A credit score of 550 lies within the poor credit range. Credit scores from 300 to 579 are considered very poor. It is difficult to get a credit card if your scores fall within that category. Despite that, you can still get credit cards for a 550 credit score. Such cards are termed as credit cards for bad scores and aim at helping the holder to improve his or her credit score.
A poor credit score is a real drawback when it comes to financial development. Imagine a situation where almost every financial institution is turning you down on loans and credit card applications. You can only rely on your friends and relatives to boost you financially. If you succeed in getting a credit card, fees might be very high, especially for unsecured credit cards.
Secured credit cards can give you a large credit limit even when you have a bad credit score. It is because you have to deposit some amount of money to act as your credit security. The more funds you deposit, the more you increase your limit. It shows that it is possible to get credit cards with a 5000 limit with bad credit. Again, most secured credit card issuers do not bother with your credit score.
How can you get a credit card for a 550 credit score?
According to FICO, 550 credit score is poor. Despite that, getting a credit card is possible. First of all, you should research all the available bad credit cards and see which of them suits you. Various credit card issuers charge different fees on their cards. Secured credit cards have low-interest fees as compared to unsecured credit cards.
Furthermore, when choosing a credit card, consider cards with rewards such as cash backs, miles, and points. You will enjoy using the card as you benefit from the services.
What are the requirements when applying for a credit card?
For you to apply for a credit card there are requirements you should meet. These include the following.
i) Social Security number
A Social Security Number (SSN) is the numerical identifier given to U.S. citizens and some residents by the federal government to track their income and determine benefits. It is compulsory for anyone seeking a credit card to have the number so that banks can ascertain his or her source of income.
ii) Identification documents
You should have all the necessary identification documents so that your bank can prove your identity.
iii) Source of income
You need to show proof that you will be capable of paying your credit card debt. There is no way a bank or any other financial institution will give you a credit card if they are not sure how you will pay back the debt.
Sources of income include employment by a company, organization, or parastatal. One may also be self-employed if he or she has a business. You can quickly get a small business credit card for bad credit if you have an enterprise with good returns since it gives the card issuer confidence that you will repay any credit card debt.
Special groups such as students who only earn very little during their part-time jobs can get a student credit card. The limit might be small, but it helps to some extent.
iv) A good credit score history
Most credit card issuers require you to have a good credit score. Some banks will ask for a good and consistent credit score of around seven years. Such restrictions make certain credit cards inaccessible to those with poor credit cards.
However, people with bad credit scores can apply for unsecured credit cards for bad credit. Although the cards come with a lot of expenses, such as high-interest rates and maybe monthly charges, they act as an excellent tool to improve your credit score. The credit cards for bad credit with no deposit may give you a low limit if you have a terrible credit history. Your limit increases with time, depending on how you utilize your card.
If you have no credit history, you should not worry about getting a secured credit card. People who have never taken any credit do not have any credit history. Having a secured credit card can help you register some credit history. A secured credit card needs you to deposit some amount of money as security. You then get a limit equal to your deposit or a percentage of your deposit. After some period of excellent utilization of your credit card, you may get an unsecured credit card and get your deposit back for usage.
What is the importance of having a credit card?
There are various ways on how a credit card can help you. First of all, you can make convenient purchases of goods and services even when you do not have cash at hand at places that accept card payments.
During the card usage, you can also benefit from cash backs, miles, and points. You can redeem points at shopping centers for goods and services. You can see that you benefit more by using a card than the real money while spending the exact amount you could have used by using cash.
You will also benefit from the card by increasing your credit scores. Bad credit cards, credit cards for fair credit with high limits, and so on help you to improve your scores if you utilize the card well. With time, you will find yourself within the best range of scores.
Moreover, credit cards offer security to your money. With a credit card, you do not need to carry a lot of money around, which might be stolen by thieves. Even when you lose the card, you are not liable for any unauthorized transaction as long as you report the loss to your bank.
How do you avoid a poor credit score?
You can avoid falling in the lousy score category by ensuring that you utilize your card well.
First of all, you should pay your debts on time. Early payment of debts contributes a large chunk in your overall score. Many people with bad credit scores have found themselves there due to failure to pay their debts on time.
Secondly, you need to take manageable credit cards. So do not acquire too many cards to the extent of some remaining dormant. A dormant credit card can drastically lower your credit scores. You should have a few cards which should remain active all the time.
How are secured credit cards different from unsecured credit cards?
Although the two cards may appear similar in physical appearance, they are different. The notable differences between the two cards include the following.
- Secured credit cards require you to pay a deposit while unsecured credit cards do not need you to pay anything.
- Secured credit cards do not require any credit score, while unsecured credit cards need you to have any number of credit scores. Unsecured credit cards for 500 credit scores are common for people with poor credit scores. They are great options to increase your credit scores.
- Secured credit cards charge fewer interest fees as compared to the unsecured credit cards.
Secured and unsecured credit cards can be tangible or virtual. There are various free virtual credit cards with no deposit that you can get in various financial institutions. An excellent example of virtual credit card issuers includes the NetSpend, Payoneer, American Express, and Neteller, among others.
Which Credit Cards can I get with a credit score of 550?
Various credit cards are suitable for a credit score of 550. They include the following.
1) Credit One Bank Unsecured Visa with cashback rewards
The card gives you a 1% cashback on all eligible purchases. It is an excellent option to go for if you have a credit score of 500 or below. Moreover, the card does not charge annual fees, and you do not need a security deposit. Again, your credit score is not affected when you pre-qualify. Reed more
2) Credit One Bank Visa Credit Card
With this card, you will benefit from 1% cash backs on all eligible purchases. Check if you qualify without affecting your credit score. Reed More
3) Indigo Platinum MasterCard
For you to use this card, you have to pay a $0 – $99 annual fee. Again, the card is suitable if you have previous bankruptcy. The pre-qualification process is easy. Reed More
4) Discover it Secured
The card requires no annual fee. Enjoy 1% cash back at gas stations as well as restaurants for up to $1,000 in combined purchases each quarter. You also get 1% cashback on all other purchases. Reed More
5) Milestone Gold Mastercard
The card charges a $35 – $99 annual fee. Furthermore, a previous bankruptcy is alright. Checking your qualification does not affect your credit score. Reed More
Although a 550 credit score is horrible, holders can still get credit cards. One can get a chance to increase his or her credit score. Credit cards with cash backs and points are the best to have. Again, you should strive to improve your credit scores so that you can move from a poor credit category to an excellent credit position. Any credit card, be it a secured or unsecured is eligible to help you improve your scores.