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Can I Get a Credit Card with a Low Credit Score?

Written by Equifax Experts on February 28, 2014 in Credit  |   12 comments

It’s important to build a positive credit history, but you may find it difficult to get new lines of credit if you have no credit or a low score. Fortunately, you have some options for building credit—the Equifax Experts explain.

credit scoreIf you are on the lower end of the credit score spectrum, you could have some trouble qualifying for a credit card.

That’s because banks and credit card lenders view consumers with low credit scores as higher risk. These consumers are seen as more likely to miss payments or not repay their debts on time.

But while you may find fewer credit card options if you have a poor credit history, you aren’t completely out of luck.

Card lenders are now embracing more high-risk consumers, known in the industry as subprime consumers, after tightening underwriting standards from 2009 to 2010.

As you comparison shop to find the credit card that best fits your needs, consider these three types of cards that are often offered to consumers with low credit scores:

1. Secured credit card.

Even if you have a low credit score, you may be able to qualify for a secured credit card. This type of card can be a valuable tool to help you reestablish your credit and improve your creditworthiness.

To open a secured credit card, you’ll be required to put down a security deposit as collateral to help offset the risk for the lender in case you default on the card.

In general, the security deposit is equal to the credit limit on the card. If you make an initial cash deposit of $300, for example, your credit limit will also be $300.

Keep in mind that secured credit cards often come with higher fees than their unsecured counterparts (traditional cards that are offered by a bank or other financial institution and that don’t require a security deposit). In addition, while many secured cards boast attractive low interest rates, those rates could significantly increase after about a year.

If you do opt for a secured credit card, make sure your credit activity is reported to the three national credit reporting agencies in order to help to build your credit history. If you make on-time payments for six months to one year, you might be able to qualify for an unsecured credit card.

2. Retail credit card.

With a low credit score, you may have an easier time qualifying for a retail credit card than a general-purpose credit card. In fact, in 2013, American retailers opened the largest number of credit cards for consumers since 2009, according to Equifax data.

While retail credit cards can be used to help improve your credit score and often come with promotions, discounts, and other incentives, they are also known to have high interest rates. If you regularly carry a balance and only make the minimum monthly payment on your retail card, you could dish out a significant amount of money in interest.

Retail cards are also notorious for having low credit limits, which could harm your credit utilization (how much of your available credit you are using). Experts generally agree that if you carry a balance of less than 30 percent of your credit limit, lenders will view you more favorably.

3. Unsecured credit card.

Depending on how low your credit score is, you could have difficulty qualifying for an unsecured credit card.

Unlike a secured credit card, an unsecured card doesn’t require a security deposit as collateral. Instead, factors such as your credit score, income, and credit card debt are considered to determine if you are approved—and at what interest rate and credit limit.

If you have a low score and are approved for an unsecured credit card, you’ll likely be considered a high credit risk. As a result, you could be hit with a high interest rate and hefty fees on top of a low credit limit.

Fortunately, credit card legislation in 2010, known as the CARD Act, put a cap on the fees credit card companies could charge consumers. According to the law, credit card fees (excluding penalty fees) cannot total more than 25 percent of the initial credit limit in the first year the account is open.

Using your card wisely

Once you get a hold of your new credit card, make sure to practice positive payment behavior that will reflect favorably on your credit history and credit score. Always pay your bills on time every month to establish a positive payment history, and try to keep your balances low in order to improve your credit utilization.

Regularly pull a copy of your credit report so you can monitor your credit activity and ensure all of your information is accurate and up to date. You are entitled to one free credit report from each of the three nationwide credit reporting agencies annually through annualcreditreport.com.

Also consider ordering your credit score for a nominal fee to determine how your credit card use is impacting it.

Once you’ve reestablished your credit history and improved your credit score, you may be able to qualify for more favorable terms on your credit cards.

12 comments

  1. John says:

    Having a hard time getting a credit card. Just put money in the bank and use a debit card. Works like a secured credit card without the credit.

    • Zeke says:

      That doesn’t help if somebody is attempting to build their credit or avoid fees. This solution also doesn’t take into account that there are many people who live paycheck to paycheck, and hours can flex, a $50 late fee on rent vs 3% interest on a 500 payment, I would much rather take the interest and pay it off when I get my following paycheck than piss off my landlord.

      • Karl says:

        I agree with John’s comment. Just use a debit card. Chances are if you need the credit and have to decide if it’s rent or not than it’s something you can’t afford and need to save for it.
        My issue is on larger purchases like a vehicle or house. This article never addressed how to get a secured card to begin to build your credit.

  2. Anonymous says:

    Thank you very much it’s been very helpful.

  3. Veronica says:

    Great article, thank you! You answered questions I had for a while.

  4. Me says:

    The whole credit reporting, and score system is corrupt, and should be abolished. Anyone can ding your credit with no oversight.
    This country is falling apart!!!!

  5. Anonymous says:

    My daughter is 25, just received her Bachelors Degree a year ago and is working in self-employment as a babysitter-nanny. She keeps getting these offers for credit cards but when she applies is always turned down, for reasons like lack of history, her existing student loans, etc. If she has no history and is apparently a bad credit risk, why is she still getting offers in the mail? It’s frustrating to say the least.

  6. Michael says:

    Like most people who suffered from the ’08 crash where my card interest rates went from an average 4.5 o/o to over 29 o/o overbite. It took me over 12 months to pay off most of my credit card debt, but one of them demanded either full payment or 6 equal monthly payments, which being retired I just couldn’t afford!
    I offered an amount of $250 p.m. which I could afford and would have paid off the outstanding amount ($4,100) within 17 months. This offer was refused by the acting agent for the bank who insisted that they wouldn’t change their demanding terms, considering that the negotiations started more than two years ago and that the debt would have been paid off by now, I now find that although my credit score is in the 700′s I can’t get any credit from banks or credit card companies because of the Negative status of this one credit card which has to be settled before I can move forward.
    Apart from my own negotiations I did hire a reputable company to negotiate on my behalf and after 18 months even they gave up on negotiating stating that the company was being totally inflexible and suggested that I wait for my State’s 6 year period to expire – which I wouldn’t want to do as I prefer to pay my debts!

  7. j rodriguez says:

    I have a credit card a loan and payed off my car and equifax can not give me a credit report but I can get my credit file from credit karma and expiran. Equifax states my credit history is not long enough yet if I have a collection I am not able to dispute it.

  8. zachary santee says:

    The information you provide is very helpful.


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