About Credit Card Offers for Poor Credit

What is poor credit?

At Credit Sesame, a poor credit score is typically between 500 – 549. This is based on a VantageScore 3.0 model provided by TransUnion and may not be the credit scoring model used by the financial institutions presenting offers on the Credit Sesame website. Your credit score may vary from what you see elsewhere based on the credit bureau, date of the credit report, and credit scoring model. Credit card issuers and other financial institutions use a variety of different types of credit scores and other criteria to make credit and lending decisions so, having a credit score in a particular range is not a guarantee that you will be approved for a credit card or approved for the terms you applied for.

Credit card options for poor credit

Having poor credit limits your credit card choices but there are issuers who cater to individuals who have lower credit scores. Many of these credit cards are basic, no-frills offerings, but some do offer rewards and other perks.

One of the most important considerations is the cost of owning the credit card. People with low credit scores frequently pay higher interest rates because the credit card issuer is assuming more risk by extending credit to a person who has not demonstrated responsible credit habits. These may also charge more in the form of annual fees and even maintenance fees.

Secured or unsecured? That is the question

Traditional credit cards are unsecured, some of which are fee based, and individuals with poor credit may not qualify. A secured card can be easier to get but requires a cash deposit as a security deposit from you (held by the credit card issuer) to open the account.

The credit line is usually equal to the amount of the cash deposit. But the deposit is not applied to purchases. Similar to a traditional credit card, you’ll still need to pay the bill each month. The Annual Percentage Rate (APR) on a secured card is usually higher in comparison to a traditional (unsecured) credit card. With responsible use by you a secured card can be a stepping stone to better credit and better credit products.

Dos and don’ts of applying for a credit card with poor credit

Check your credit report and credit score before you apply for a new credit card so you know what you’re working with. If you apply for a credit card that is only available to individuals with better credit scores, chances are that you’ll take a hit to your credit score with nothing to show for it. In addition you will want to review the fee schedule carefully. You may find some credit cards for individuals with poor credit that offer a low or no annual fee. Review the APR so that you know what you’ll pay if you carry a balance (but try not to carry a balance). If all else is equal, choose a rewards card.

Don’t apply for several credit cards all at once because that is likely to hurt your score. Do take advantage of tools that, if properly utilized, can help you work towards increasing your credit score, such as free credit monitoring, credit education and due date reminders.

If your goal is to rebuild or build positive credit, make sure the issuer reports your credit card activity to the three major credit bureaus. Once you use a credit card responsibly for six to 12 months, your credit standing is likely to improve and you can consider requesting one that is not secured or one that has more features and perks.