Choosing a credit card when you have low scores
By Erica Sandberg
April 15, 2014
I have a low credit score. Which credit card should I apply for? Best option? –Lydia
You might be surprised to learn that your question is nearly impossible to answer. You see, there are countless credit cards on the market. Almost all banks and credit unions offer them (and there are thousands of those), as do issuers such as Discover and American Express. Each financial institution that does offer cards actually offers many kinds, and the qualification standards vary considerably.
Therefore, choosing one for you without knowing the intimate details of your finances would be folly. Still, though I can't tell you exactly which bank or issuer to contact, or which of their products would be best, I can give you enough guidance so that you can make that decision yourself.
You say that your credit scores aren't so hot, but maybe they're not as bad as you think. Get your FICOs from MyFico.com; most creditors use this scoring system for qualification purposes, which ranges from 300 to 850:
Bad: below 599
Excellent: greater than 750
Depending on where your scores are on this scale, you can pinpoint the types of credit cards that may be right for you. Don't worry if your scores are on the low end. In most cases, you can get plastic no matter what your score, as long as you have a job and some assets.
If yours are in the “bad” category, most are either secured credit cards or prepaid cards (These are not actually credit cards, since you load them up with cash, but they do offer some perks.) Secured cards are usually the best option because they are credit based. With these, a cash deposit acts as collateral and the credit line may equal that sum or a bit more. You also may see a few unsecured cards in this section, but their credit lines are often very low, so your borrowing power would be extremely limited. A secured card might have a greater line.
Of course, if your scores are better than you previously thought, check out the fair credit or good credit deals.
Also, you may want to cure whatever is dragging your scores down, then apply for better accounts after your numbers are higher. For example, maybe you have a bill in collections. If you pay it off, your scores will rise, making you eligible for more exciting credit cards.
Whichever account you get, use it responsibly so your scores rise every month. A small, single charge that you pay on time and in full every month will work wonders. A year of such borrowing and repaying can repair your score. Then, a wider selection of cards (including those with fantastic rewards) will be at your disposal.
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