Credit cards are payment cards that allow you to borrow money from card issuers. Institutions such as mobile wallets, banks, and credit unions are the ones that issue credit cards. The cards are essential if you exploit your money before your payday. You can borrow money without having to fill out forms to request loans. Most credit card issuers require that you possess good credit scores. But what credit card can I get with bad credit? I will show you the credit cards you can get with a bad credit history.
Credit history shows how you have been paying your loans. Any financial institution must look for your credit history from the relevant agencies to determine the amount of loan to give you. Banks and other financial institutions usually give you credit limits for credit cards, depending on your credit scores. All financial institutions must make a hard inquiry when you apply for a loan or a credit card. A hard inquiry refers to the request for your credit scores from credit bureaus by financial companies.
There are various reasons why you can end up with bad credit scores. One of the reasons is the late payment of your loans. Financial institutions report you to credit bureaus who keep records of your poor payment when you delay paying your loans. Likewise, the credit bureaus also keep records of good credit usage. You lower your credit scores when making late payments and vice versa. Also, if you do not utilize your credit cards, then your scores drop.
What is a credit score?
Credit scores measure the creditworthiness of an individual. In short, they show the ability of someone to pay his loan on time and in the correct amounts. The score ranges from 300-850. 300 is the lowest credit score, while 850 is the highest. When you have 300, you have the worst credit score, while 850 is excellent.
There are three main credit bureaus that financial institutions report to. They include Experian, Equifax, and TransUnion. You are entitled to get a free credit report from each one of them every year. Even though they may differ slightly, the companies are crucial when maintaining proper records about people who get loans.
How do you end up with bad credit scores?
You may wonder how you end up with bad credit scores. Well, as I mentioned earlier, financial institutions report your loan repayments to credit bureaus. If you do it wrongly, you get poor credit scores. The following are practices that land you in a bad credit score category.
i) Late payment of loans
If you pay your loans late, you will find your name in the credit bureaus. Financial institutions require that you pay your loans on the agreed date. If you delay paying, your credit card issuer will forward your name to loan recoverers, also known as debt collectors. Your details will also reach the credit bureaus, which will keep them for reference. You should pay your loans on time to be on the safe side.
ii) Keeping your credit cards dormant
If you have one or two credit cards and do not use them often, you risk lowering your credit scores. You should make sure that you use your cards now and then to register good scores.
iii) Spending too much of your credit limit
Every financial institution gives you a credit limit on your card. That means you cannot borrow beyond the limit. It is always safe to utilize 30% or below your credit limit. If you use most or all of your credit limits, your scores drop significantly.
What kind of credit card can I get with bad credit?
Having bad credit scores does not mean that you cannot get a credit card. If you have a question like; what credit cards are good for bad credit, then you have the answer here. There are two categories of credit cards for bad credit. They include the following.
1) Secured credit cards
Secured credit cards are suitable for people with bad credit and those who do not have any credit history. The cards require you to deposit some amount of money in your account to act as security. You then borrow against your deposit. Some institutions only allow you to borrow what you deposited, while others borrow way below your deposit.
Secured credit cards allow you to grow your credit scores to greater heights. In fact, the cards allow you to rectify your precious loan repayment mistakes and eventually get your negative records out of the credit bureaus. Secured credit cards have low-interest rates since there is substantial security.
2) Bad credit cards
Some institutions also have bad credit scores that you can utilize to get loans. However, such credit cards have high-interest rates since there is low security on the loans. The card issuers risk losing money since there is a possibility that you may not pay. Since bad credit cards help you access a credit limit, you can grow your credit scores.
Despite being helpful when accessing a credit limit and growing your scores, you end up paying so much money as interest in the long run.
What are the necessities to apply for a credit card?
There are various things you should provide when getting a credit card. They include the following.
- Country of residence
- How long you have stayed at your place.
- Whether you own or rent your home.
- Country of citizenship
- Social Security number
- Employment status
- Gross annual income
- Phone number
- Date of birth
- Sources of income
- Financial assets and accounts
- Financial liabilities like a monthly housing payment or other loan payments
How do I apply for a credit card?
Applying for a credit card is a straightforward activity. You must start by applying for a checking account from your bank or credit union. The following are the general guidelines to apply for a credit card.
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a) Decide why you need a credit card
You must have a specific reason why you want a credit card. Most people apply for a credit card to help them borrow money in times of need, while others get the cards to build their credit scores. Therefore, it is vital to have a concrete reason as to why you want the card. Otherwise, you may end up borrowing money uncontrollably, thus landing on financial difficulties.
b) Check your credit score
It is essential to check your credit scores from the relevant credit bureaus to know which credit card to apply for. You may also leave your bank or credit union account to make a hard inquiry and know your creditworthiness. As I said, you are also entitled to a free credit report every year. You can also pay a small fee to get your credit scores as many times as you like. Knowing your credit scores helps you to decide which credit card to apply for.
d) Look around for the most suitable credit card offers
Once you have known your credit scores, you can then look around and see which financial institution offers the best credit cards. You can explore online or ask your friends about the best credit cards you can take that match your credit scores. Intensive research is fundamental to ensure that you get the best credit card that matches your needs.
c) Read the fine print down there
Many people usually make the mistake of skipping the fine print at the bottom of the application form. That is very important since it explains the terms and conditions of your card. If you skip those details, you may end up becoming embarrassed.
You need to know the annual fees, the annual percentage rate for purchases, APR for balance transfers, balance transfer fees, APR for cash advances, cash advance APRs, Cash advance fee, Minimum interest charge, penalty fees and transaction fees.
e) Apply for the most appropriate credit card for your needs
After choosing the most appropriate credit card, you can proceed to apply for it. You will need to provide the necessary details. When you apply, your bank or credit union will determine whether you qualify or not. They will then suggest the most suitable credit card if you do not qualify for the one you have applied for.
Credit card issuers usually send the card to your physical address, after which you activate the card as per the guidelines. You can then start using your card for various kinds of transactions.
How do I use a credit card?
A credit card allows you to perform various kinds of transactions. They include the following.
1. Buy goods and services
A credit card helps you to purchase goods and services online and at physical stores. You can swipe your card at a Point of Sale to pay for goods or services rendered. Also, you can add your credit card details to an online store to make payments. Some merchants may also present you with their account and routing numbers to make transfers.
2. Send and receive money
You can use a credit card to send money to others. All you need is the correct details. You have to send money using the card’s online account, whereby recipients of the same institution as yours will receive money immediately or after a few minutes. You only require their account number.
You can also transfer money to accounts of other institutions by using the routing and account numbers of the accounts to send money. Also, you can receive money from others in your account. You only need to present your card details to whoever wants to send you money.
3. Withdraw money
You can withdraw funds from a credit card at an ATM point. You require a PIN to access your account. You should make sure that you do not withdraw too much of your available credit limit, or else you will impact your scores negatively. However, using a credit card at an ATM attracts a lot of fees, unlike when you use a debit card.
What are some credit cards for bad credits?
The following cards are suitable for bad credits.
- Capital One Platinum Secured Credit Card
- Mission Lane Visa® Credit Card
- Discover it® Secured Credit Card
- Credit One Bank® Platinum Visa® for Rebuilding Credit
- Navy FCU nRewards® Secured Credit Card
- BankAmericard® Secured credit card
- First Progress Platinum Prestige Mastercard® Secured Credit Card
- Milestone® Gold Mastercard®
How are credit cards different from debit cards?
Credit and debit cards are different in many ways. These include the following.
- Credit cards allow you to borrow funds from your card issuer, while debit cards allow you only to use what is in your account.
- Credit cards limit the amount you can take out from your account, while debit cards allow you to use as much money as possible as long as you have enough balance.
- You require a credit history (for unsecured credit cards) to get credit cards, while you can acquire a debit card as long as you have a checking account.
- Credit card issuers report your credit card usage to credit bureaus while debit card issuers do not.
Even though there are differences between credit and debit cards, the cards are similar in various ways. First of all, both debit and credit cards have card numbers. The card number is significant when making payments. Moreover, both cards have the security code, i.e., the CVV and the expiry date. Secondly, the cards allow you to withdraw money, send money, buy goods and services.
How do I dispute a false credit report?
Sometimes you may have bad credit scores due to false reports. Your credit card company may have sent a report with some errors to the credit bureaus. That means you will have a bad credit report due to those errors. You should be keen on your yearly report to see those errors and file a complaint.
Secondly, you may get a report that does not match your actual credit usage. Someone might have stolen your identity and applied for a credit card and misused it. The card usage report will reflect on your side and will hit you hard.
The good news is that one can dispute a report with errors. You have to create an online account with the credit bureau that gave an erroneous report. You then proceed to file your dispute online by providing the necessary details. Dispute resolution can take between two weeks and a month. Disputes are free, and no one should ever ask you for dispute resolution fees.
A credit card allows one to borrow funds from your issuer. You can use the card to buy goods and services online and at physical stores. Most credit card issuers need you to have a credit history. The credit history shows how you have been paying loans. If you have bad or no credit scores, you can apply for an unsecured credit card. You can always dispute an erroneous credit report.