Best Credit Cards For Bad Credit Score: Secured & Unsecured
Credit card for bad credit provides information needed for your bad credit cards. This post shows you some best credit cards for bad credit, how to tell you if you need a credit card for poor credit and how to choose and get it with credit score analysis. Keep reading for more details to learn!
About Credit Cards For Bad Credit
When you have a less than stellar credit score, getting approved for a credit card can be a challenge. And when you apply for a credit card and get turned down, it can boost your credit score because of the credit inquiry reductions that come with every application.
Borrowers with credit low score still have more ways to access credit. We’ve compiled a list of our top credit card recommendations for “subprime borrowers” and created a guide to help you navigate getting approval odds for a secured or unsecured credit card despite credit low score.
You typically have two options when you have lower credit and you’re applying for a credit card: a secured card, where you put down a deposit equal to the line of credit you’re applying for, or an unsecured credit card designed for those with credit low.
If you balk at the idea of putting down a deposit, know that many unsecured cards for people with poor credit are often loaded with fees and sky-high APRs. If you go with a secured card, try to select one that reports to all three major credit bureaus so that your on-time payments can help build your credit score as quickly as possible.
Whatever you choose, aim to use the new line of credit as a building block toward a stronger credit profile so you can qualify for better cards and interest rates on your other loans in the future.Consumers develop credit problems for a wide variety of reasons – most of which involve no actual wrongdoing on the part of the individual. Sometimes it’s nothing but bad luck.
Try explaining that to a credit card issuer though! These companies tend to look at applicants as a calculation of risk vs. reward; on the scale they operate, a handful of creditworthiness metrics summarize each individual. Garbage on a credit card application is a bad idea (and a crime) and there are simply no shortcuts, tricks or ways around hard numbers.
This leaves subprime borrowers with two main options: a secured credit card, which typically requires a deposit equal to the desired credit, or an unsecured card marketed specifically to those with poor credit. Each option has its own advantages and disadvantages, and which one to pursue, if either, depends on the individual’s goals and financial circumstances.
Best Credit Cards For Bad Credit
Below is our comparison among best credit card review for people with bad credit needed in details:
Petal 1 “No Annual Fee” Visa Credit Card
When you’re new to credit, qualifying for an unsecured credit card can be a challenge. The Petal® 1 “No Annual Fee” Visa® Credit Card, issued by WebBank, is one of a small handful of credit cards that applicants with a thin or no credit profile may consider.
- Earn 2%-10% cash back at select retailers.
- This card does not offer a bonus intro.
- Annual fee: $0
- Petal 1 does not require an annual fee or deposit. It doesn’t offer a welcome bonus or introductory APR, though that’s typical of credit cards aimed at those just starting to build credit.
Someone with badly damaged credit is unlikely to be approved for this credit card, as Petal 1’s terms state that previous bankruptcies or a history of missing payments may not qualify. The credit card’s ongoing variable APR range is on the high side, so if you plan to carry a balance, consider a card that offers a lower interest rate.
Navy FCU nRewards Secured Credit Card
The Navy FCU nRewards Secured Credit Card is an excellent option for someone with a qualifying military affiliation who wants to build their credit profile.
- Earn 1 point per dollar on qualified net purchases.
- This card does not offer a welcome bonus.
- Annual fee: $0
- For a minimum deposit of $200, this no-annual-fee card offers cash back rewards on qualifying net purchases. Earning rewards credit card on a secured card is rare, but what really makes this card shine is that it offers a path starting at six months to upgrade to an unsecured account.
The only downside – which is a big one for some – is that you have to be a member of a credit union to apply for the credit card. Membership is open to anyone who has a relative in the armed forces, including an applicant’s grandparents. You may also be able to find a secured card with a lower ongoing APR than the nRewards rate of 18% variable APR on purchases and balance transfers. No balance transfer fee is charged.
Tomo Credit Card
It could be an ideal solution for someone who has strong finances but no credit history in the US. The Company uses your salary information and other financial considerations to determine eligibility.
- This credit card does not provide cash back rewards.
- This credit card does not offer a welcome bonus.
- Annual fee: $0
- Tomo’s approval process means you’ll have to agree to link your bank account for a weekly automatic payment of your bill, making this more like a debit card than a credit card. But the weekly payments mean you don’t pay interest on your fees. And you don’t have to be a US citizen to apply for the card, although you do need a valid SSN or ITIN and a valid government-issued ID.
OpenSky Secured Visa Credit Card
The OpenSky Secured Visa credit card is a great option to help rebuild credit. No credit report is required to apply, so your credit score doesn’t matter like it does with traditional credit cards. It is even possible to get approved for this card if you have no credit score at all.
- This credit card does not provide rewards cash back.
- This credit card does not offer a welcome bonus.
- Annual fee: $35
- The credit card stands out from the pack because it doesn’t require a credit check or even a online banking account to be approved. This can be especially helpful for people with bankruptcies and back taxes, as many other secured cards won’t approve you for these reasons.
Discover It Secured Credit Card
The Discover it Secured Card comes with a great combination of features for those looking to build their credit. The card comes with no annual fees and earns rewards credit card to boot.
- Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases.
- Earn Unlimited Cashback Match – Discover credit automatically matches back all money earned at the end of the first year.
- Annual fee: $0
- In addition to a lack of fees commonly found with other secured cards, Discover card will review your account starting at seven months to see if you qualify to upgrade to an unsecured account, a worthy goal with any secured Map. Your deposit does not earn interest and the increased cash back at restaurants and gas stations is limited to $1,000 per month. quarter, but it’s relatively rare for you to earn rewards cash back at all on a secured card.
Credit One Bank Platinum Secured Credit Visa For Rebuilding Credit
While we generally don’t recommend credit-rebuilding credit cards that charge an annual fee, the Credit One Bank Platinum Secured credit Visa Credit-Rebuilding Visa of Capital One earned a spot on our list for its reasonable structure.
- Earn 1% cash back on qualifying purchases.
- This Platinum secured credit card does not offer a welcome bonus.
- Annual fee: $75 for the first year, then $99 annually ($8.25 per month)
- Earning rewards cash back on everyday spending on an unsecured card is a nice perk for a card aimed at those rebuilding their credit. Credit One says they will review your account regularly to see if you also qualify for a credit line increase. Just be aware that there are other options you may qualify for that don’t charge annual fees.
Bank Of America Customized Cash Rewards Credit Card
The Bank of America Customized Cash Rewards Secured Credit Card offers generous cash rewards credit in a choose-your-own structure. Each calendar month you can change which of the six spending areas you want as your enhanced cash-back earning category.
- Earn 3% cash back in a category of your choice: purchases of gas, online shopping, dining, travel, online drugstore or home improvement/decor; 2% cash back at grocery store credit and wholesale clubs; unlimited cash back on all other purchases. Earn 3% and 2% cash back on the first $2,500 in combined Category/Merchant/Wholesale Club purchases each quarter, then earn 1% thereafter.
- This credit card does not offer a intro bonus.
- Annual fee: $0
- Bank of America will periodically review your account to see if you qualify to get your deposit back and upgrade you to the unsecured version of the card. You can redeem your earnings for any amount at any time for account credits, deposits made directly to a Bank of America checking or savings account, or for credit to an eligible account with Merrill.
PREMIER Bankcard Mastercard Credit Card
- If your FICO score is low, don’t let that deter you from applying; we approve applications that others might not.
- You can apply without having decent credit.
- Simply complete the brief application, and you’ll know in 60 seconds whether you’re accepted.
- Our distinguished US-based customer service representatives are available to assist you whenever you need them.
- FICO scores are used to gauge a person’s creditworthiness and may be one indication of the kind of credit you qualify for. To be clear, eligibility for any PREMIER Bankcard product purchases is neither assured or inferred by a credit score alone.
Methodology For Determining Best Credit Card For Bad Credit
We analyzed dozens of credit cards marketed with Nerdwallet, Bankrate and Credit Karma to subprime borrowers. Factors considered for each category included the annual fee, monthly fees, security deposit requirements, APR on purchases and other benefits that come with card ownership such as rewards cash back and other perks.
A Low Credit Score And Credit Card With Bad Credit
There are many different credit scoring models, and each lender may have a particular version they prefer to use. This means that the definition of what constitutes a low credit score can vary among lenders. While there isn’t exactly a uniform number that marks the threshold between “bad” and “good” credit, a FICO score below 580 is generally considered very low, and “fair” usually describes score between 580 and 669.
Credit Card And Credit Score
The lower your credit score, the more limited your options when it comes to credit cards. Typically, consumers with low score credit will only be able to get approved for a secured credit card or a card with higher-than-average interest rates and other extra fees. Not only does a credit score play a central role in your application options, it can also have a direct impact on how favorable the terms of your eventual credit card plan are.
Causes Of Bad Credit Credit Card
Bad credit doesn’t always happen overnight. Usually, consumers end up with damaged credit because they repeatedly miss payments or default on what they owe on existing credit cards, loans, mortgages, and the like. Any carrying of a credit card balance can have an impact, including paying late or making only the minimum payments on bills.
Other actions that can lower your score include filing for bankruptcy, repeatedly applying for out-of-reach credit cards, maxing out credit cards, and even simply using a significant portion of your credit limit, which increases your credit utilization ratio.
How To Tell If You Need A Credit Card For Bad Credit?
If you’re not entirely sure whether a Credit card for bad credit is your best bet, here are a few points to consider.
Determine Your Credit Score
If you’re looking to apply for a credit card and aren’t quite sure what you can qualify for, you should check your credit score first to get an idea of where you stand.
Depending on your results, it may be best to focus on credit cards with more lenient insurance terms and work on improving your credit so you can apply for a better credit card later. If you’re not sure what to do with your credit score, find a way to talk to a financial expert about exactly what the numbers mean for you, or see our guide to good credit scores for background information.
Consider Your Credit History
If you already know you’ve had some major financial missteps — a bankruptcy, a loan default, a rocky credit card history — a credit card marketed to consumers with poor credit is likely your most realistic option. Due to credit card issuers’ risk management practices, the most generous credit card plans are primarily available to borrowers with solid, developed credit histories.
As with a recommended credit score, a good credit history indicates “creditworthiness” or trustworthiness to lend money to the lender. If you’re unsure where your credit profile stands, you can get a free credit report once a year from each of the three major credit reporting calculator agencies at annualcreditreport.com .
How To Choose Credit Card For Bad Credit?
Getting a credit card can actually be one of your best options to start improving your credit profile. Here’s what to look for in cards designed for consumers with bad credit.
- Reporting of payment behavior on time: You should pick credit cards that report to at least one of the three major credit bureaus: Equifax, Experian and TransUnion – although reporting to all three is ideal. With this reporting, consistent payments will show up on your credit report and can help improve your credit over time. It’s even better if you choose credit cards that report to all three credit bureaus.
- Easy on fees: Most credit cards with bad credit come with penalty fees like a high fee without the benefits of backing it up (which can eat into your credit limit), account opening fees, or even fees to request a higher credit limit. Aim for a card that seeks to minimize the direct fee of simply owning the credit cards.
- Option to upgrade: Some secured cards allow you to “upgrade” to an unsecured card after several months of consistent on-time payments. This means that you don’t need to open a brand new account once your credit has improved. It also negates the negative effect that opening a new line of credit can have on your credit score, which otherwise threatens to undo some of your hard work.
How To Get A Credit Card With Bad Credit?
Knowing where you stand on the credit spectrum is just the beginning. It is equally important to have a clear sense of your goals in acquiring a credit card and an understanding of what is realistically achievable.
Secured Credit Cards
With a secured credit card, a refundable deposit or “collateral” is paid upfront and often serves as the cardholder’s credit limit, helping to reduce the risk assumed by the lender.
This may be a good deal for credit card issuers (it’s what makes them consider subprime borrowers in the first place), but for the same reasons it provides less value to the cardholder, as it lacks some of the conventional benefits of to borrow.
Why are secured credit cards even considered a secured credit line of credit in the first place? For the cardholder, secured credit cards act more like debit or ATM credit cards, with the plastic only serving in daily practice as a convenient way to access money they already have.
Technically, however, credit is still extended with secured cards. The issuer simply has the “security account” on hand if the cardholder falls short.
Importantly, this means that a secured credit card or mastercard allows the cardholder to build credit. A secured credit card isn’t inherently better at improving credit, but its availability makes it one of the simplest and most effective ways to get on the right track.
This depends on one critical factor: the credit cards will actually still be paid in full and on time. Secured credit cards also pose a risk of further damage to your credit if bills go unpaid and, despite all credit being secured by deposits, high interest rates on late payments.
Unsecured Credit Cards
If you simply lack credit history or haven’t built credit long enough to achieve a good credit score, secured cards can still be a rewarding option. An unsecured card can also be achievable in these cases and is often preferred by those who are unable to put down a deposit.
Many unsecured cards are available and some are available for those without great credit. Be aware that not all unsecured credit cards for bad are created equal. Many of these cards come with high annual fees, which act as annual subscription fees for using the card.
That’s in addition to other common fees such as account opening fees that can eat into your available credit, raise your credit utilization ratio and further negatively impact your credit. Unsecured credit cards for bad also typically come with sky-high APRs on purchases which greatly penalize carrying a balance and make this option riskier for the cardholder.
Whatever you choose, try to use the new line of credit as a building block toward a stronger credit profile so you can qualify for better cards and interest rates on other loans down the road. If you’re not sure you’ll be able to keep up with your bills regardless of which credit cards you have, it may be worth reconsidering a credit card for the time being to avoid debt and further damage to your credit.
How To Get A Secured Credit Card With Bad Credit?
A secured credit card is typically easier to get for those with low credit than an unsecured credit card with decent terms. Each is different and comes with its own minimum and maximum credit limits, typically requiring a minimum deposit of between a few hundred and a few thousand dollars. (This number depends on the card’s maximum limit and how big a deposit you are willing or able to part with).
Secured cards are offered by almost all major issuing banks and some smaller ones. If you already know which bank or other lender you are interested in using, secured cards are easiest to pursue via the issuer’s website. We recommend comparing at least several different options online and checking other reliable resources for recommendations or general advice, such as our guide to the best secured credit cards .
How To Get An Unsecured Credit Card With Bad Credit?
In general, unsecured credit cards are harder to see approval for without good credit, but that’s where the cards specifically for subprime borrowers come into play. Except for credit cards that rely on a cosigner, the process for obtaining this type of unsecured credit card is similar to that of your average card, although applicants will generally have fewer options.
If approved, the cardholder can then enjoy a relatively normal credit card product as long as they are willing to put up with the downsides and risks these cards tend to carry, such as high APRs.
Again, the best place to start for most applicants is online, including the materials found on the bank or other issuer’s website. We recommend checking out our current guides to the best credit rebuilding cards and the best second chance cards with no security deposit .
Credit Card After Credit Bankruptcy
Starting over financially after bankruptcy can be difficult. You cannot apply for credit cards until your bankruptcy is completed. However, when this has happened, your best bet is to do credit card apply as soon as the bankruptcy process is completed, so you can start rebuilding your credit right away.
There are steps you can take to rebuild your credit after bankruptcy, but depending on the type of bankruptcy you filed, the bankruptcy will remain on your credit report for seven to 10 years. Still, bankruptcy doesn’t completely eliminate all credit card prospects.
There are a small handful of credit cards you can get even with a bankruptcy on your credit report, including options that don’t require a credit check. Be sure to read the terms and conditions of any card you’re interested in to see if your financial circumstances match the card’s requirements and restrictions. These cards typically have extremely strict terms apply.
How To Get Approved For Credit Cards With Bad Credit?
There is no guaranteed approval method of receiving approval for a credit card, especially with bad credit. You can improve your chances of success by knowing where you stand and by only applying for a card that is both practical and achievable for your specific financial circumstances – even if it means waiting longer to get one credit card.
Use some thought to decide whether your situation lends itself to either a secured or unsecured credit card, and be sure to read the fine print of any plan you wish to apply for. Finally, do not be tempted to embellish or falsify any of the information you submit through an application, as it is not worth the potential consequences.
How To Prequalify For Bad Credit Credit Cards?
If an issuer offers pre-qualification for one or more of its credit cards, it will typically display this on its website. To see if you prequalify, you’ll be asked to enter a few details about yourself. You must normally provide your name, your address and the last four digits of your CPR number so that the issuer can run a so-called soft check of your credit.
This type of credit check, unlike a hard pull on your credit, will have no impact on your score. Running a soft check also doesn’t mean you’re officially starting the application process, but it does give an issuer an idea of which of its offers you may or may not qualify for.
Overall, there is no downside to having an issuer prequalify your application. In fact, you may end up finding that you have a shot at a card that you didn’t think your current credit score deserved. Prequalification is not a guarantee of approval.
An important note: Be sure you have full confidence in any website or service that asks for sensitive information for pre-qualification (or to determine any other form of eligibility).
Be careful about initiating this process through links provided by apply online or email advertisements and through unsolicited phone calls, as the entity on the other end may not represent who they claim to be.
You can always decline, note information and follow up yourself through the credit card issuer’s official channels. Claims that “this is your only option” to act on an offer should raise red flags.
How To Use A Credit Card To Build Credit?
Building better credit is synonymous with improving your credit low score. There is no silver bullet, but there are concrete actions you can take to get on the right track.
First, do your best to pay your bills on time – your payment history makes up 35% of your credit score. If you simply find it difficult to remember due dates, you can use autopay to eliminate the risk of missing bills.
Building credit also depends on keeping your credit utilization ratio at less than one-third of your total credit limit. This metric compares your credit card balances—what you spend—to the maximum amounts allowed by your credit limits.
Lenders can use this ratio to measure risk – as an indicator of how well a borrower is managing their finances. A ratio of less than 30% is generally considered good, but under 10% is even better.
Applying online for too many new lines of credit can also hurt your credit score, so it’s important to manage this effectively to build credit. Hard credit checks can lower your score by one to five points and, if approved, lower your average account age, which can also lower your credit score. If possible, try to avoid applying for too many lines of credit as you work to improve your score.
Frequently Asked Questions About Credit Cards For Bad Credit
Getting a credit card when you have credit low is possible and can be a great step towards building better credit and cash back. Not all credit cards for those without great credit are good credit cards score.
Choosing the right card will depend on a combination of your personal financial history and your financial goals. Beware of high fees, credit interest rates and unreasonably low credit limits that will keep your credit utilization high and your credit low score.
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