You have a credit score of 500 or 550. This is not bad, but you want to get a credit card. Is it possible? You can get a good credit card with your low credit score. Here are some tips to increase the chances of approval for poor scores.
Types of credit cards for bad credit
Secured credit cards are one of the best credit card with bad credit. They require you to make a security deposit, usually equal to your credit limit. In this case, the bank holds the deposit as collateral if you don’t pay back your debt.
For example, Your secured card might be $500 and require a $500 deposit, so if you only make $100 worth of purchases on the card, then only $100 will be withdrawn from your account via ACH transfer (direct withdrawal). Any remaining balance will stay put until it reaches zero.
Secured cards have some benefits over unsecured options—most notably that they’re easier to obtain than unsecured cards—but they do have some downsides too:
- You’ll be charged higher fees than with other types of prepaid cards because they’re riskier investments for banks than unsecured offerings.
- Secured cards typically come with low limits and high-interest rates.
Can you get credit cards with a 500-550 credit score?
Yes, you can get a credit card with a 500-550 credit score. When you apply for a secured credit card, you will need to deposit into the account. This deposit acts as collateral for your account until it is repaid and converted into an unsecured line of credit.
Secured cards require no annual fee and sometimes have lower interest rates than their unsecured counterparts. It makes them a good choice if you need help building up your credit history without paying high finance charges on existing debt.
How to improve the chances of approval with poor credit?
If you want to improve your chances of getting a credit card with bad credit, here’s what you need to do:
- Make a plan for paying off debt. If you have outstanding balances on one or more personal loans, it’s important to pay down the balance and keep the amount of debt low so that other lenders will be willing to approve your application.
- Improve your credit score. One way of doing this is by taking new loans and making regular payments on time; this helps build up a positive payment history on which lenders can base their decision on whether or not they should offer you a new line of credit.
As per experts like Lantern by SoFi, “Any unsecured card for people with bad credit will probably charge extraordinarily high fees and interest rates.” So, a secured card is the best deal.
Yes, you can get a credit card with a score as low as 500. However, it will be complicated for you to qualify for the cards with rewards programs attached to them and will have higher APRs than other borrowers.