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When you are struggling with bad credit, finding a credit card can be difficult and frustrating. It can also be a catch-22. One of the best ways to improve your credit is through the responsible use of a credit card, but if you can't get a credit card because of bad credit, then you probably feel stuck. Luckily, there are some options.
There are a number of credit cards designed specifically for people with bad credit. One such card is called a secured credit card. A secured credit card operates like a normal credit card with one important difference: You are required to make a cash deposit that is treated like a security deposit in exchange for access to a line of credit. You still have to pay your credit card balance on time at the end of each billing period, and if you are late or carry a balance you will be subject to fees, and interest will be applied. The upside, however, is that if you use your secured credit card responsibly for a period time, you will improve your credit, and ultimately graduate to an unsecured -- or regular -- credit card. Back to top.
Prepaid debit cards are another option for people with bad credit, because they provide users the convenience of plastic without having any credit requirements. Prepaid debit cards do not provide access to lines of credit, so good credit isn't required to get one. You just need the cash to load on to the card. (Be sure to pay attention to the fees!) It's important to remember, however, that prepaid debit cards do not help users build credit. So if you have bad credit and are looking for a tool to help improve your standing, a prepaid card is not the right tool for that. Back to top.
If you are able to get an unsecured credit card, you'll want to make sure you apply for a card that is appropriate for your credit standing. Generally, there are five credit groups based on credit scores. (There are lots of credit scoring models out there, but most use a scale of 300 to 850). They are:
When you're ready, you should apply for a credit card that is geared toward people with credit scores similar to yours. If you apply for cards you don't qualify for, you'll likely be rejected, and if you apply for too many cards during a short period of time, your credit score could suffer. Also keep in mind, the lower your credit score, the more you are likely to pay in interest for any balance you carry on the card.
If you don't know your credit scores or anything much about your credit standing in general, you can use Credit.com's free Credit Report Card for an easy-to-understand breakdown of your credit history, along with your free credit scores. If something doesn't look right, you can check your actual credit report. You are entitled to a free copy of your three credit reports from the major credit reporting agencies once a year. If you find inaccuracies, you should ask the credit bureaus to correct them. Back to top.
*For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While Credit.com always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
** FICO scores and credit scores are used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any credit card offer.
†Advertiser Disclosure: The credit card offers that appear on the website are from credit card companies which Credit.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The site does not include all credit card companies or all available credit card offers.