Can I get a credit card if I have less than stellar credit?

For many Americans who have a less-than-stellar credit history or no credit history at all, credit can be a source of ongoing frustration.

That's partly because credit cards have become such an important player in our financial lives. Whether we're shopping online, using an app-based ride service or visiting a store that doesn't take cash, not having a credit card can be a hassle.

Of course, a debit card can be an option in these situations, but they don't always offer the same features and protections. So if your history of credit usage, or lack thereof, has left you without a card, are all of these modern conveniences out of your reach?

The short answer is no. Read on to learn how you can build credit and improve your chances of being approved for a credit card.

What a "good credit score" really means

First off, what's a good credit score and is it required to get a credit card?

A good credit score can mean different things to different people. There's no firm rule that defines a good credit score, as it often varies by the credit card issuer and the credit card itself.

These behaviors, however, affect your credit score because they're important to lenders who determine whether to approve your credit card application.

• You make routine, on-time payments.
• You don't max out credit limits or owe a significant portion of your total available credit. Ideally, you pay off your credit card balances in full each month.
• You have a long credit history.
• Your accounts don't fall into collections.

A common, yet false, assumption is that if you ignore a credit problem for long enough or close an account that's giving you trouble, it'll go away. This couldn't be further from the truth. Bad credit history can stay on your credit report for up to seven years, and certain types of bankruptcy for up to 10 years. Late payments and bankruptcies will have a negative impact on your credit the entire period they are on your report, but the degree of impact typically lessens over time.

Improve your credit score by paying down debt.

It may sound simple, but if paying off debt were easy, fewer Americans would struggle with it.

Paying off debt starts with managing your spending. To do this, make a budget to be sure you spend less than you earn, and stick to it. Factor in on-time payments for any remaining open credit accounts.

If you're overextended, start paying down those debts as quickly as possible. If you need a budget, a great place to start is USAA's How to Budget page.

We suggest the "Three A's" approach to getting debt under control — assess, avoid, attack.

Assess

Check your credit to understand what you owe and where. You can check your credit report once a year for free at annualcreditreport.com Opens in a New Window.‍ ‍ ^{See note 1} Look at your statements and make sure you recognize everything listed. If you see any mistakes, dispute them. Take a look at your current spending as well.

Avoid

Until things are under control, try to avoid using credit. Build some cushion into your savings so you don't have to use credit if something unexpected happens. The industry norm is to have three to six months of living expenses saved up in an emergency fund savings account.

But, don’t let that amount discourage you. Start with a $1,000 goal. That's a car insurance deductible, maintenance around the house or a medical bill payment. Then, continue saving until your emergency fund is fully funded.

One way to get there is through a concept called "step-up savings." Here's how it works: Over a 52-week period, save $1 more per week than the previous week. For example, save $1 the first week, $2 the second week, $3 the third week, and so on. At the end, you'll have $1,378.

Attack

For the debts you have already, get those balances in order. There are two schools of thought when it comes to this. Either pay off the smallest balance first or pay off the one with the highest interest rate first. In either case, you pay the minimum on all but one debt. For that one debt, you'll pay extra until it's paid off. Then you'll roll that payment amount onto the next debt and so forth. There are additional resources to help you pay down debt at USAA's How to pay down debt page.

Building your credit

Just because you once had bad credit doesn't mean a good credit score is off limits for you or that you can never get another credit card. And just because you've never had credit doesn't mean you never can or never will. Consider which of these strategies to build credit may be a good fit for you.

• Get a secured credit card. These work well because you put down money up front, and that along with your creditworthiness determines your credit limit. You can reestablish credit and then apply for an unsecured credit card later.
• Piggyback off the good credit of a family member. If your spouse or another household family member has good credit, ask them if they'd be willing to add you as an authorized user. As long as their credit card issuer reports authorized users to the credit bureaus, you can piggyback off them and inherit their good credit.
  
  Keep in mind, if the primary account owner doesn't have good credit history on the account, then you wouldn't benefit, since any negative history associated with that account would be reported on your credit. It's also risky for the primary cardholder, who's trusting you to be responsible. But if problems arise, they can remove you from the account at any time.
  
  Read this article to learn more about how you can use a credit card to build credit.
• Talk to a reputable nonprofit credit counseling agency like the National Foundation for Credit Counseling Opens in a New Window.‍ ‍ ^{See note 1} The Department of Justice also has an approved list of credit counseling agencies. Along with several federal agencies, we caution against credit repair companies or debt settlement companies that promise to fix the problem for you at a cost.

Whatever your credit situation is, it makes sense to track your finances, follow a budget or spending plan, save for the unexpected and limit how much you borrow. Then you've always got a handle on where you stand.

It involves hard work but take heart. Over time, you can establish credit or improve your credit score and get back to using a credit card responsibly.