Can You Get a Credit Card With a Poor Credit History?

Can You Get a Credit Card With a Poor Credit History?

Written by Caitlin Wood
Last Updated November 30, 2021

The thing about credit is that you need it to get it; it’s the worst kind of catch 22 because it can truly affect someone’s life and prevent them from getting the money they need. Most people start out with a credit card to build their credit history but if you have no credit history or bad credit then how do you get a credit card? There are thousands if not millions of people who are in this exact situation, you aren’t the only one.

The good news is that because there are so many people stuck in this catch 22, lenders are learning how to better serve people trying to build or improve their credit. Unfortunately it’s not quite as easy as it used to be for people with poor credit to obtain a credit card, but it’s also not impossible. Here’s what you need to do.

You Still Have Options

Just because you have a lower credit score or a bad credit history doesn’t mean that you should settle for the first credit card company that approves you. It’s true that you’ll probably have fewer options than someone who has good credit, but like we discussed above credit card companies are starting to work more and more with and for people with bad credit. Shop around a bit, even if the interest rates of the companies willing to give you credit are only slightly different it will still help you in the long run.

Choosing the best option for your situation should be your number one priority. Get a free credit check and see exactly what you’re dealing with, your idea of bad might not be so bad. Seeing your actual credit score number might help you work harder towards improving it in the future, or help you decide on the best company to apply for a credit card with.

Credit Scores 101

In Canada credit scores range from 300 to 900. Depending on where your score falls within this range it will be difficult or easy to obtain a new credit card. Here’s a breakdown of the poor credit range and how you should go about looking and applying for a credit card.

Check out our learning center, Credit Scores 101.

A Credit Score of 500 or Below

Having a credit score of 500 or below will unfortunately make it very difficult to qualify for a credit card. There are two situations you might be in with a credit score of 500 or below, either you’re just starting out and want to build a credit score or you’ve made some bad financial choices and want to rebuild your score. If you’re a young student then don’t worry there are lots of credit card options for you. But if you’ve recently been a part of a bankruptcy or defaulted on a loan then you might want to consider a secured credit card.

Secured credit cards require that you put down a security deposit as collateral so your lender doesn’t bear all the risk. The security deposit is usually equal to your credit limit. Not all credit card companies offer secured cards and not all secured credit cards are created equal, so just like you would with a traditional card, shop around and do your research. Finally, make sure the company you choose reports to the credit bureaus, this is extremely important if you’re trying to rebuild your credit score.

A Credit Score of 600

If your credit score falls in the low 600s then you’ll definitely have more options then someone with a score in the 500s. You’ll probably qualify for a traditional credit card and won’t need a secured one, but you’ll also still be a high risk. You’ll have to look around and find a company that’s willing to approve people will slightly lower credit scores, but it won’t be impossible. Unfortunately you will probably have to accept an above average interest rate. But, the great news is that once you’re approved for a card you can use it to rebuild your credit score and then apply for cards with lower interest rates.

A Credit Score of 650

Once your score breaks into the high 600s you should have significantly less trouble being approved for a traditional credit card. But you’re not quite out of the lower credit range yet, you’ll have no trouble getting a credit card but your interest rate and fees might still be high. At this point boosting your score into the 700 range should be your top priority as this means lower interest rates which will save you money.

For more information on credit score ranges, click here.

Moving Forward

So now that you have a credit card you need to use it responsibly, pay the full amount on time and make sure the balance doesn’t get out of hand. You worked hard to get this credit card so don’t make your situation even worse by maxing out your card and putting yourself into debt. If you make your full payments in time and keep the ratio between available credit and your balance low, after a while you should be able to see a difference in your credit score.

Once you’ve improved your credit score you’ll be able to apply for a new card with a lower interest rate and even apply for loans. It will take some time and effort but all your hard work will be worth it in the end.

Rating of 5/5 based on 2 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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