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What You Need to Qualify for a Credit Card for Bad Credit

When you have damaged credit, those“easy-to-get” credit cards aren’t always easy to get.

Even withcredit cards forbad credit, issuers vet applicants carefully againstseveralrequirements, known asunderwriting standards, to find customers who are less likelyto default.In some cases, federal law also requires issuers to get certain information before extending credit to a borrower.

Ifyou want to qualify for a secured credit card— that is, a card that requires a cash deposit— or an unsecured card for bad credit, here’swhat you’ll need.

An identification number, an address and other personal information

Required for all U.S. credit cards.


No matter where you apply for a credit card, your issuer will always want to know who you are. Provisions of the USA Patriot Actdesigned to combat terrorism and money-laundering require issuersto get your personal information.

For most people, providing name, address and birthdate is the easy part. But if you’re new to the U.S.,filling outthe Social Security number field might be a stumbling block.If you don’t have an SSN, you can get an individual taxpayer identification number. Ifyou skip these sections altogether, or if you’re under 18, your application will be rejected.


Required for all U.S. credit cards.

Issuers must check thatborrowers have an “ability to pay” before extending them credit, under the Credit Card Act of 2009. Butdepending on the issuer, that can mean different things.

At the very least, your issuer is going to ask about your annual income, to make sure you have one. If you’re over 21, thisincludes all the incometo which you have “reasonable expectation of access.”That meansyou can include your partner’s income.

Most secured cards don’t have minimum income requirements. But sometake your debt and monthly living expenses into consideration. TheCapital One® Secured MasterCard®, for example, will deny your application if your monthly income doesn’t exceed your rent or mortgage payment by at least $425,according to its terms.

If you’re applying for an unsecured credit card from a major issuer, you’ll likely have to meet aminimum income requirement — usually $10,000 or $12,000 per year. If your income is too low, or you’re carrying too much debt, your application might be rejected.

A security deposit

Required for all securedcards.

Unlike “regular” credit cards, secured cards require cash collateral when you open a new account. Typically, you need to put downat least $200 or $300 for a security deposit, which thendetermines your credit limit. For example, a $300 deposit would get you a $300 limit. If you fall behind on payments, the issuer keepsthat deposit. Otherwise, you’ll get your money back when you close the account in good standing or upgrade to an unsecured credit card.

If you’re having trouble coming up with that kind of money, it’s usually best to save up for asecured card with a lower deposit requirement. Unsecured credit cards from subprime specialist issuers — or issuers that focus onborrowers with bad credit — may seem appealing, but could end up costing you over $100 more in fees each year, according to a NerdWallet study.

A checking or savings account

Requirement varies by issuer.

A checking or savings account gives you a secure place to store money and can help you build anemergency fund. But often it’s also requiredfor funding a secured card’s security deposit or used by issuers to determine yourfinancial stability. If your ChexSystems record iskeeping you from opening an account, look fora bank or credit union that offers asecond-chance checking accountin your area.

A credit history without serious negatives

Requirement varies by issuer.

Some credit cards, like theOpenSky® Secured Visa® Credit Card, don’t run credit checks. But most do. Usually, issuers do this to look for red flags that your financial life might be getting worse, not better. For instance, for theDiscover it® Secured Card – No Annual Fee, “Factors such as income, bankruptcy, debt and judgments” — for example, liens or lawsuits — “may impact your ability to be approved,” according to a statement from Discover. Among major issuers, these types of warnings are typical.

Tryto improve your credit as much as you can before applying for cards — say, by getting caught up on payments on your existing accounts. If a recent bankruptcy is keeping you from an approval, find out whetheryou can get a credit card with your local bank or credit union. While cards that skip credit checks are an option, they tend to be more expensive.

» MORE: Applying for a credit card after bankruptcy

A clean history with the issuer

Requirement varies by issuer.

Bad blood can sometimes get in the way of a credit card approval. If you’ve defaulted on your payments with a certain issuer before, that issuer likely won’t approve your application for a new card. Instead of dwelling on the past, starta clean slate by working with a different company. Remember, many banks are happy to get your business.Look for alender thatgives you achance to rebuildyourcredit on goodterms.

Claire Tsosieis a staff writer at NerdWallet, a personal finance website. Email:claire@nerdwallet.com. Twitter:@ideclaire7.

The article What You Need to Qualify for a Credit Card for Bad Credit originally appeared on NerdWallet.

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