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Second-chance credit cards: What you need to know
There may be many reasons your credit score isn’t where you want it to be. Maybe you’ve missed a few payments or needed to declare bankruptcy in the face of financial hardship.
If you’re ready for a fresh start to take control of your finances, a second-chance credit card can help. Use these cards to take another shot at using credit responsibly. If you consistently make payments on time, you could see your credit score rise.
What are second-chance credit cards?
The biggest difference between second-chance and regular credit cards is second-chance cards are meant for those rebuilding credit with poor credit scores of 300 to 619. Because lenders understand that customers looking for these cards tend to have damaged credit histories, they are typically more lenient with their acceptance criteria, giving you another try at using credit responsibly.
Which second-chance cards should I pick?
If you have poor credit, you won’t qualify for the majority of credit cards. However, you’re not out of luck. There are two types of second-chance credit cards to choose from: secured credit cards and unsecured cards for poor credit.
Secured credit cards
Secured credit cards require an upfront deposit — around $250 — before you can open an account. Your deposit is collateral for your card provider if you fail to pay your balances.
Although locking away hundreds of dollars isn’t ideal, doing so gives you a higher probability of getting a credit card.
Though it’s fairly easy to get a secured card, you may still be declined for one if your credit is too low. In that case, consider a secured card that doesn’t require a credit check, like the OpenSky® Secured Visa® Credit Card or the primor Green Dot primor® Visa® Classic Secured Credit Card. Your chances of card approval are extremely high as long as your income exceeds your expenses.
Our pick for secured credit card
OpenSky® Secured Visa® Credit CardRead more
Unsecured credit cards for bad credit
Alternatively, you can look for an unsecured credit card that’s marketed to those with bad credit. The good thing is you won’t have to pay a security deposit. On the downside, this type of card is relatively rare and tends to come with high fees.
Look for a card that allows you to prequalify without affecting your credit score. That way, you’ll know beforehand if you have a good chance of approval. Try the Credit One Bank® Unsecured Visa® for Rebuilding Credit, which is open to those with less-than-stellar credit. You can prequalify for either one with no effect on your credit score.
Should you carry a balance on your card?
Whichever card you pick, consider paying off your balances in full each month. Because second-chance cards are geared toward people with poor credit, they typically come with high interest rates. Avoiding a balance will keep you out of debt and focused on the real goal: building your credit score.
What should I do once I get my card?
Once you receive your card, your second chance begins in earnest. Now’s the time to watch your payment due dates like a hawk. Commit to making timely payments, because this is how you’ll increase your credit score. Mark your calendar, set reminders on your phone or set up auto pay to more easily manage your payments.
Along the way, you can work on your financial habits. For example, overspending may have contributed to your poor credit. Your second-chance card likely comes with a low credit limit, which could help you practice controlling your spending. You can also learn how to pay off your card balances before spending more.
Ultimately, succeeding with a second-chance card boils down to keeping your spending in check and paying off your balances on time. If you can do this, you’re sure to see your work rewarded with an improved credit score.
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