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A credit card can be a useful tool when you're trying to rebuild your credit. Yet qualifying for a credit card when you have bad credit can sometimes be a challenge.
Thankfully, numerous credit card issuers are willing to do business with people who have less-than-perfect credit scores. You might not qualify for the flashiest rewards card on the market, but there are some decent credit card offerings available for subprime borrowers.
6 Simple Steps to Applying and Getting Approved for a New Credit Card
Are you looking for the best credit cards for bad credit? The following list may be a great place to start your search:
- Best Secured Credit Card for No Credit: OpenSky® Secured Visa® Credit Card
- Best Secured Credit Card for Bad Credit: Discover It® Secured
- Best Unsecured Credit Card for Bad Credit: Avant Credit Card
- Best Unsecured Credit Card for Limited Credit: Credit One Bank® Platinum Visa® for Rebuilding Credit
- Best Credit Card for Limited Credit: QuicksilverOne® from Capital One®
- Best Credit Card for No Credit: Citi® Secured Mastercard®
- Best Credit Card for Bad Credit: Capital One® Secured Mastercard®
Methodology: How We Chose the Best Credit Cards for Bad Credit
We reviewed dozens of credit card offers for people with bad credit, limited credit and no credit. Our evaluations included comparisons of APRs, annual fees, security deposit requirements, rewards, cardholder benefits and other relevant information. Our goal is to give you well-researched, unbiased information to make the search for your next credit card a little easier.
What Is Considered Bad Credit?
Credit card issuers and lenders use credit scores to help predict the risk of doing business with you. In the U.S., the vast majority of top lenders use FICO scores to guide their decision-making processes.
How to Improve Your Credit Score Fast for Free
Base FICO scores range from 300 to 850. A higher credit score means you're less likely to become 90 days late on a credit obligation within the next 24 months. Although credit card issuers may use different versions of the FICO score, the chart below shows what lenders may consider as bad, good and excellent credit.
- 579 and Lower: Poor
- 580–669: Fair
- 670–739: Good
- 740–799: Very Good
- 800 and Higher: Exceptional
How to Build Good Credit
Your credit scores are 100% based on the information found on your credit reports. So, if you want to boost your credit scores, you need to focus on improving the information that influences those important numbers:
- Make your payments on time. Payment history affects 35% of your FICO scores.
- Pay your credit card balances in full each month. Credit utilization (aka your credit card balance-to-limit ratio) has a big influence over 30% of your FICO scores. It's crucial to keep your balances paid down on low-limit credit cards, like the ones you may qualify for when you're building credit.
- Don't close unused credit cards. This could raise your credit utilization and potentially lower your scores.
- Review your credit reports often. If fraud or mistakes happen on your credit reports, it can harm your scores. It's your responsibility to notify the credit bureaus if a credit reporting problem comes up.
- Apply for new credit strategically. When you apply for new credit, a "hard inquiry" is added to your credit report and might decrease your score slightly. You don't have to be afraid to apply for credit, but you should avoid too many hard inquiries in a 12-month period.
How to Choose a Credit Card to Improve Your Credit Score
Before you start reviewing credit card offers, check your credit and acknowledge where you stand. If your credit score falls into the "fair" or "poor" range listed above, you don't want to start applying for cards that require an excellent credit rating for approval. Instead, it's better to start with cards you're more likely to qualify for now.
I Have 20 Credit Cards — This Is How I Keep My Credit Score Above 800
When you find cards that seem like a good fit for your credit profile, you can weigh the pros and cons of different accounts side by side. Here are some questions to help guide the process:
- Secured cards: What is the size of the security deposit? How easy is it to get my deposit returned in the future?
- Unsecured cards: Is the account more expensive than a secured card with a refundable deposit? Can I graduate to a better card later?
- Fees: Does the card issuer charge an annual fee? Do additional fees apply?
- Rewards: Does the card offer cash back or other rewards for purchases? What is the rewards rate?
How to Get a Credit Card With Bad Credit
Before you apply for a credit card or any other form of financing, it's wise to do a little prep work. Make sure your credit is in the best shape it can be right now and you might improve your approval odds:
- Check your credit reports. It's essential to check your credit reports with Equifax, TransUnion and Experian several times a year. You can claim a free copy of your three reports once every 12 months from AnnualCreditReport.com.
- Dispute credit errors. Carefully review your credit reports for mistakes. If you find any, the Fair Credit Reporting Act gives you the right to dispute them. When you dispute an error, the credit bureau processing your investigation has 30 days to verify the account or delete it from your credit report. You can find information about how to submit a credit dispute on the CFPB website.
- Catch up on any late payments. Are you past due on any current credit obligations? If so, it's wise to bring those accounts current before you fill out applications for new credit.
- Pay down credit card balances. If you already have other credit cards, pay your balances down as much as possible before you apply for a new account. A $0 balance is ideal. Not only could paying down your cards potentially improve your scores, but it could also lower your debt-to-income ratio. Either way, you might look better on a new credit application.
Even the best credit cards for fixing bad credit won't solve all of your credit problems. But finding the right account can be a great step in the right direction, as long as you use it responsibly.
How to Get a Rewards Credit Card When You Have Limited Credit
Whether you're looking for access to a higher credit line or you have moderate to bad credit, qualifying for a credit card can be challenging. But there are solutions for consumers who are hoping to build credit.
1. Become an Authorized User
Young people and recent arrivals to the U.S. often have no credit history. Becoming an authorized user is regarded as one of the quickest ways to establish credit.
Being an authorized user means that someone else (the primary cardholder) adds your name onto their credit card account. Once approved, you’ll receive a card in your name and make purchases as if it were yours.
As an authorized user, that account will most likely appear on your credit report, helping you establish credit. If the primary cardholder has excellent credit, like my husband, yours can get a boost too. The downside is that if the primary cardholder does something negative, like miss a payment on that card, your credit could be affected.
Before being added as an authorized user, call the credit card issuer to see if it reports authorized user activity to the major credit bureaus.
2. Apply for A Credit Card You Can Quality for
For example, if you sign up for a card when you have bad credit or no credit history, like the Chase Sapphire Preferred—which requires the applicant to have excellent credit—you’ll most likely be denied. Instead, consider a credit card that you a have a higher chance of being approved for based on your credit score.
Plenty of credit card companies allow you to check out pre-approved offers, or you can check credit card comparison sites which can suggest cards that are a good fit. Some of these cards offer rewards programs—though not as stellar as the ones you’ll find for folks with excellent credit.
Cards like the Credit One Bank Platinum Visa can be easier to qualify for because of their terms and conditions; it has no annual fee (though it could be as high as $99, depending on your credit score), and you can receive 1% cash back on qualifying purchases.
Charge small purchases here and there, and pay off your balance each month. On-time payments help to boost your credit score.
3. Work Your Way Up
Once you have a credit card solely in your name, wait a little while longer before working your way up to better rewards credit cards. There’s no set guideline as to long you need to wait, but watch your credit score and jump on the chance to apply for another credit card when your score creeps to the high 700s.
If you’re ready to apply for another credit card, be cautious because if your application doesn’t get approved, it could negatively affect your credit score. It might not decrease it by a whole lot, but better safe than sorry.
When assessing which credit cards are right for you, look for issuers that provide an initial $200 credit line and will allow you to manage your account 24/7 with online access to virtual banking tools.
4. Practice Patience
It’s easy to understand the desire to start getting the best rewards credit cards right way, but doing so will most likely end in frustration if you don’t get your application approved. Instead, monitor your credit score carefully, build some credit and check for pre-approved offers before filling out an application form.