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Poor credit happens.
It could be that you lost your job, had a medical emergency, or some other big life change that affected your ability to pay your bills on time. Whatever happened, you now have some cleaning up to do in order to get the credit score you want!
But if you do have poor credit, you may be wondering how you can improve your credit and move on from the past and overcome your financial roadblocks.
There aren’t as many credit cards available for those with poor credit as there are for people with good or even fair credit.
Here on CreditShout, though, you can look over a selection of cards for poor credit from our partners, do a side-by-side comparison of their features, and make an educated decision about which to apply for.
What credit scores are considered poor credit?
There are different measurements of what constitutes a poor credit score. According to VantageScore, 550 to 649 is considered poor credit. Sometimes poor credit is lumped in with bad credit to create a wider range.
Whether you consider your credit poor or downright bad, you know you need to improve it if you have any plans that involve big purchases such as a new home or car.
Even such activities as applying for a new job, renting an apartment or signing up for utilities at a new residence can be made much more complicated when your credit is poor.
No matter the reason for your poor credit score, it’s time to get your credit under control and improve it.
A new credit card for poor credit, used responsibly right from the start, could be a big part of the solution to your credit woes.
What kind of cards are available for consumers with poor credit?
If you have a poor credit history, you’re not going to get the same kind of credit card offers as those with excellent credit.
There aren’t quite as many options, the interest rate may be a little higher, and secured cards are in the mix.
Secured credit cards for poor credit require you to pay a deposit, such as $500, which “secures” the card because it is the same amount as the credit limit -- so the creditor knows they won’t lose any money even if you don’t pay off the card.
With time, the credit card company may refund your deposit and/or raise your credit limit as you demonstrate creditworthiness. Or the deposit may go toward the last charges you owe on the card in the event that you close it.
Other cards for poor credit are unsecured, meaning they don’t require an upfront deposit, but they have higher APRs or annual fees.
A secured credit card designed for those with poor credit may actually be a better deal, despite the deposit -- but be sure to compare all the details of the cards you’re considering before you apply for any card.
With any of these cards for poor credit, if you keep the balance low and make timely monthly payments, you’ll see your credit score gradually creep up.
Do prepaid debit cards help improve poor credit?
Although they sound very similar to the secured credit cards, prepaid debit cards don’t actually help you rebuild your credit. Since you don’t have to make monthly payments on them, your prepaid debit cards won’t show up on your credit history at all.
What else can someone with poor credit do to raise their credit score?
Besides applying for a new card for poor credit, you can (and should) also be working to pay down and get on track with your existing credit card accounts.
In some cases, you might be close enough to crossing the line from poor to fair credit that it’s worth waiting a couple of months to apply.
All you can do to improve your credit is to show that you’ve learned from your past financial mistakes -- and the only way to do that is by having credit accounts to work with.
So if you don’t have open credit cards, applying for a secured card or other card for poor credit is your first step to building a better credit history.
More poor credit points to ponder:
●Making payments on time is a must -- and not just because that’s necessary for credit-building. A late payment penalty on a regular credit card may be $30-35, but on a card for poor credit, it can be as much as $60!
●Most credit cards for those with poor credit are not rewards cards. If there are rewards at all, they won’t compare to those offered to people with better credit. But these cards can be the stepping stones to good credit (and good credit perks), so they serve their purpose well.
●If you get denied for a card for poor credit, wait a few weeks, do your research on other cards, and apply again for another card. Your credit score will take a little hit because of the hard inquiry the first credit card company did when you applied, but it will recover soon.
Keep in mind that some items on your credit history that you’d rather forget can actually stay there for up to 7 years.
However, with responsible usage of your new card for poor credit, you’ll soon have positive activity to show -- and a better credit score in the bargain.