Credit cards are helpful tools for financing important purchases while staying within your day-to-day budget. But if you have bad credit, it can be tougher than usual to find the best credit card or open a new line of credit without high-interest rates from credit card issuers or having to make a refundable security deposit.
Fortunately, many retailers and other companies let you get a new credit card specifically for individuals with bad credit. If you don’t know where to look, you’ve come to the right place. Let’s break down the best store credit cards for bad credit in detail, including cards that offer a bonus, cash rewards, or other perks.
What Does a Bad Credit Score Mean
A bad credit score means your score is somewhere below 600 or 550, depending on whether you’re using the FICO Score or VantageScore credit systems. This score takes into account factors like your credit utilization ratio, any special financing you’re using, and how long it’s been since you opened your initial credit line or made your first purchase on a credit card.
Regardless, a low credit score signals a few worrying things to lenders. Specifically, it tells them that you may not be a trustworthy borrower or be trusted to pay back any debts you take out.
For borrowers, a bad credit score means they’ll have fewer financial options until they improve their credit scores. They’ll have access to fewer loans and lines of credit, and those they do have access to will have unfavorable terms.
A bad credit score can be acquired in a few different ways. Note, too, that “bad” credit is not necessarily the same thing as no or little credit, which is common for teenagers.
Bad Credit Scores From Debt
Firstly, you can get a bad credit score from having too much debt. For example, if you take out too many loans in rapid succession, you’ll have too much debt under your name and lenders could be less likely to let you borrow further from them until you pay those debts back.
Bad Credit Scores From Too Many Inquiries
Alternatively, your credit score could decrease and stay down if your credit score is subject to too many hard inquiries. When you apply for a loan, lenders check your credit score by making hard credit checks. These checks reduce your credit score by a few points.
So, if you try to get too many loans within a month or so, your credit score may suffer. You should only apply to loans that you think you are likely to get and that you really need.
Bad Credit Score From Late Payments
By far the most common way in which people damage their credit scores is from not making payments on time. Late payments, or failing to make payments entirely, can reduce your credit score drastically and quickly.
Being unable to pay utility bills, loan payments, or credit card minimums all impact your creditworthiness and show lenders that you shouldn’t be given more debt or credit.
Bad Credit Score From Too Many Accounts
Lastly, your credit score could also suffer if you have too many open credit accounts. For example, if you have five credit cards, your credit score may be capped at a low number even if you don’t use those cards often or at all. For this reason, you should try to minimize how many open credit accounts you have at any one time.
How Do You Improve Your Credit Score?
While it’s all too easy to damage your credit score, there are also some easy ways to improve your credit score over time!
Improve Your Credit Score With On-Time Payments
For example, you can and should begin by making each bill or credit card/loan payment on time and in the appropriate amounts. Making on-time payments for your existing debts is the best and fastest way to boost your credit report, though it will take some months before you see major results.
Still, this will improve your credit history in the eyes of the major credit bureaus: Experian, Equifax, and TransUnion. As a cardholder with a good credit history and at least fair credit, you’ll avoid unsecured cards with high APR and/or extra fees.
Improve Your Credit Score by Minimizing Debt
Next, you can boost your credit score by minimizing the debt under your name. If you have the means, try to clear existing loans or credit card balances ASAP. Eliminate as much debt as you can or your credit score may balloon rapidly. Note that you still need to pay back any ongoing debts or utility bills consistently and on time for these benefits to last.
Improve Your Credit Score by Budgeting and Wise Spending
Alternatively, you can improve your credit score more gradually — but oftentimes for more consistent results — by budgeting carefully and spending wisely. For example, save up for big purchases instead of taking out a loan.
What Is a Store Credit Card?
If you need to make a purchase for an appliance or an important piece of furniture, you can sometimes get a store credit card. Store credit cards are specialized lines of credit offered by retailers. You can normally only use store credit cards at the stores they’re offered. For example, you can use a Walmart credit card at Walmart for financing Walmart purchases.
Who Offers Store Credit Cards?
Many of the world’s biggest retailers offer store credit cards, especially if they offer items worth several hundred dollars. These companies include Amazon, Walmart, and Kohl’s.
Do Store Credit Cards Have Rewards?
Sometimes! Many of the best store credit cards include rewards programs or incentives. Used wisely, these can help you save even more money or net you some discounts on popular items, like furniture pieces, electronics, and other purchases.
What Are the Best Store Cards for Bad Credit?
Let’s break down some of the best store credit cards for folks with bad credit in detail. These come issued by Visa, MasterCard, and other big card companies. The best cards have perks, are accessible even if you have poor credit, and have a low-interest rate.
The Amazon Store Card
Amazon offers an Amazon Prime Secured Card. This is perfect for individuals who need to rebuild credit or build credit from scratch. It includes a lot of great benefits, such as 2% rewards for all Amazon purchases if you have an Amazon Prime membership.
Alternatively, you can apply for an Amazon Prime Store Card. This card nets you 5% back on everyday Amazon purchases, and it comes with 0% APR financing options. You’ll also benefit from no annual fee. Like all secured credit cards, this card requires a security deposit. But unlike unsecured credit cards, it’s a guaranteed means for building credit. Note that it comes with low credit limits for most users.
The Kohl’s Card
The popular clothing and apparel store Kohl’s offers a dedicated credit card plus access to your store credit account anytime and anywhere. This card is very easy to use, allows you to enroll in paperless statements, and lets you request a credit limit increase after several months of responsible use. Paying your bill is quick and easy since you can do it entirely online.
The Walmart Card
Walmart also offers a stellar store credit card for those with bad credit. You’ll get 5% cashback for Walmart purchases, plus another 2% cashback at various associated stores and fuel stations. This rewards credit card is perfect for frequent shoppers at Walmart and the rewards possibilities are diverse and varied.
The Becca’s Home Charge Account
If you need to pick up furniture specifically, consider Becca’s Home. We allow you to lease furniture and then pay for it over time and through affordable monthly installments. You can even pay off your furniture’s remaining price early and take full ownership, or take advantage of our 90-day same as cash offer.
Conclusion
Ultimately, the best store credit cards for bad credit are those you’ll use wisely. It’s a good idea to only get one or two store credit cards at maximum, especially if you know you’ll shop at those cards’ stores frequently.
Want to know more about Becca’s Home credit account and how it can help you finance furniture purchases? Visit us today!
Sources:
What Is A Bad Credit Score? | Forbes Advisor
How to “Fix” a Bad Credit Score | Experian
Understanding Hard Inquiries on Your Credit Report | Equifax
