How to Get a Credit Card Despite a Terrible Credit History

So you've got bad credit.

And you know the only way to build good credit: by using credit. Getting loans, using credit cards, and using debt responsibly is the only way to build a solid credit history.

The catch is this: if you have bad or nonexistent credit, how do you get approved for lines of credit (which require you to have good credit)? It's like the old job-hunting problem for college students—employers want you to have experience, but the only way you get experience is by getting hired.

Your answer? Secured credit cards.

Secured credit cards are credit lines where you put down a deposit when you receive the card. This acts as your "credit line." For example, if you have a $300 secured card, you'll place $300 down with the creditor. You're then able to use your credit card up to that limit. This offers you a chance to break into the cycle of good credit to good offers to better credit to better offers.

Some secured credit cards even have a $0 annual fee—Discover is one of the companies that offers one. Discover also allows you to upgrade your secured card to an unsecured one once your credit reaches a healthy level. Other cards are specifically made for people with no bank account, bad credit, or low secure deposits.

What's the Difference Between Secured Cards & Prepaid Debit Cards?

In both cases, you're putting down your own money to use the card. The vital difference though, is that use of the secured card is reported to the three major credit reporting agencies. Even though you're technically using your own money as "credit," you're able to build your credit history like anyone else.

Eventually, if you keep your balances low, you'll be able to get an unsecured (normal) credit card—and get back your secured deposit in full.