It’s hard to miss the credit card offers on television advertising flashy rewards, fancy perks and celebrity endorsements. While these cards do feature great benefits, the hard truth is they are generally only available to those with excellent credit.
Those with bad credit are limited to credit cards for people with poor credit. These may not have bells and whistles you want, and interest rates will be higher, but they do offer the opportunity to build better credit and can serve as a backup in emergencies.
Here are four signs you may need a credit card for bad credit:
1. You don’t have much in savings.
Life always throws emergencies our way. Having an emergency savings fund you can pull from is always the best strategy, but if your savings are low, it’s smart to have a credit card to fall back on rather than having to take out a loan. Just remember that if you can’t pay it off quickly and are forced to carry a balance, you will have to pay interest — and interest fees are high on credit cards for bad credit. So only borrow what you absolutely have to, and pay it back as soon as possible to make this card a true benefit.
2. You can’t qualify for a regular credit card.
If you have tried to apply for a credit card for fair credit or good credit and were rejected, that’s a sign you may need to apply for a bad credit credit card instead. They are geared toward people with low credit scores, so it’s easier to be approved for them. If you aren’t able to qualify for this type of card, you may need to try for a secured credit card instead.
3. You have had debt in collections or bankruptcy.
These types of problems can damage your credit for years to come. If you have had to file for bankruptcy or deal with a collections agency in the past few years, chances are you won’t qualify for a regular credit card. A credit card for bad credit is likely the best option for you until marks from collections or bankruptcy are no longer on your credit report.
4. You need to build better credit.
Whether you have bad credit from some financial blunders, or no credit at all, using a credit card for people with poor credit is the ideal way to start building positive credit history. Your activity is sent to the three credit bureaus that create credit reports, so when you make a smart move like pay a bill on time, it helps boost your credit score. With time, your credit will improve and you may be able to qualify for a credit card with rewards or other perks.
The post 4 Signs You May Need a Credit Card for Bad Credit appeared first on NerdWallet Credit Card Blog.
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