Credit Cards for Bad Credit

When you max out your credit cards and fail to pay your bills, you may not know that you’re negatively impacting your credit. Both untimely credit card payments and the amount of debt you carry greatly affect your credit score. Therefore, neglecting these things will hurt your credit score. Since most lenders today will use your credit score to judge you, having a bad credit score may make life difficult. It can even affect your ability to do such things as purchasing a car, getting a job, and finding a place to live.

Additionally, poor credit can lock you out of many credit card offers. Fortunately, there are credit cards for those with bad credit. These cards can help fix credit mistakes, build your credit, and create a better financial future for you and your loved ones.

What are Your Options if You Have Bad Credit?

Have bad credit? All isn’t lost. Below are some options that can help you get a credit card:


If you have a poor credit score, you can build your credit by becoming an authorized user on another person’s credit card. If you use your new card responsibly and make timely payments, credit bureaus may recognize you as someone who can handle credit wisely.

Upfront costs

Becoming an authorized user is simple, free and an effective way to establish your credit.

Available funds

As an authorized user, you can use another person’s credit card in your name — that is, you can use the card as if it were your own. This also means that you can use your new credit card up to the maximum limit allowed to the primary account owner.

Credit score needed

If you don’t qualify for a credit card because you’re just starting out or you have thin credit, becoming an authorized user on another person’s credit card will help you improve your credit. There is no minimum credit score requirement for becoming an authorized credit card user.

Reporting to the credit bureau

Not all credit card issuers include information about an authorized user’s account on their credit report. Therefore, it’s important that you check the credit card issuer policies. Otherwise, being added as an authorized user may not help you build your credit score.

Rewards and benefits

As an authorized user, you will earn rewards and benefits, just like the primary account owner.

Reporting of fees

Fees are standardized, and you can easily compare.

Where to learn more

See the “Unsecured Credit Cards for Bad Credit” section on this page and visit our credit card hub.


An unsecured credit card doesn’t require you to pay a security deposit for your application to be approved or for your credit limit to be increased after approval. This means that there is no security deposit that your credit card issuer can take if you fail to pay your bill. Instead, your credit card issuer will take further action, including reporting your delinquent balances to the three credit bureaus.

Upfront costs

Some credit cards will charge you an application, processing, and annual fee, which you will pay when your card gets activated.

Available funds

You are allowed to use all the funds within your credit card limit.

Credit score needed

The higher your credit score, the higher your chances of qualifying for a credit card. However, card issuers will also review other factors to determine whether you are eligible for a credit card. According to a 2018 FICO blog post, the average FICO score required is 704. However, TransUnion recommends a Vantage score of 600 or higher.

Reporting to credit bureau

Your credit card issuer will regularly report your card status and activities to all the three major credit bureaus.

Rewards and benefits

You will earn rewards and benefits provided by your credit card issuer.

Reporting of fees

Fees are standardized, and you can easily compare.

Where to learn more

See the “Unsecured Credit Cards for Bad Credit” section on this page and visit our credit card hub.


This is a card similar to your debit card. However, it’s not attached to a bank account, and there’s no credit behind it. You just secure the cards with the money that you will spend, which means that you will be spending your own money. Therefore, when the prepaid credit card balance dips, you will have to reload more money.

Upfront costs

You load the card with the money you intend to use.

Available funds

Only the prepaid amount, but you can always load more money.

Credit score needed

You don’t need a credit score to qualify for a prepaid credit card.

Reporting to credit bureau

Because there is no credit history needed to qualify for this card, and it doesn’t help your credit, your prepaid credit card activities won’t be shared with any credit bureau.

Rewards and benefits

You don’t enjoy any credit card rewards and benefits.

Reporting of fees

They will vary depending on the issuer.

Where to learn more

See our detailed page on prepaid credit cards.


This is a type of credit card that requires a cardholder to make a cash deposit. This cash deposit will act as your security in case you’re unable to pay your bill. Secured credit cards are ideal for those with a bad credit history or those who are trying to build their credit history.

Upfront costs

Some credit card issuers will require you to pay an application and processing fee, and also pay the cash deposit.

Available funds

The available funds will be equal to the security deposit. However, you can always increase your limit by increasing your security deposit.

Credit score needed

Individuals with bad or no credit can get accepted.

Reporting credit bureau

If you want to build or rebuild your credit score, a secured credit card can help you achieve your goal. However, not all credit card issuers will report account activities to the three major bureaus.

Rewards and benefits

You will earn rewards and benefits provided by your credit card issuer.

Reporting of fees

Fees are standardized, and you can easily compare.

Where to learn more

To learn more, check the “Secured Credit Cards 101” section below.


Whether you want to apply for your first credit card or you want to rebuild bad credit, a co-signer with good credit can help you get approved. Unlike an authorized user, co-signers are joint account holders, which means you and the co-signer are responsible for repaying any debt.

Upfront costs

Depending on your credit card issuer, you may be required to pay an application, processing, and annual fee before your card is activated.

Available funds

You are allowed to use all the funds within your credit card limit.

Credit score needed

You don’t need to have a good credit score when you’re applying with a co-signer. However, your co-signer should have good credit and income history to make your application more attractive.

Rewards and benefits

You will earn rewards and benefits provided by your credit card issuer.

Reporting of fees

Fees are standardized, and you can easily compare.

Where to learn more

To learn more, check the “Unsecured Credit Cards 101” section on this page and our credit card hub.

Secured Credit Cards

Secured credit cards are backed by a cash deposit, which you have to pay when opening an account. In most cases, the deposit will be equal to your credit limit. This means that if you pay a deposit of $300, you will have a $300 credit card limit. Secured credit cards are available to people with no credit or those with bad credit. Although the minimum and maximum cash deposits vary, you should expect to pay at least $200.

The deposit is meant to reduce your credit card issuer’s risk. In case you fail to pay your bill, your issuer will just take money from your deposit. However, if you use your credit card responsibly and pay your bill on time, you will eventually get your deposit back. Secured credit cards can help you build your credit score and be able to access an unsecured credit card that doesn’t require a cash deposit.

Pros of Secured Credit Cards

Build Your Credit

Secured credit cards are meant for those seeking to build or rebuild their credit. This may include those without credit and those with a bad credit history. Unlike prepaid or debit cards, your secured credit card issuer will share your activity, including monthly bill payment with the main credit bureaus – Equifax, Experian, and TransUnion. This will help you improve your credit score, build a credit history, and you may eventually qualify for an unsecured credit card.

Quick Approval

If you don’t get approved for a regular credit card, you should consider applying for a secured credit card. Because you have to back your credit limit with an equal cash deposit, most secured card issuers are less picky, and you are more likely to get approved despite your slim or poor credit score.

Eliminate Overspending

Perhaps the biggest advantage of a secured credit card is that it helps you show your ability to use your credit card and pay your monthly bills. Think of it as a training program that helps you create good money habits before you’re upgraded to an unsecured credit card. Because you know you have made a deposit, you will be more careful before you make a purchase.

Cons of Secured Credit Cards

Large Deposit

Paying the initial deposit may be difficult while still managing your other bills. Additionally, paying a security deposit takes away the advantage of credit. Credit should enable you to budget for what you may not afford with your cash. Anything you purchase with your secured credit card can be recovered with the money you deposited.

Interest & Fees

Apart from paying the initial cash deposit, there are other fee charges. These fees include the cost of the application, processing, and an annual fee for your secured credit card. Additionally, secured credit cards don’t offer competitive interest rates because of the high risk that you may default.

Low Credit Limit

A secured credit card often has a low credit limit, which is typically between $300 and $500. However, your credit card issuer may increase your limit with time. Additionally, if you want to optimize the credit card utilization of your credit score, you will have to use less than 30 percent of the set limit. This means, if you have a limit of $500, you should keep your balance below $150.

The Essentials for Secured Credit Cards

If you’re considering a secured credit card, then you most likely have no credit, or you have a poor credit history. This makes you a target by companies selling predatory credit cards. Such companies have ridiculously high interests and other hidden charges. Avoid applying for a secured credit card from banks that sound sketchy, even when the offer seems like a good deal. Before you apply for a secured credit card, do an internet search of the bank and read the customer reviews.

When searching for a suitable secured credit card, ensure you choose one that has these eleven features:

Low Yearly Fee

If you cannot qualify for an unsecured credit card, you can find a secured credit card issuer with zero or a low annual fee. Most major credit card providers offer secured credit cards with a low annual fee. A typical secured credit card won’t charge you more than $50.

Low-Interest Balance Rates

Generally, it’s not wise to carry balances on your secured credit card. Credit card balances can quickly pile up interest charges and eat into your monthly budget. Additionally, this will damage your credit score even more. However, sometimes it is impossible to avoid carrying a credit card balance, and in such a case, a low APR credit card will make it easier to carry balances forward because they don’t accrue interests quickly.

Access to an Unsecured Credit Card

Inquire whether the credit card issuer offers unsecured credit cards. Consider credit card providers that can help you upgrade to an unsecured card. Allowing you to transition your secured credit card account to the new card is the easiest way to get a better credit card. You will also get your deposit back.

Reports on Payment History

The main goal of a secured credit card is to help you build or rebuild your credit. However, not all secured credit card issuers will report your history to the three major credit bureaus. Such cards are less effective at helping you achieve your goal.

Flexible Credit Limit

Credit card issuers check many different things to determine your ability to handle credit. They have to consider your income and how long you have been employed. They also review your credit report and your credit score. However, with a secured card, your credit card limit is often equal to your security deposit. In most cases, you can increase your credit limit by increasing your deposit amount.

Some elite credit cards will offer you “no preset spending limit.” This is whereby you don’t have a definite limit. This is a type of a floating limit which changes depending on your spending habits and income among other factors.

A Grace Period (Interest-Free)

Most secured credit cards have grace periods. A grace period gives you time to pay your balance in full without paying any interest. This period typically stats on the first day of your billing phase and finishes at a specified sum of days later; however, the grace period depends on your credit card issuer.

Grace periods are usually between 21-25 days. The longer the grace period, the more time you have to pay your balances without any interest charges. When shopping for a secured credit card, always choose one that has a grace period of around 25 days to avoid paying out interest charges while paying your monthly balances.

Zero Restrictions on Purchases

The worst mistake you can ever make is to use your credit card without a plan. You can guarantee the efficacy of a credit card by making purchases that will earn you rewards. Therefore, when shopping for secured credit cards, choose one that doesn’t restrict your purchases. Make sure that the secured credit card you choose will allow you to make any purchase.

A Strong Reputation

Credit cards differ in reputation. Therefore, when shopping for secured credit cards, compare the cards from all the key credit card issuers like Capital One, Discover It, Bank of America, and Wells Fargo, among many others. Understanding the best options of secured cards with a good reputation is very important in selecting the one that suits you. Do some research on the secured credit card you have chosen and read the reviews while learning what other cardholders experienced with the card and its issuer.

Interest on Initial Deposit

The best savings accounts can help you finance your goals quickly. Sometimes, credit card issuers pay you an interest rate, which is then multiplied by the amount of money deposited and kept in your savings account. This interest rates changes with time. When shopping for a savings account, make sure you think through the Annual Percentage Yield as well as the interest rates on the amount deposited. Choose a secured credit card that has a higher interest rate on amounts deposited.

Extra Features

Apart from helping you establish a good credit score, some secured credit cards come with perks, extra features, and protection. Credit card transactions are protected by the Fair Credit Billing Act that protects you from unfair billing practices and billing errors in credit accounts. This Act makes sure you are never accountable for things you never received. Some benefits that come with secured credit cards include purchase and fraud protection, free access to your FICO Score, and sometimes cashback rewards. Always choose a secured credit card that offers these extra features and protection.

Unsecured Credit Cards for Bad Credit

It can be hard to get good deals with a bad credit score. Unsecured credit cards are the most commonly used credit cards. A poor credit score is considered to be 550 and below. However, it doesn’t mean that you cannot get access to credit cards because you have a poor credit score. Most unsecured credit card issuers require you to have an active checking account and proof of income that surpasses a specific minimum amount. You can qualify for an unsecured credit card if you have a credit score of 550-650.

Unsecured credit cards are designed to help you build your credit and develop your credit score. Reward cards are the most common types of unsecured credit cards. These cards include travel point credit cards, Retail reward credit cards, cash back credit cards, and general reward point credit cards. Unsecured credit cards APRs are usually risk-based and tend to have higher interest rates.

Common Questions Answered


Are there many unsecured credit cards that accept applicants with fair credit?

There are various credit card options for people with fair credit, which might include cards that offer rewards, for instance, bonus points and cashback. Finding an unsecured credit card with fair credit can be a daunting task. However, most of the credit card companies offer some chances of approval to help you manage your credit score wisely. The important thing is to use your card responsibly and get a chance to qualify for even better deals. Make sure that you shop for unsecured credit cards while considering the interest rate, credit limit as well as the incentives.

Are there any unsecured credit cards that will accept applicants with lower-than-fair credit?

The selection of unsecured credit card is limited for people with low credit scores. You can qualify for some unsecured credit cards even with a low credit score. However, you should expect high-interest rates, small lines of credit, and other fees. It can also be hard for you to qualify for reward points if your credit score is low.

If the issuer of an unsecured credit card accepts someone with fair credit, should consumers expect to see higher interest rates and/or lower credit limits for that card than what would be offered to a consumer with better credit?

There are credit cards that are easy to qualify for with low credit. Your credit score indicates the likelihood of repaying your loan. A lower credit score shows you are a riskier borrower than someone with a better credit score. Getting approved for an unsecured credit card means that you will pay more in interest over time than when you would have a better credit score. The good news is that you can use an unsecured credit card to help build your credit. You can boost your credit score by using your card responsibly while also avoiding penalties and uncontrollable debts. Improving your credit score also enables you to get a higher credit limit over time.

What red flags should credit card shoppers with poor or fair credit look for in unsecured credit card offers?

It is usually hard for people with bad credit to qualify for the same interests as people with good credit. Some unsecured credit card issuers charge unnecessary higher interest fees. Avoid this by shopping around to find cards with lower interest rates. Many greedy lenders are looking to make money off consumer’s credit miseries. Before applying for an unsecured credit card with bad credit, make sure you check your credit scores and read the fine print of the credit card issuer.

If someone has fair or poor credit, would that person be better off getting an unsecured credit card (if approved) or a secured credit card? Will one affect a person’s credit score more positively than the other?

The answer to how a credit card can affect your credit score depends on two factors: how you use them and if the credit card issuers report your payment history to the major credit bureaus. Unsecured credit cards are best for people who are having trouble being approved for secured credit cards. The core difference between the secured and unsecured credit cards is the security deposit. Once the deposit is submitted, and the account is active, the card works similarly to the secured cards.

Secured and unsecured credit cards issuers will report your credit payment history to major credit bureaus hence the improvement of your credit score. As long as you make your payments on time, both the secured and unsecured cards can have the same impact on your credit score. The convenient part about the secured credit card is that you can get back your security deposit if you maintain a good payment history.

Using Your New Credit Card to Improve Your Credit Score

One of the best ways to build your credit score is by using your credit card. Getting approved for a credit card can be a daunting task, especially if you want to build your credit score from scratch or if you want to rebuild it. As long as you use it responsibly, your credit card can be the best strategy to build your credit score.

Not knowing the best ways to use your new credit card to improve your score can lead to more significant damage to your credit score. However, there are some ideal methods you can use to improve your credit score using your new secured or unsecured credit card.


On-time payment is a crucial factor that affects your credit score. Just one missed or late payment can have a substantial impact on your credit score. Credit card issuers find it hard to predict whether a first-time cardholder will be able to repay the debt on time. Make purchases every month and pay on time. You will need a record of on-time debt payment to have good credit.

Pay your monthly credit balances in full, and your credit card issuer will report your payment history to credit bureaus. Always keep in mind that your payment history makes up 35% of your FICO score. Therefore, it is advisable to set an auto-pay on your credit card account.


It can take time to improve your credit score, especially when you are starting from scratch or when you have negative items on your credit report. You can quickly lose track of your spending when you use your credit card. Spend what you can pay in full every month. By paying on time every month, you establish a constructive payment history. If you are afraid of overspending, look for a card that has a zero annual fee and use it only for little expenditure.

You can also ask for a credit limit increase by first updating your domestic yearly income. This way, you will be able to make more purchases using your secured or unsecured credit card. Remember to always keep a budget to know how much you have to spend.


Credit reporting agencies use your credit utilization, which represents 30% of your FICO score. Credit utilization is the amount of your credit limit; it is also the amount of debt unresolved on your credit card, be it secured or unsecured. Make purchases that you can pay for. The best way to put your credit utilization in check is by paying your monthly credit balances in full and on time.

If you like carrying balances from one month to another, you should take care to keep your credit utilization below 50%. However, people with higher credit scores usually have a credit utilization rate at 10% or less. You can improve your credit utilization by making multiple payments. Making numerous payments means that the minimum monthly balances will be paid every month, and your balances will drop.


Your payment history has the most impact on your FICO score. Paying off your balances on time works in your favor; this is because many lenders use your FICO score to determine if you qualify for a new line of credit. Making sure that all your balances are paid in full and on time helps you establish a robust payment history.

If you are unable to make the monthly payments on time, make the balances as low as possible. Never carry a balance of more than 30 percent on your credit card. Lower balances equal to better credit score. Keep your balances low by making small purchases and paying them off to keep your credit card active.

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