If you are trying to apply for a credit card in this economy, expect to encounter some resistance if you have bad credit or don't have a credit history. Banks are tightening lending standards for nearly all types of credit. There is no set minimum credit score to obtain a card because each individual lender sets their own limits.

Credit card companies will usually not tell you what their minimum credit score is, but keep in mind that they may base their decision on other factors besides just your fico score (such as income, job history, and the balances you have on other credit cards)

Secured Cards Versus Unsecured Cards

If your credit is bad or you just don't have any history at all, you will probably only be able to get approved for a secured card. But don't worry, secured cards are just as good (if not better, in many ways) than unsecured cards.

For starters, virtually anyone can be approved for a secured card since the card is secured with a cash deposit. And secured cards function just like regular credit cards. In other words, the word "secured" is not printed on the card, so nobody but you and the credit card company will ever know it's secured.

Also, they often carry lower interest rates than unsecured credit cards. And if your goal is to improve your credit history and obtain an unsecured credit card one day, then you'll need to build a good credit history in order to do that.

Secured cards typically report to all three credit bureaus, which is imperative if you want to build a good credit history. Debit cards and prepaid credit cards do not usually report to the credit bureaus, so don't assume they will help your credit score at all.

Department Store Credit Cards

Most department stores and retail stores require that you have at least one major charge card before they will approve you for one of their cards. In addition, they will typically require a certain minimum credit score, often between 620 and 700. Be careful not to acquire too many department store credit cards. They usually only come with small credit limits, and it's easy to run those up which may inhibit your ability to obtain other types of credit and even lower your credit score. Start with a major charge card, and if you can't get approved for one, get a secured card.

Finance Company Accounts

These can be very tempting to get because the credit requirements are typically lower. But the credit bureaus know this, and as a result, they may penalize you for obtaining too many finance company accounts. They really don't help your credit history nearly as much as having a major card (secured credit cards fall into the category of major credit cards). If you really need something from a finance company (new furniture, etc), it's best to charge those purchases on a major credit card (or just pay cash if you can!).

Finance companies, such as rent-to-own stores and other companies that may provide title loans, typically charge outrageous interest rates, and it may be very hard to deal with them if you have a billing dispute because they control both the product and the financing. If you make a purchase on a major credit card and have a problem with the merchandise (damaged, not delivered, or doesn't work properly), a credit card company will usually remove the charge and handle the dispute on your behalf. The process with finance companies is usually more difficult.

Copyright (c) 2010 John Gough Rasor