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Credit Cards

How to apply for a credit card with bad credit

Date:
October 22, 2021

Having a bad credit score can make applying for a new credit card challenging.

However, it's still possible to get a card despite bad credit. A secured credit card is designed for individuals with poor credit who are looking to rebuild their credit. A security deposit is required to open an account and results in a card with a credit limit of the same amount. 

For example, a $1,000 security deposit on a secured credit card will typically get you a card with a $1,000 credit limit. 

Secured cards don't usually come with perks or rewards. Instead, they're typically used to build credit by offering an opportunity to prove your creditworthiness by establishing a new positive payment history, from on-time payments to balances paid in full. After managing a secured card responsibly, your credit score can improve and, when you reach good credit, you can become eligible for other cards and types of credit. 

In contrast, an unsecured credit card doesn't require a security deposit -- because it requires a healthy credit history, proof that you're able to manage cards and repay debts responsibly. With unsecured cards, credit card companies are looking cardholders who represent a good risk -- people who have demonstrated they know how to repay their debts on time and in full.

How can I get a credit card with a 530 credit score?

Credit scores below 580 are typically considered bad and can limit access to different types of credit, especially credit cards. Boosting your credit score can open up more opportunities, including access to new credit cards. 

A few simple steps can help improve your score, providing opportunities to demonstrate responsible use, boosting your eligibility for better credit cards, with rewards programs you'll actually use. 

Start by checking your FICO score. Numerous monitoring services offer free credit reports. Make sure to choose one that won't damage your credit history by checking your score. 

Next, address the five factors that determine your credit score. Ask yourself these questions:

  • Do I have a healthy payment history? Your payment history makes up 35% of your credit score. Any delayed or late payments can lower your score. Make sure you're always making payments before your due date and, whenever possible, pay off the full balance. Remember isn't not just about credit cards. Credit bureaus can access your payment history on utility bills as well as some recurring subscriptions and memberships.
  • Am I using too much of my credit? Can I pay off more debt? Most experts advise limiting yourself to using only 30% of your total available credit. Credit utilization determines 30% of your credit score. 
  • Can I hold onto older credit cards? "Credit age" accounts for 15% of your credit score. Your "credit age" looks at the length of time you've carried your cards and uses the average age across all your accounts.
  • Do I have a healthy credit mix? Your credit mix refers to the different types of credit you've carried in the past, including cards, auto loans, personal loans and mortgage. This accounts for 10% of your score. 
  • Have I applied for a new card too recently? Try to leave several months between credit card applications. If you apply to often, credit card issuers often see it as a sign you're unable to manage your existing credit responsibly.

How can I get a credit card with a high limit with bad credit?

The best place to start is improving your credit score. But also avoid applying for cards you don't qualify for. Too many inquiries may affect your credit report and could lower it. You might want to delay applying for new credit until your credit score improves.

What are the best credit cards for bad credit?

Secured credit cards are built for consumers with bad credit. They're also designed to help improve your credit score, with different features, benefits and deposit requirements. Most come with high interest rates, but the three major credit bureaus consider them valid for establishing positive credit behavior. Here are three popular options from major card issuers that welcome users, all with low minimum credit scores.

1. Secured MasterCard from Capital One

Capital One's secured card offers a range of security deposit options. Depending on your credit score, an upfront deposit of $49.99 or $99 can get you a secured card with a $200 credit limit -- and you can make your security deposit over time, in installments. That makes account opening easier for some people. You can also choose to deposit more, for a credit limit as high as $1000. Interest rates are high, averaging 26.99%. But if you can't make your payments on time, Capital One will set up installments of at least $20 each, as long as you pay the balance within 35 days. Capital One's secured card requires no annual fees and does an automatic credit limit review every six months.

2. Discover it Secured Credit Card

Discover's secured card stands out from the crowd because of its reward program. With a Discover it Secured Credit Card, you'll get a 2% cash back reward on common purchases, like at restaurants or gas stations, up to $1000 each quarter. You'll also receive 1% cash rewards on all other purchases. An initial deposit of at least $200 must be paid with a bank account, but after your first 8 months, Discover regularly reviews your eligibility for an unsecured card. Interest rates are high, with an average 22.99% variable APR. Discover also requires no annual fees. 

3. OpenSky Secured Visa Credit Card

The OpenSky Secured Visa Credit Card has two distinct advantages, especially in the application process: no credit check is required, and no bank account is required. OpenSky's secured card starts with a $200 deposit, which is higher than others, and there's an annual fee of $35 and 3% foreign transaction fees. However, with a 17.39% APR, your interest charges will be lower than with other secured cards.  

Use Bright for an easy credit boost

Bright can pay off your cards faster and smarter. Bright studies your finances and your debt, moves funds when it makes sense and makes payments for you, always on time and always optimized to save on interest charges. It's a new AI-driven financial system that delivers real results automatically.

Bright Credit Builder adds an easy credit boost, building an on-time payment history automatically and lowering your credit utilization with a new line of credit. 

If you don't have it already, download the Bright app from the AppStore or GooglePlay, link your checking account and your cards in a few steps, and let bright get to work!

MoneyScience™ Team
Bright Money

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