Mostly, you need a fair credit to get a credit card and you need a credit card to build your credit score to fair. It almost seems like an impossible paradox to get out of when trying to get new credit cards. Unfortunately, those with bad credit have limited options to get credit cards. Most banks and credit card companies shy away from people with bad credit. This doesn’t mean that you can’t get a credit card though.
Whether your credit score is below 500 or way worse than that at the moment, you can always increase it by making your payments on time. But before we get to that, how to get a credit card with bad credit?
If you applied for credit cards and got rejected multiple times, try secured credit cards. Since you will put a deposit amount before you get your credit card, almost all credit card companies and banks can offer you one. However, your credit line may not be exactly the deposit amount. Although it isn’t going to be dollar to dollar, you can get about $800 credit available to you for a $1,000 deposit. Surely, about $300 or $400 is enough. So you don’t need to put a large deposit amount since you’re going to qualify for better ones eventually.
Secured Credit Cards for People with Bad Credit
First and foremost, secured credit cards are more seen as a last resort to many people. If you’re struggling to get a credit card, opt-in for a secured credit card. There is a high chance that you won’t be getting your security deposit until you close the credit account. With that being said, check the terms of the bank or the credit card company if getting your deposit back as soon as possible is important to you.
Here are a few credit card products that offer to give back your security deposit sooner than others.
Secured Mastercard® from Capital One®
With no annual fee and $49, $99, or $200 refundable minimum security deposit, this credit card from Capital One is a great way to start rebuilding credit score. One of the best features of this credit card is that you can get your security deposit back without closing your credit account in less than 9 months. Besides, your limit will automatically increase if you wish so as you become eligible for a higher credit line.
Before you apply for this credit card, there are few things you should know though. First, the application process takes about two to three weeks. But if your credit score isn’t that bad, it can take sooner. Once you’re approved, you will be notified about the required security deposit. This usually equals to your available credit. If it is $0, you are likely to start off with the minimum deposit amount which is $49. After that, you will have your credit card in about 10 business days.
Rebuilding Credit Score for Better Credit Cards
After rebuilding your credit score for the good, you can qualify for better credit cards that will give you more cash back and certain discounts at certain places. For the most part, you need a good credit score to get these credit cards. What we recommend is setting yourself up a roadmap for finances.
Assume you make all of your credit card payments on time until you can get your security deposit back. From there on, your credit score should be high enough to apply for new credit cards if you don’t use all of your credit line.
One thing to keep in mind when trying to rebuild credit is using your credit card often early on. Try to make all of your purchases with your credit card and keep your balance as low as possible so you make large payments. As the payments grow and you make your payments responsibly on time, your credit score will increase to get better credit cards in no time.