as getting a loan, renting an apartment, or even securing a job. However, if you find yourself with bad credit, it may feel like an uphill battle to improve your score. 

Don’t worry! There are plenty of actionable steps you can take to slowly increase your score. And in the meantime, there are a few ways to manage your finances while you work on boosting your credit.

What Is A Credit Score?

Before we delve into the steps, let’s first understand what a credit score is and how it impacts your financial life. 

Your credit score is a three-digit number that reflects your creditworthiness. Lenders use this score to assess the risk of lending you money. The higher your credit score, the better your chances of obtaining credit at favorable terms.

Credit Score Ranges

Credit scores typically fall into different ranges: Bad, Fair, Good, and Excellent. While specific ranges may vary among credit bureaus, a general guideline is as follows:

• Bad Credit: 300-579
• Fair Credit: 580-669
• Good Credit: 670-739
• Excellent Credit: 740-850

The Relationship Between Credit Score and Credit Card Approval

When it comes to getting a credit card with bad credit, it can be challenging, but not impossible. Credit card issuers often consider credit scores when reviewing applications. While a low credit score may make it harder to get approved, there are still options available.

Your credit score plays a significant role in the approval process when applying for a credit card. Lenders and credit card issuers use your credit score as a measure of your creditworthiness and risk. It helps them assess the likelihood of you repaying your debts on time based on your past credit behavior.

Here’s a closer look at how credit scores impact the likelihood of getting approved for a credit card:

• Higher Approval Odds with Good Credit: Individuals with higher credit scores generally have an easier time getting approved for credit cards. Lenders view good credit scores as an indication of responsible financial behavior and a lower risk of defaulting on payments. With a good credit score, you’ll have access to a wider range of credit cards, often with better terms, lower interest rates, and more favorable rewards programs.
  
• Limited Options with Bad Credit: If you have bad credit, it can be more challenging to get approved for a credit card. Lenders may see your low credit score as a warning sign of potential repayment issues. As a result, you may have limited options, especially when it comes to unsecured credit cards. However, there are still options available, such as secured credit cards or credit cards designed specifically for individuals with bad credit.
  
• Impact of Credit Inquiries: When you apply for a credit card, the lender typically performs a hard inquiry on your credit report. This inquiry can have a temporary negative impact on your credit score, typically a few points. If you have a marginal or borderline credit score, multiple credit card applications within a short period can further lower your score and reduce your chances of approval. It’s essential to be strategic and selective when applying for credit cards to minimize the impact on your credit score.
  
• Secured Credit Cards for Building Credit: Secured credit cards are a viable option for individuals with bad credit or no credit history. These cards require a security deposit, which serves as collateral for the credit limit. Because of the reduced risk to the card issuer, secured credit cards are often more accessible for individuals with lower credit scores. As you make timely payments and demonstrate responsible credit card usage, you can gradually build a positive credit history and improve your credit score.
  
• Subprime Credit Cards: Some credit card issuers specialize in subprime credit cards, which are designed for individuals with bad or limited credit. These cards may have higher interest rates and fees compared to traditional credit cards. While they can be a stepping stone for rebuilding credit, it’s crucial to review the terms and conditions carefully to ensure you’re aware of any potential costs associated with these cards.

Secured vs. Unsecured Credit Cards:

One option for individuals with bad credit is a secured credit card. With a secured credit card, you provide a security deposit that serves as collateral. 

The deposit acts as a safety net for the card issuer, reducing the risk associated with lending to someone with bad credit. Secured cards are a valuable tool for rebuilding credit because they report your payment history to credit bureaus, helping to improve your credit score over time.

On the other hand, unsecured credit cards don’t require a security deposit. They are typically available to individuals with better credit scores. 

However, if you have bad credit, you may still be eligible for certain unsecured credit cards designed specifically for individuals with less-than-perfect credit. These cards often have higher interest rates and fees, so it’s crucial to review the terms and conditions before applying.

How Using a Credit Card Can Improve Your Credit Score

Once you have a credit card in hand, you can start taking steps to boost your credit score. Here are some strategies to help you along the way:

• Make Timely Payments: Paying your credit card bills on time is crucial for building a positive credit history. Late payments can harm your credit score, so ensure you pay at least the minimum amount due by the due date.

• Keep Utilization Low: Credit utilization refers to the percentage of your available credit that you’re using. Aim to keep your utilization below 30% to show lenders that you can manage credit responsibly.

• Avoid Maxing Out Your Card: Maxing out your credit card can negatively impact your credit score. Instead, aim to use a small portion of your available credit to demonstrate responsible usage.

• Regularly Review Your Credit Report: Keep a close eye on your credit report to identify any errors or discrepancies. Disputing inaccuracies can help improve your credit score if they are negatively affecting it.

• Gradually Increase Your Credit Limit: As you demonstrate responsible credit card usage, you may consider requesting a credit limit increase. This can help lower your credit utilization ratio and positively impact your credit score.