Can I get a credit card with bad credit?
A bad credit score can make getting a credit card difficult but not impossible. Credit card issuers use your credit score and other factors to determine whether to approve you for a card. If you have a low score, it will be harder to get approved for new financing, but to improve your score, you need to show you can get and manage new accounts. It’s a classic catch-22.
But there are actions you can take now to make it easier to get approved for your next card or other payment options.
Know your credit score
Before you apply for a card or other financing, check your credit report and your score. Your credit report contains information about your credit accounts, including balances and payment history. You can get a free copy of your credit report at least once every 12 months through AnnualCreditReport.com and the three major consumer reporting companies (Equifax, Experian and TransUnion). Soft inquires have no impact on your credit score. Soft inquiry examples include personal credit checks, preapproved credit offers, insurance applications, account reviews by current creditors, and employment applications.
A credit score is different from your credit report. Your credit score is a three-digit number that usually ranges from 300 to 850. Credit scoring models, such as FICO, use the information listed in your credit report to calculate your score. Your bank may offer free credit scores to accountholders and several services also provide free credit scores.
Keeping tabs on your credit report and knowing your credit score will give you a baseline for where to begin. It will also give you an idea of credit cards that may be available to you. Many cards give a range of acceptable scores, so check your score against those ranges before you apply.
Why do you need a credit card?
Not everyone has or needs a credit card, but they do offer several benefits, including helping you build credit or repair credit. Other top benefits including secure transactions, rewards for making purchases, and the ability to pay over time.
A credit card may be a viable option for you, but as you begin looking a different credit card offers, be aware of fees and interest rates.
Fees. Especially if you have multiple cards, fees can add up and make it harder for you to build credit. Credit card issuers may charge annual fees. Other common fees include charges for foreign transactions, balance transfers, cash advances, and late payments.
Interest rates. When evaluating different credit cards, look past the introductory rate for the promotional period. Credit cards with a 0% introductory annual percentage rate (APR) can be appealing, but once that period is over, you’ll start accruing interest on any unpaid balances, including those you may have charged or transferred to the credit card during the promotional period. Even if the introductory rate is zero, your APR could increase significantly after the promotional period, leaving you with more debt than you planned for.
Read important credit card terms and conditions
When applying for a credit card, it’s important to pay attention to the details of the agreement. Confirm when the introductory rate expires, the interest rate that will be charged before and after any promotional period, balance transfer fees, and any additional fees and security clauses. Reading the important disclosures helps ensure there are no surprises.
Clean up bad credit
Clear up as many negative credit issues on your credit report as possible before applying for a new credit card. If any negative information is valid, work to make it right. That will help improve your credit score and increase the likelihood of getting approved for a new card. Late payments, collections and charge-offs, and settling a debt for less than what was owed will impact your credit score. Derogatory issues on your credit report breakdown into two areas: collections and public records.
Collections. If you fail to make payments on your accounts, creditors can send them to debt collectors to try and recover the amount owed. This creates a derogatory mark on your credit report and can affect your score. Check your credit report for collections. If you see a collection that you think is an error, call the debt collector to get more information or ask to have it removed. Credit reports sometimes have errors, so the more closely you monitor your report, the better.
Public records. Bankruptcy, lawsuits, foreclosure, and tax liens are public records that can affect your credit for seven to 10 years. In most cases, public records don’t come as a surprise. But if you check your report and find a public record that you didn’t expect, call the credit bureau and ask about it as soon as possible.
Types of credit cards available if you have bad credit
If you’re looking to rebuild your credit, there are credit cards that might be available to you.
Secured credit cards require you to make a cash deposit to the credit card issuer to open your account, which typically is your credit limit. If you consistently pay on time with your secured card, the lender may increase your credit limit or offer you a different card with more appealing terms. Of course, late or missed payments will have a negative effect on your credit score, just like a regular credit card.
Unsecured credit cards are typical cards with no deposit amounts. However, not all credit cards are created equally. Some have better interest rates and some have extra or annual fees. Once you prove yourself by making on-time, consistent payments, you may qualify for a lower interest rate and lower fees.
Your way forward
Getting a credit card can be a great way to rebuild your credit if you pay attention to the details. Know your credit score before applying, shop around for the best rate, and do your homework before signing any agreements. When getting back on track financially, it’s especially important to make wise, informed decisions.
If less-than-perfect credit is keeping you from getting what you need now, Snap Finance® can help with Snap-branded lending and lease-to-own financing solutions for all credit types.¹ We look beyond scores from major credit bureaus to give you the best chance of approval.¹ So when life happens, you can get what you need now and then make budget-friendly payments over time.
Learn how Snap can help you shop now and pay later.
-----------------
Snap-branded product offering includes retail installment contracts, bank installment loans, and lease-to-own financing. Talk with your local Snap sales representative for more details on which product qualifies at your store location. For more detailed information, please visit https://snapfinance.com/legal/financing-options
¹Not all applicants are approved. While no credit history is required, Snap obtains information from consumer reporting agencies in connection with submitted applications, and your score with those agencies may be affected.