Have Bad Credit? There Are Still Credit Card Options for You

Don't give up on a credit card just because your credit isn't good.

Having bad credit can be really frustrating because you can find yourself in a situation where it's difficult to turn things around.

Most companies you want to do business with -- from utility companies to mortgage lenders -- are going to check your credit before they agree to let you become a customer. And if your credit score is low, they may not allow you to borrow. The big problem with that is, if no one gives you new credit, you'll have limited opportunities to show you can be responsible with it. And demonstrating your financial responsibility is key to raising your credit score.

The good news, however, is that you can typically get a credit card even if your score is low. And if you use that card responsibly, you can improve your score over time and open up the door to getting affordable loans as well as access to utilities with lower deposits.

How can you get a card even if your credit score is lower than you'd like -- and below what most card issuers like to see?

The best solution to getting a credit card for borrowers with a low credit score

If you're hoping to get a credit card with a low credit score and you're having a hard time doing so, secured cards could be your best bet.

Secured cards work a little differently than traditional credit cards. With most cards, you apply and the card issuer grants you a line of credit based on how much they trust you to pay back what you've borrowed. The only guarantee they have of repayment is your word that you'll cover at least the minimum due each month -- and it can be difficult for them to take effective legal action to collect what's owed if you choose not to pay as promised.

With secured cards, though, creditors eliminate the risk of nonpayment. That's because you have to secure the card with collateral. This generally means making a deposit with the card issuer that's held in a special account. The amount you deposit is equal to your credit limit. So, if you opted for a secured card with a $500 limit, you'd deposit $500 and would be given access to a $500 line of credit.

Secured credit cards work a lot like regular credit cards

Other than the fact you must make a deposit, secured cards work similarly to regular credit cards. You're allowed to charge up to the credit limit you've been given and are expected to make payments each month. As you pay down your balance, you free up your credit and can make charges again. And your payments are reported to the credit reporting agencies so you can develop a positive payment history. Depending on the secured card, you may even be able to earn rewards for the charges you make.

Since there's no risk to creditors since they could seize your deposited funds with a secured card, you can usually get this type of credit no matter how bad your score is -- even if you've had a recent bankruptcy. If you’re confident you'll avoid running up a big balance or miss payments, you should consider getting a secured card as soon as you can so you can start using it to improve your credit score and open up the door to new borrowing opportunities.

Learn More: Are you familiar with payday loans? If you're not, take a look at this guide by The Ascent on what payday loans are and how they can be risky.