How to choose a credit card with poor credit?
Quick insights
- There are credit cards that you can be approved for even if you have a low credit score.
- You can improve your credit score by making consistent, healthy changes, such as making your payments on time and lowering your credit utilization ratio.
- You may increase your chances of approval for future credit cards if you first increase your credit score.
If you have a bad credit score you might feel limited in your search for your next credit card. And while it may be correct that you’re less likely to get approved for a premium credit card, there are still some options available to those with a low score. Let’s review in more detail below.
Understanding bad credit and what it means for credit card applications
Credit score models often have credit scoring ranges that go from poor to exceptional. If your credit score falls in the poor category as referenced by some models, you might feel this is "bad credit." While there is technically no definition of a "bad" credit score, in this article the term "bad credit" refers to low credit scores.
A bad credit score can impact your ability to get approved not just for credit cards, but also loans, mortgages and other financial products. A bad credit score shows your potential lender that you’re possibly a higher risk borrower, meaning there’s more potential of you not being able to repay your debts.
How to choose a credit card if you have poor credit
When you have a low credit score, your chances of getting approved for a premium card or the card of your choosing may go down. However, there are certain types of credit cards that you may be eligible for. While these cards may not come with premium rewards or attractive benefits, they can help you begin to build healthy financial habits.
Note that these credit cards may come with lower credit limits and higher annual percentage rates (APRs). It’s always a good idea to review the terms and conditions of the cards you are considering applying for.
Regardless of which credit card you have, it’s important to pay your statement balance on time by your payment due date and, if possible, pay the total amount.
Importance of credit reports
If you want to better understand your credit history and improve your credit score, it can be important to review your credit report, which is generated by the main credit bureaus—Experian™, Equifax® and TransUnion®. You can get a free annual credit report from the credit bureaus directly.
Reviewing your credit report can help identify areas where you can improve your credit or address potential inaccuracies with the credit bureaus.
Taking control of your financial future
Rebuilding your credit takes time and patience. You may need to implement several new habits and develop a routine of making regular payments to help improve your score.
It's possible to find a credit card when you have a low score, but it’s important to choose wisely. With responsible credit card use, you can demonstrate and improve your creditworthiness.
