Summary List PlacementHaving a low credit score makes it harder to get approved for a new credit card and other types of loans, and it means that when you do get approved for, say, a mortgage, you’ll generally get less-favorable terms like the highest variable interest rates.
A bad credit score is defined as anything below 580, according to the FICO scoring model, and anything below 601 according to VantageScore. If you currently find yourself in this credit score range, you probably won’t get approved for popular rewards cards like the Chase Sapphire Preferred® Card, but you do have some credit card options. Secured credit cards are particularly easy to get approved for, because you put up a cash deposit as collateral to get started, and there are also non-secured cards tailored to those looking to repair or build their credit.
Using a card responsibly will help boost your credit over time, since keeping your credit utilization low and making on-time payments are the two biggest factors that determine your credit score. Once you have your finances on track and your credit score keeps climbing, it’s only a matter of time before you can get a rewards credit card offering bonus points and other enticing perks.
The best credit cards for bad credit
Best secured card with rewards: Discover it® Secured
Best secured card with purchase and travel protection: Capital One® Secured Mastercard®
If you can qualify for a non-secured credit card: Capital One® Platinum Credit Card
Best for building credit: Petal Visa
For students building credit: Discover it® Student Cash Back
A secured credit card for businesses: Wells Fargo Business Secured Credit Card
Discover it® Secured
Best secured card with rewards: Discover it® Secured
The Discover it® Secured is easily the top secured credit card on the market today, because not only is there no annual fee, but you also get the opportunity to earn rewards. You’ll need to put down a cash deposit to get started, and you’ll secure a line of credit equal to that amount that you can use to begin building a responsible credit history. If you use your card responsibly, you can also get your deposit back when you close or upgrade your account in good standing.
In terms of rewards, the Discover it® Secured lets you rack up 2% cash back on up to $1,000 spent at gas stations and restaurants each quarter you activate (then 1%), plus 1% back on all other purchases. Even better, Discover will double all the rewards you earn after the first year.
The Discover it® Secured also gives you a free FICO score on your monthly credit card bill, and you can use this information to monitor your score as you improve your credit over time.
Capital One Secured Mastercard
Secured card with purchase and travel protection: Capital One Secured Mastercard
The Capital One Secured Mastercard is another popular secured credit card that doesn’t charge an annual fee. This card starts you out with a low line of credit (possibly as low as $200) when you make the minimum deposit amount of $49, $99, or $200 depending on your application details.
From there, you can begin building good credit by using the card for small purchases and paying your bill on time each month. Capital One will consider you for a higher line of credit after you’ve paid your credit card bill early or on time for six consecutive months.
You can pick your payment due date with the Capital One Secured Mastercard, and you won’t pay foreign transaction fees if you use it for purchases made outside the United States. This card also comes with travel accident insurance and extended warranties on eligible items that already come with a manufacturer’s warranty.
Capital One Platinum Card
If your credit’s on the higher side of low: Capital One Platinum Card
Unlike most other card issuers, Capital One indicates what type of credit score you need to get approved for each of its cards. The Capital One Platinum Card is for “average credit,” which Capital One defines as having defaulted on a loan in the past five years or “limited credit history” (defined as having a credit card or other credit for less than three years).
This card doesn’t offer any rewards, but it is an unsecured credit card, meaning you don’t have to put down a cash deposit as collateral. There’s also no annual fee, no foreign transaction fees, travel accident insurance, and extended warranties.
You may have to start out with a relatively low line of credit, but Capital One promises to reevaluate your credit line after you’ve made six on-time monthly payments.
Discover it® Student Cash Back
For students building credit: Discover it® Student Cash Back
The Discover it® Student Cash Back is specifically geared to students with limited credit history, so it may be considerably easier to qualify for when compared to other unsecured credit cards. You won’t pay an annual fee for this card, and you won’t pay a late fee on your first late payment.
You can also earn rewards with the Discover it® Student Cash Back by enrolling each quarter to earn 5% back on up to $1,500 spent in quarterly rotating bonus categories (then 1%), and 1% back on all other purchases. Like with its other cash-back credit cards, Discover will also match all the rewards you earn the first year.
As a bonus, you can qualify for a $20 statement credit each year you maintain a GPA of 3.0 or higher (for up to five years).
Petal Visa
Best for building credit: Petal Visa
Unfortunately, this card is currently only available to those with an offer code, but you can add your name to the list here to be notified when you’re able to apply.
The Petal Visa was designed for consumers with limited credit histories who need help building credit from scratch. This credit card comes with no annual fee and no hidden fees, yet it’s a Visa credit card that can be used anywhere Visa is accepted worldwide. Not only that, but you may be able to qualify for a credit limit up to $10,000, and you’ll earn rewards on your spending.
Cash back is initially offered at 1%, but you’ll graduate to earning 1.25% back after six on-time payments then 1.5% back once you’ve made 12 on-time payments on your card. This credit card also works in conjunction with a handy app that helps you track your spending and set a budget for the month, and usage of the app is also free.
Wells Fargo Business Secured Credit Card
A secured credit card for businesses: Wells Fargo Business Secured Credit Card
Business owners who want to improve bad credit may need to get started with a secured credit card for business, and the Wells Fargo Business Secured Credit Card is a good option. This option only requires a $25 annual fee per card, yet you can qualify for a line of credit between $500 and $25,000.
You’ll also earn 1.5% cash back for each dollar you spend, or you can decide to earn rewards “points” instead and redeem them for gift cards, merchandise, and flights. You’ll earn 1 point on every dollar spent and receive 1,000 bonus points when your company spends $1,000 or more during a monthly billing period. Cash back is received automatically as a deposit into an eligible checking or savings account each quarter.
This card won’t charge any foreign transaction fees, and you can log in for business spending reports from Wells Fargo.
Frequently asked questions
If your credit is in poor shape, picking up a credit card can help if you use it to your advantage. These questions and answers can help you get approved for a credit card for bad credit, then use it to boost your credit score over time.
How do I know if I have bad credit?
According to myFICO.com, poor credit is typically considered any FICO score below 580. Meanwhile, “fair credit” is considered any FICO score between 580 and 669.
The best way to find out if you have bad credit is to check your credit score for free online. Fortunately, a variety of platforms let you get a free look at your credit score, including Credit Sesame and Credit Karma.
How can a credit card help me build credit?
Credit cards help you build credit by reporting your credit movements to the three credit bureaus. To build credit with a credit card, all you have to do is use your card for purchases you can afford to pay off. From there, pay your credit card bill early or on time each month. Over time, your positive credit usage will help boost your score.
What is a secured credit card?
A secured credit card is a type of credit card that requires a cash deposit as collateral. The cash deposit you put down is typically equal or close to the line of credit you qualify for, meaning you’ll get a $500 line of credit if you put down $500 in cash to get started. While putting down collateral may not seem ideal, secured credit cards are considerably easier to get approved for when you have bad credit or a limited credit history.
How do I avoid credit card interest?
To avoid paying interest on purchases made with a credit card, you need to pay your credit card statement balance in full each month. You’ll only be charged interest on balances you carry from one month to the next, so you should strive to avoid this.
Which credit card fees should I watch out for?
Try to pick a credit card that doesn’t charge an annual fee. Other credit card fees to watch out for include application fees, late fees, balance transfer fees, cash advance fees, and over-the-limit fees.
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