Step 1: Be realistic

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Take an honest look at your financial situation.

Credit card issuers like to wow consumers with low interest rate offers and perks like cash back and discounted concert tickets. But remember, you have bad credit — so no soup for you.

You'll be lucky to get a card with a high interest rate, and your only reward will be points toward a better credit score. 

Start by checking your credit score and credit report. There are free credit check options that will give you a quick look at your score, or you can opt to pay a small monthly fee to see your full report and get ongoing credit monitoring service.

Simply add Capital One Shopping to your browser, and shop like normal. This free tool does the work for you.

Install Capital One Shopping

Step 2: Explore your options

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There is no One-Size-Fits-All solution for bad credit. Instead, you need to find the solution that works best for you.

Department stores and other retailers often have more relaxed standards for credit applicants. If your score is decent enough to be accepted, you might be able to get a store credit card.

These cards usually have low credit limits and might work only at specific stores, but they're a great way to reestablish credit.

Secured credit cards are another good option for applicants with poor credit. These cards are offered by banks, which require you to make a cash deposit.

The deposit amount becomes your credit limit, so if you don't make your payments, what you owe on the card is deducted from your deposit. But if you use the card responsibly, your deposit money will be returned, your credit will improve and you'll be offered a regular credit card.  

Step 3: Beware of hazards

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Don't be a victim of bad financial actors. Educate yourself on how to remain on the right path.

A person who has bad credit is at risk of being victimized by predatory companies dangling what are called subprime credit cards. 

These cards can come with super-high interest rates (we're talking 30%!), lots of fees, low credit limits and painful penalties if you're late with a payment or go over your limit. Subprime cards can be relatively easy to get, but it's also easy for them to put you in a spiral of debt.

Other companies offer products that won't do much for your bad credit. Prepaid credit cards are technically not credit cards at all. You pay a deposit, and it goes on the card. Your purchases come directly off the deposit amount.

There is no debt to pay back, so there is no benefit to your credit score. The main reason to have a prepaid card is if you don't have a bank account and want to make electronic purchases. 

Sign up for Credit Sesame and see everything your credit score can do for you, find the best interest rates, and save more money at every step of the way.

Get Started—100% Free

Step 4: Stick to your plan

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Once you have a plan, the only thing left to do is follow it.

Make a decision about what to do next and make sure you don't relapse into bad financial habits. Remember your goal of rebuilding your credit score long term, and before you know it, you'll start seeing better scores.

Little by little, you can revive your credit score!

Here's how to save up to $700/year off your car insurance in minutes

When was the last time you compared car insurance rates? Chances are you’re seriously overpaying with your current policy.

It’s true. You could be paying way less for the same coverage. All you need to do is look for it.

And if you look through an online marketplace called SmartFinancial you could be getting rates as low as $22 a month — and saving yourself more than $700 a year.

It takes one minute to get quotes from multiple insurers, so you can see all the best rates side-by-side.

So if you haven’t checked car insurance rates in a while, see how much you can save with a new policy.

About the Author



MoneyWise Editorial Team

These articles were created by the MoneyWise editorial team.

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