Finding a credit card with a low credit score depends on knowing which goods you are eligible for. However, they are widely available; large and small local banks and credit unions grant credit to those with bad credit records.
To assist you in raising your credit score, these cards have lax acceptance rules and will disclose your payment and balance history to at least one credit bureau.
Banks view people with credit scores below 600 as high-risk borrowers, so when you initially open an account, they might give you a card with a smaller credit limit or impose an annual fee.
To expand your purchasing power, you might be able to increase your credit line as you demonstrate your financial responsibility over a period of months.
Consider a secured credit card if you require a higher initial credit limit. Secured credit cards let you choose your credit line based on the sum of your refundable security deposit. However, this necessitates that you have the cash on hand to give to the bank.
You can look for a credit card that allows you to prequalify without hurting your credit score if you’re worried that your bad credit will prevent you from receiving a credit card.
These cards obtain a modified version of your credit history using a soft credit pull. This information is usually sufficient for the bank to determine whether you qualify for the card. While prequalifying does not ensure you’ll obtain the card when you apply, it is usually a good indicator of future success when you decide to apply.
What Sets Secured Credit Cards Apart from Unsecured Credit Cards?
A refundable security deposit is required for approval of a secured credit card, whereas an unsecured card does not. Other significant distinctions between the two are as follows:
- Many secured cards provide you the option of determining your credit limit based on the amount of your deposit. You will not be able to choose your credit line with an unsecured credit card.
- When you end your account with no outstanding bills, the secured card will repay your deposit. If you demonstrate a pattern of responsible behavior, some secured products may repay your deposit amount before you end your account.
- For approval, a secured card may not require a credit check. It will instead utilize your deposit as collateral to back up your account.
- Secured credit cards often feature lower interest rates and fewer fees.
The type of card you qualify for is determined by your credit score. Secured cards are easier to obtain, but if you only need a small line of credit to help you restore your credit over time, an unsecured card will likely give you what you need with low upfront expenses.
Secured Credit Cards Frequently Have Cheaper Interest Rates And Perhaps No Annual Fee.
Your credit will determine the kind of card you are eligible for. Secured cards are simpler to obtain, but if you only require a limited credit line to help you gradually improve your credit score, an unsecured card will have low upfront expenses and probably meet your needs.
What Credit Limit Can I Expect?
The amount of credit a bank will grant an applicant depends on a variety of factors that are specific to each credit card issuer. Additionally, the minimum and maximum credit limits on each card are different.
For instance, some negative credit cards may grant each new cardholder the same initial credit line, which usually ranges from $200 to $300. You can boost your credit limit if you behave responsibly over time.
While some secured cards let you choose your deposit and consequent credit limit, others require a fixed deposit that is equal to your credit limit. However, read the cardholder agreement carefully before applying for any credit card so that you know the minimum and maximum credit limits you might be granted if you are approved.