Yes, 590 is pretty bad. But I've seen worse. You're in a high risk category of borrower that most lenders won't want to touch. Understanding how you got to that score and what you're going to do next will determine the right credit card for your situation. And yes, there are legitimate credit cards for bad credit out there.
A credit score below 600 means you've probably endured some major life events that caused you to fall behind on your bills. Maybe you lost a job, or faced a severe illness. Or, like many young consumers, you just weren't prepared to manage an increasing number of monthly payments. You've probably lost a credit card or two along the way.
It's time for a reset. It's also time to change the way you use your credit cards. Understanding how credit bureaus calculate your creditworthiness can help you recover quickly, as long as you're committed to a long term change. How much you owe and how often you pay your bills on time make up more than two-thirds of your credit score, according to officials at FICO. First, you've got to find a lender willing to send you a bill that you can pay every month.
Avoid responding to the offers you're receiving in the mail. Predatory lenders thrive by sending letters, offering you a "second chance" with cards that carry some of the highest interest rates and service charges in the industry. Instead, compare credit card offers from lenders who specialize in helping consumers rehabilitate their credit:
- Capital One. The youngest of the major American credit card issuers uses high-tech wizardry to assess your long term risk, far beyond just looking at your credit score. If they can't find an unsecured card for you, their secured card offers a path to qualify for more credit over 18 months.
- Citibank. Though Citi spent the last few years focusing on consumers with high credit scores, it recently started promoting its secured credit card again while touting a "Simplicity" card that eliminates late payment penalties.
If you're worried about coming up with the $300 you'll need for a secured credit card's security deposit, remember that you'll get that cash back when you graduate to an unsecured account. Compare that to paying the same amount in fees for a subprime credit card that keeps your credit line tied up all year. Good luck!