5 Steps to Get Approved for a Loan or Credit card With Bad Credit

Having a less-than-perfect credit score can make it challenging to access credit and financial opportunities. However, it's important to know that all hope is not lost. Many financial institutions and credit providers offer credit options for individuals with bad credit, and with some strategic steps, you can improve your financial situation.

1. First things first, check your credit report

Before you start searching for credit card or loan offers, it's essential to know exactly where you stand. Request a free copy of your credit report from all three major credit bureaus: Equifax, Experian, and TransUnion, or check your credit score on the Credit Karma or Experian app. Review your credit report for any errors or inaccuracies that may be negatively impacting your credit score. If you find any discrepancies, dispute them to have them corrected.

2. Consider a secured credit card

Secured credit cards are an excellent option for those with bad credit. Secured credit cards work just like regular credit cards, except they require an upfront deposit deposit as collateral, which usually determines your credit limit. They can be a good choice for people looking to build or rebuild credit, but not great if you have liquidity issues. Timely payments can gradually boost your credit score over time!

Not only that, but you can eventually graduate to a unsecured (or regular) credit card if you make enough on-time payments on a secured card. The bank will typically give you the deposit back as a statement credit for the new card. To summarize, here are the pros and cons of secured cards:

Some of our top picks 😎


3. Seek out a co-signer

If you have a trusted friend or family member with good credit, you can ask them to co-sign a loan or credit card application. A co-signer is someone who agrees to share the responsibility of the debt. Their good credit can help you qualify for a credit offer and potentially secure more favorable terms. However, it's crucial to understand that if you default on the debt, it can negatively impact both your credit and the co-signer's credit. Here are the pros and cons of getting/being a co-signer

4. Shop around online for regular credit cards

There are a number of websites that compare credit offers for people with bad credit. This can help you find the offer that’s best for you. Start your search on CreditRepair.com, NerdWallet, or Bankrate.

When you're shopping for credit offers, it's important to compare the interest rates, fees, and terms of each offer. It's also important to make sure that you only borrow what you can afford to repay. Here are some credit cards that are offered to people with less than great credit:

5. Build your credit with a credit builder loan or app

Many banks and credit unions offer credit cards and loans to people with bad credit. They may have special programs designed to help people rebuild their credit. Here are some examples:

If you don’t want to take out a loan, there are credit builder apps which typically charge a small monthly fee to report your recurring expenses to the credit bureaus. Here are a few we like:

Some bonus tips:

  • Make all of your payments on time and in full. This is the most important thing you can do to improve your credit score.
  • Pay down your debts. The less debt you have, the better your credit score will be!
  • Keep your credit utilization low. Your credit utilization is the amount of credit you're using compared to the amount of credit you have available. It's best to keep that number below 30%.
  • Avoid opening new credit accounts too often. Opening new credit accounts can temporarily lower your credit score.

The Bottom Line

If you're navigating the challenging waters of bad credit, remember there’s hope for you to improve your financial situation. By taking these steps, you can make progress towards a better financial future and regain control of your credit. Remember, it's never too late to start building a stronger financial foundation!

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