Can I Get A Credit Card With Bad Credit?

We explain how to apply for a credit card with bad credit – without being rejected by the banks and ruining your credit score further.

If you have a bad credit rating, it’s not all doom and gloom. You can still apply for a credit card with bad credit, and there are still reputable lenders out there that can give you a second chance at being a responsible borrower. Of course, you have to do your homework first before applying, and provide a lender with good reasons to give you a line of credit.

How to get rejected for a credit card

If you just keep on applying for credit cards knowing you have a bad credit rating, you will continue to be rejected by banks and credit institutions. Lending institutions have lending criteria that they have to follow by law – so they can’t give you a credit card unless you meet those criteria.

How to get approved for a credit card

Here’s the typical lending criteria that you need to meet when you apply for a credit card with bad credit:

1. No job? Get a job

A lending institution is not legally allowed to give you a credit card unless you have enough annual income to meet the minimum repayments for that card’s credit limit. And you should think twice before applying for a credit card if you can’t afford to repay your card in full each month, anyway – you would be better off using a debit card than getting into debt.

If you don’t already have a regular job or a reliable source of income, don’t apply for a credit card just yet. You are likely to get rejected by major banks and other credit lending institutions, which creates another black mark on your credit report. We also certainly don’t want to see you falling into the trap of payday lenders.

How much of a job is enough? For those who have are employed as casuals or contractors, you may need to demonstrate a long-standing working relationship of more than 12 months with your current employer.

What if I have multiple jobs? Having more than one employer in a short span of time doesn’t actually help you get a credit card with bad credit, because most lenders are looking for one or two stable sources of income to repay the card, rather than several smaller jobs.

2. Pay off other loans or credit

Lenders usually approve credit cards (or other types of loans) based on your repayment history with cards or loans you already have. You will need to demonstrate a consistent history of meeting your required monthly repayments over the past months. For credit cards, you will need to show that you’ve been making more than just the minimum monthly repayment, to show that you can actually repay the debt.

Need some help working out how to repay your debts? Check out some of our guides:

bad debt credit card Work out how to separate your debts and create a repayment plan
4 methods for debt consolidation – find out which one is cheapest
11 tips to repay your debt faster
Consider a balance transfer to repay your credit card debt in a set timeframe
bad credit rating Look for a financial counsellor – not a debt solution company or debt repair company
Don’t pay too much in interest on a debt consolidation personal loan
Stay patient and grateful while repaying your debt
Stay on top of your debt
Budgeting & Saving Tips to keep using once you are debt-free

3. Fix your credit report

You can check your credit rating and your credit history report for free with Veda (MyCreditFile.com.au)Dun & Bradstreet (CheckYourCredit.com.au), and Experian Credit Services. Read this article to find out more on how to do it.

Why should you check your credit history report? You can’t improve your credit rating until you know what black marks you need to fix. And you never know what it might uncover – an unpaid phone bill that you can afford to repay now, or even an administrative error that is the whole reason why you have bad credit. It’s easier to fix your credit report now than to apply for a credit card and be rejected, because being rejected is just one more black mark on your credit report.

4. Start saving

Lenders look at your current bank statements when you apply for a credit card with bad credit. If you’ve overdrawn your account recently, or if any direct debits have been dishonoured because there wasn’t enough in your account at the time, these things do not look good to lenders.

It’s essential to prove that you are not spending all of your income on your expenses and other debts, but that you are actually saving a small amount each week. This says to the lender that you have the finances to repay a credit card if they give it to you.

You might even consider whether a debit card would fill your needs better than a credit card.

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