Having a low credit score can take you out of the running for many credit cards. But credit blemishes – or even major black marks on your credit report – don’t mean you’re financially doomed and can never get a credit card.
The truth is that you just have to widen your options – and be prepared to get higher than average interest rates.
Also, unlike those people who have A-1 credit ratings, you’ll probably get a smaller credit line than you’d like.
Still, there are two good ways to get credit cards, even if you have bad credit or fair credit.
Strategy #1 is to apply for a secured credit card.
Strategy #2 is to seek a credit card from a bank that’s a bit more forgiving of those with past credit woes.
Coincidentally, both of these tactics will likely lead you to Capital One.
Let me explain why with a personal story.
Like most credit card issuers, Capital One offers numerous top-notch cards, like the Venture Rewards Card, for those with good or excellent credit.
But Capital One also isn’t afraid to accept those with less than perfect credit, namely people whose FICO credit scores are in the 660 range or lower.
That’s why my husband, Earl Cox, loves Capital One.
Earl and I met a decade ago, in 2003. But as young adults, long before we ever met each other, Earl and I both went through the ringer financially.
We’d both had past credit and financial problems in our 20s: mine started with excessive credit card debt in college, and peaked when I had $100,000 in credit card debt in my early 30s.
Earl’s previous financial troubles also involved credit card bills.
We both also experienced divorce, so that didn’t help either one of us financially.
Fast-forward to the present. Thankfully, now that we’re in our 40s, Earl and I are both very responsible, have great credit, and never miss any payments.
Still, Earl has often told me that after his credit was rotten back in the late 1990s, Capital One was the one bank willing to take a chance on him even when others rejected him. It’s one reason that, to this day, Earl has remained a loyal Capital One customer. In fact, he now has multiple Capital One cards.
Which brings me back to your options when your credit is poor.
Get a Good Secured Card
If you have bad credit, you can always apply for a secured credit card, which requires you to put up a deposit – perhaps $500 or so – and that deposit amount becomes your credit limit.
The Capital One Secured MasterCard is a great option if you need a secured credit card. It has a low $29 annual fee, a modest security deposit requirement that can be as little as $49 to $200, and it carries a 22.9% variable APR.
It’s also a unique credit card in that it can be a partially secured card. When you have a partially secured credit card, your credit line can actually be larger than your security deposit. For example, Capital One’s secured lines range from $200 to $3,000.
So with the Capital One Secured MasterCard, if you’re ever in a pinch and need extra credit, you could have it instantly because the card can effectively give you the equivalent of a back-up line of credit – or an amount in excess of your deposit.
Equally important, Capital One reports your secured credit card payment history to the credit bureaus – just like they do with other unsecured cards. This way, your secured credit card can also build your credit rating and improve your credit score.
Pick the Right Bank
If your credit score is low, another option – as I mentioned earlier – is to specifically apply for credit cards where the bank is known to work with people who have bad credit or so-so credit.
Here again, Capital One fits the bill.
So if your credit is just fair, try the Capital One Classic Platinum Credit Card, which has a reasonable $39 annual fee and currently offers a 0% APR on purchases until November 2013. The normal APR is variable and stands at 19.8%.
As you might suspect, there is some downside to getting a secured card or a credit card for those with “bad credit,” so-called “subprime credit” or “near prime” or even just “fair” credit. The interest rates, naturally, will be higher than the credit cards offered to people with pristine credit.
But honestly, if your credit rating is seriously tarnished, can you really blame Capital One (or any other bank) for charging you a higher rate than it charges people who’ve consistently paid their bills on time?
No matter where you seek your next credit card, always do your homework before applying for credit and be sure to read the fine print on any credit card offer you may receive.
Just because you have bad credit or fair credit doesn’t mean you should be taken advantage of by unfair deals or deceptive, misleading credit card offers.
And lastly, remember to only apply for credit when you truly need it. Being selective about your credit use and minimizing inquiries on your credit reports will ultimately help boost your credit rating in the long run.
Latest posts by Lynnette Khalfani-Cox, The Money Coach (see all)
- Can My Landlord Pull My Credit Report After I’ve Already Moved In? - December 3, 2013