Bad Credit: below 600
If you’re in the bottom category, don’t despair. Not only can you improve your credit score to get a credit card, a mortgage or other financial dreams down the road, chances are you can get a credit card right now to help you on your way toward that better credit score.
The first step is knowing what your credit score is and whether everything on your credit report is accurate. (If you don’t know where your credit score stands, you can pull your credit reports for free each year at AnnualCreditReport.com. You can also view your credit scores for free each month on Credit.com.)
If your bad score is valid, you can work to improve it by getting accounts out of default, paying down high credit card balances and limiting new credit inquiries.
Once you know where your credit score stands and you’ve corrected any errors, you can look at applying for credit cards created specifically for folks whose credit scores need some improvement. Most likely, you’ll need to start with a secured credit card from a reputable bank that has a reasonable annual fee.
Secured credit cards can be helpful for people trying to fix their credit or establish a credit history for the first time. Issuers negate some of the risk of doing business with such consumers by requiring a deposit to open the account. That deposit serves as the cardholder’s credit line, and beyond that, the card works like most other credit cards: You make purchases, and every billing cycle, you make a payment. If you don’t make your payment, however, the issuer can take your deposit.
Remember, your bad credit doesn’t have to last forever. Most negative information stays on your credit report for seven years (bankruptcy may remain on your report for up to 10 years). And the sooner you start establishing and maintaining solid lines of credit, the sooner you can improve your credit score, and your ability to get a non-secured credit card.
Note: It's important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
Constance is an editor and writer at Credit.com. Prior to joining us, she worked as a Web producer for CNBC, NBC News, MSN.com and The Dallas Morning News. More by Constance Brinkley-Badgett