If you have a poor credit score, you may think that getting a credit card is impossible. However, that is not true. There are some credit cards that are designed for people with bad credit, and they can help you improve your credit score over time. In this post, I will review some of the best credit cards for poor credit scores and explain how to use them wisely.
WHAT IS A POOR CREDIT SCORE?
A credit score reflects your creditworthiness based on your credit history and behavior. Credit scores range from 300 to 850, and the higher the score, the better. Different lenders may have different criteria for what they consider a good or bad credit score, but generally, a score below 580 is considered poor.
A poor credit score can make it hard for you to qualify for loans, mortgages, car leases, and other financial products. It can also result in higher interest rates, fees, and deposits. A poor credit score can be caused by various factors, such as:
- Missing or late payments
- High credit utilization (using too much of your available credit)
- Having too many or too few credit accounts
- Having negative items on your credit report, such as collections, bankruptcies, foreclosures, etc.
- Having a short or thin credit history (not having enough credit experience)
HOW CAN A CREDIT CARD HELP IMPROVE YOUR CREDIT SCORE?
A credit card can help improve your credit score if you use it responsibly. A credit card is a type of revolving credit, which means that you can borrow and repay money up to a certain limit every month. When you use a credit card, the issuer reports your activity to the three major credit bureaus: Experian, Equifax, and TransUnion. These bureaus then use this information to calculate your credit score.
By using a credit card regularly and paying your bills on time and in full every month, you can demonstrate that you are a reliable and trustworthy borrower. This can boost your payment history and lower your credit utilization, which are the two most important factors in your credit score. Over time, this can improve your credit score and help you qualify for better financial products in the future.
However, using a credit card irresponsibly can also hurt your credit score. If you miss or make late payments, max out your card, or apply for too many cards at once, you can damage your payment history and increase your credit utilization. This can lower your credit score and make it harder to get approved for other forms of credit.
Therefore, it is important to use a credit card wisely and follow these tips:
- Choose a card that suits your needs and goals. There are different types of cards for people with bad credit, such as secured cards, unsecured cards, store cards, etc. Each card has its own pros and cons, such as fees, interest rates, rewards, etc. You should compare different options and choose a card that fits your budget and preferences.
- Pay attention to the terms and conditions. Before you apply for a card, you should read the fine print and understand the terms and conditions of the card. You should pay attention to the annual fee, interest rate (APR), grace period (the time between the end of the billing cycle and the due date), minimum payment, late payment fee, etc.
- Make a budget and stick to it. Plan how much money you can spend with your card each month and stick to it. Avoid spending more than you can afford or more than 30% of your available credit limit. You should also track your spending and balance regularly to avoid overspending or overdrafting.
- Pay your bill on time and in full if possible every month. You should always pay at least the minimum payment by the due date every month to avoid late fees and interest charges. However, it is better to pay the full balance every month to avoid paying any interest at all and to lower your credit utilization. You can set up automatic payments or reminders to help you pay on time.
- Monitor your credit report and score. Check your credit report at least once a year for free at [AnnualCreditReport.com] to make sure there are no errors or frauds that could lower your score. Check your credit score regularly to track your progress and see how your actions affect it. You can get a free Experian membership and create an Experian report with Experian Go to see your score and get personalized tips to improve it.
WHAT ARE SOME CREDIT CARDS FOR POOR CREDIT SCORES?
There are many credit cards that cater to people with poor credit scores, but some are better than others. Here are some to consider.
- Discover it® Secured Credit Card: [ link ] This is a secured card that requires a refundable security deposit of at least $200 to open an account. The deposit acts as your credit limit and protects the issuer in case you don’t pay. (When you close or upgrade the account, you can get your deposit back.) The card has no annual fee and offers 2% cash back on up to $1,000 in combined purchases at gas stations and restaurants each quarter, and 1% cash back on all other purchases. You also get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year. The card reports to all three credit bureaus and offers a free FICO® Score on your monthly statements. You can also get a chance to upgrade to an unsecured card after eight months of responsible use.
- Capital One Quicksilver Secured Cash Rewards Credit Card: [ link ]This is another secured card that requires a refundable security deposit of $49, $99, or $200, depending on your creditworthiness. The deposit gives you an initial credit limit of $200, which can increase after six months of on-time payments. The card has no annual fee and offers 1.5% cash back on every purchase. The card reports to all three credit bureaus and offers access to CreditWise, a free tool that lets you monitor your credit score and report. You can also get a chance to upgrade to an unsecured card after demonstrating responsible use.
- Tomo Credit Card: [ link ] This is an unsecured card that does not require a credit check or a credit history to apply. Instead, it uses alternative data, such as your income, bank account, and spending habits, to determine your eligibility and credit limit. The card has no annual fee, no interest charges, and no foreign transaction fees. It also offers up to 1% cash back on every purchase. The card reports to all three credit bureaus and offers access to Tomo Wallet, a free app that lets you manage your card and track your spending. You can also get a chance to increase your credit limit by paying on time and maintaining a low balance.
- OpenSky® Secured Visa® Credit Card: [ link ] This is a secured card that does not require a credit check or a bank account to apply. You just need to provide a refundable security deposit of at least $200 to open an account. The deposit acts as your credit limit and protects the issuer in case you don’t pay. The card has an annual fee of $35 and does not offer any rewards or perks. However, the card reports to all three credit bureaus and offers access to OpenSky’s online education center, where you can learn more about credit and money management. You can also get a chance to graduate to an unsecured card after demonstrating responsible use.
- Navy FCU nRewards® Secured Credit Card: [ link ] If you have any US Military or DOD connections personally or via family, check to see if you are eligible .This is a secured card that requires a refundable security deposit of at least $200 to open an account. The deposit acts as your credit limit and protects the issuer in case you don’t pay. The card has no annual fee and offers 1 point per dollar spent on every purchase, which can be redeemed for cash back, gift cards, merchandise, or travel. The card reports to all three credit bureaus and offers access to Navy Federal’s online resources, where you can learn more about credit and financial wellness. You can also get a chance to upgrade to an unsecured card after demonstrating responsible use.
CONCLUSION
Having a poor credit score can limit your financial options and opportunities, but it is not the end of the world. You can still get a credit card that can help you improve your credit score over time if you use it wisely. By choosing the right card for your needs and goals, paying attention to the terms and conditions, making a budget and sticking to it, paying your bill on time and in full every month, and monitoring your credit report and score, you can rebuild your credit and achieve financial success.
We hope this blog post was helpful! Thank you for reading! 😊
AnnualCreditReport.com
Experian Go
Best Credit Cards for Bad Credit of September 2023 – CNBC
Best Credit Cards For Bad Credit Of August 2023 The Motley Fool
6 Best Credit Cards For Bad Credit Of September 2023. Forbes
BY: TheCreditZone.com. With Bing/Chat GPT4