How to compare credit cards for people with bad credit? Close to 20% of Americans have bad or poor credit which is between 300-600. In order to get a mortgage, a loan, a new car, or a better apartment you will need to boost to credit as all of these will check your credit score. One way to work on increasing your credit score credit cards. Credit cards are easy to apply for and can be easily manageable even if you have bad credit. Credit card companies are required to report monthly to the credit bureaus so paying your credit cards on time every month can help to increase your credit. Finding credit cards for bad credit can be difficult so we will teach you how to compare credit card offers for people with bad credit.
Understand the difference between different types of credit cards
Secured Credit Cards
Having bad credit doesn’t mean you can’t get a credit card. However, you probably will most likely be eligible for secured credit cards. Secured credit cards are ideal for anyone with bad credit as they almost always approved, and some secured credit cards don’t check your credit. All you do is choose a deposit amount, and that amount will become your credit line. This deposit is refundable on most secured credit cards. An example of a secured credit card is the Discover It Secured
Regular Credit Cards
These are credit cards that don’t require a deposit and can offer some of the better benefits such as cashback rewards, lower APR, and better terms. An example of a regular credit card is the Credit One Bank Platinum Visa
Department Store Credit Cards
These are usually used only in the store that issued them. However, if you have a low credit score, it is not a good idea to apply for them, as some of them require a higher credit score than others. One department store credit card that has a very high approval rate for people with bad credit is Fingerhut.
How To Compare Credit Cards For People With Bad Credit
Know your credit score
Before you start looking at credit cards it’s important to know where you are in your credit journey. When asked, half of Americans said they don’t know what their credit score is. You can check your credit score for free once every 12 months. Here are the websites to check your credit score:
Search online for offers
If you have bad credit, it is unlikely that you will receive credit card offers in the mail. Instead, you should go online to check what type of credit card you are eligible for. We have done extensive research on this topic and have created a list of all the best credit cards for bad credit.
Related: Best Credit Cards for Bad Credit
Check the annual fee
Some credit cards will charge an annual fee just to enjoy the use of the card. However, other credit cards will not charge an annual fee. There is rarely a reason to get a card with an annual fee unless it is the only card you are eligible for.
Credit cards that have no annual fee are:
Research the rewards rate
Secure cards rarely offer rewards, but some may. For example, discover it secured card offers a 1% reward rate. This means that for every $ 100, you will get back $ 1.
- See details of any of the Rewards programs. For example, some cards only offer rewards for purchasing certain products (such as gas) or for shopping at certain stores.
- Payment methods may also vary. Some cards allow you to use your points as a gift card or cash. Others will let you apply your balance to your balance.
Your APR is the amount of interest you need to carry the balance. The credit card issuer will determine the APR based on your credit score and credit card type. Secured credit cards tend to have higher APR as these credit cards are offered to people who are considered high risk with bad credit.
Credit cards with lower APR are:
Credit One Bank Platinum Visa 17.99% – 23.99%
Verify the issuer’s reports to the Credit Reporting Bureau
Your goal may be to gradually increase your credit score. Accordingly, make sure the card issuer reports your payment date to the National Credit Reporting Bureau. Making on-time payments will increase your score and open the door to more credit and better options.
Credit Card Tips to Increase Your Credit Score
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Apply for a card
Once you have compared all the cards and found the one that fits your needs the best, it’s time to apply. When you apply for any credit card you will need to include your personal information such as your name, address, phone number, email, and social security number. You will also be asked about your employment and income.
Once all the information is provided, and you apply all you have to do is wait for approval. Some credit cards will approve you instantly but some might take a few weeks to apply.
Once you’re approved it’s time to start using your card.
Use the card
Don’t get a credit card and then leave it in your wallet, especially if you have bad credit. To increase your credit score, you will need the on-time monthly payments to be reported to the credit bureaus. The best strategy is to make at least one or two small charges per month on the card. These charges can be gas or groceries. Make sure you have enough money to pay the amount charged at the end of the month.
Keep your balance low
High balances can damage your credit score, so make sure you don’t charge your new credit card to the maximum credit limit available. If you have other cards with balances, work to get them repaid as soon as possible.
Related: How To Pay Down Credit Cards
Pay the balance every month
If you have a balance, then you will have to pay interest, which will increase your debt burden. Paying in full will increase your credit score.
Fix errors in your credit report.
Look for mistakes on your accounts that do not belong to you or accounts that are should no longer be reported such as a bankruptcy after 7 years. Contact a credit reporting agency to dispute these errors.You can check your credit report for free every 12 months, but there are many apps that you can use to monitor your credit score.
Avoid applying for more cards.
Whenever you apply for credit, the issuer will check your credit report. This “hard inquiry” will lower your credit score. When you have bad credit and want to increase your credit score, only apply for 1 or 2 cards a year to begin with. The better you are at using these cards the better your credit score will be and then you can start applying for credit cards with higher limits and better rewards.
Ask for an unsecured card.
Most people with bad credit start with a secured credit card, as these are almost always approved. Then ask the issuer to transfer you to an unsecured card. It usually takes about a year to recreate your credit. The issuer will review your payment history and your credit score to determine if you are eligible. After your transfer, your security deposit will be refunded.
Do you have bad credit, no credit or want to learn how to become a credit expert?
Check out our credit repair training and learn:
- What your actual credit score is
- How to get a copy of your free credit report
- How to get your credit back on track today
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