Getting a Credit Card with Poor Credit

If you have a poor credit score because of minimal credit use or circumstances beyond your control, you may feel like it is impossible for you to get a credit card. The good news is that even if you have a low credit score, there are ways to work your way up to a credit card with a low interest rate and good terms. There are two major reasons why your credit score could be low. The first is simply a lack of credit. For instance, if you have never taken out a loan or had a credit card, your credit report will be essentially empty. This can make it difficult to get a credit card you need.

The first thing to do when you have little or no credit history is to determine what cards you might be approved for. Individual stores often have a lower requirement when it comes to credit scores than Visa, Mastercard, etc. Using your store card, even if you pay off the balance each month, will greatly add to your credit score.

If you are a student, there may be other opportunities open to you to build up your credit. Many banks offer any student that applies a card that has a low ($200-$1000) credit limit. Smaller local banks or credit unions may be more amenable to working with you than larger national banks.

Another option for establishing credit is having someone who already has credit set you up as an authorized user on their card. It is important to be aware, however, that if you run up charges or do not pay the bill, both you and the person who the card was initially issued to are liable.

If you think that you will be unable to get a credit card through any of the methods above, a secured credit card may be your best bet. A secured credit card is a card issued in your name that reports to the credit bureaus. It is different from a standard credit card in that it requires you to put down a deposit that acts as your credit limit, the more on deposit the higher the limit. For instance, a secured credit card with a $500 initial deposit allows you to charge up to $500. After about a year of using your secured credit card, and paying your bill monthly, your card issuer will likely offer you a standard unsecured card.   

    

The second reason why you could have a low credit score is because of mistakes with credit in the past. There are many things that could cause your credit to be dinged. Failing to make minimum payments, allowing a debt to go into default, foreclosure on a home and bankruptcy will all negatively affect your credit. If your credit is poor because of unpaid debts, it is probably best that you zero out those debts before applying for another card. Once your debts are completely zeroed out, you could try rebuilding your credit using the previously mentioned methods above.

Before you start your mission to improve your credit, it is critical to know how bad or how good you really are. Having excellent credit can be a huge advantage in your financial dealings and should be something to strive for. The credit cards with the best rewards and terms are only give to those with good credit. The difference between excellent credit and poor credit is worth the effort it takes to improve your credit score.