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Best Credit Cards for Bad Credit

Best Credit Cards for Bad Credit

Best Credit Cards for Bad Credit


Best credit cards for bad credit

Click on the card name to read our review. Confirm the information on the issuer’s website before applying.

Discover it® Secured Credit Card

Our Picks: Rewards and Upgrades

Like other secured credit cards used to build or rebuild credit, the Discover it® Secured Credit Card requires a cash deposit. Unlike most others, it offers rewards. But what really sets it apart from the competition is its upgradability. The card issuer has a program to automatically check accounts for the possibility of transitioning to an unsecured card. Read our review.

Capital One Quicksilver Secured Cash Rewards Credit Card

Our Picks: Rewards and Upgrades

The Capital One Quicksilver Secured Cash Rewards Credit Card offers people with bad credit an impressive feature set. A deposit is required, but in exchange, you’ll get a $0 annual fee card that reports to all three credit bureaus; an automatic credit limit review after six months; and a possible path to upgrade to an unsecured Capital One card. Oh, and there’s a 1.5% discount on all purchases, which you’ll find on many unsecured cards.

Capital One Platinum Secured Credit Card

Our pick: low deposit

Like all secured credit cards, the Capital One Platinum Secured Credit Card requires a deposit. But while most cards require you to put down a deposit equal to your credit limit, this card allows some eligible applicants to get a $200 credit limit and a $49 or $99 deposit. What’s more, you can automatically get a higher credit limit in just six months with no additional deposit required.

OpenSky® Secured Visa® Credit Card

Our pick: No credit check or bank account

The OpenSky® Secured Visa® Credit Card has an annual fee, but many people still want to check it out for two reasons. First, no credit check is required. Second, you don’t need a traditional bank account; you can use money order or Western Union to pay your deposit or pay your bills.

Chime Credit Builder Visa® Credit Card

Our pick: No credit check and easy account management

This card has no minimum deposit requirements, no annual fee, no interest, and no credit check, and you can pay automatically so you’re never late. But to get it, you have to be a Chime Banking customer, which is an additional hurdle and has its own customer service considerations.

Tomo credit card

Our Choice: No Credit Check, Annual Fee, Deposit or APR

You may qualify for a Tomo credit card with a lower (or no) FICO score, as the card issuer may consider several alternative factors, such as income and account balance, rather than a credit check or security deposit. The card earns 1% cash back and doesn’t charge any interest or fees because you can’t balance from one month to the next. Read our review.

Growth credit card mastercard

Our Choice: No Credit Check, Annual Fee, Deposit or APR

Grow Credit Mastercard requires no deposit or credit check. It allows you to build your credit history by paying for qualifying subscriptions like Netflix or Spotify, with no interest or fees. There is no APR as you cannot carry any balance on the card. Read our review.

Credit Builder Visa® Secured Credit Card

Our Pick: Customizable Credit Lines

Armed Forces Bank’s Credit Builder Secured Visa® Credit Card makes it easy to increase your credit limit over time, giving you more flexibility and keeping your credit utilization low. You can increase your limit at any time in $50 increments by depositing more funds.

DCU Visa® Platinum Secured Credit Card

Our pick: low fees and interest

The DCU Visa® Platinum Secured Credit Card is a secured card for bad credit, but offers people with good credit a lower interest rate than many unsecured cards. You must be a member of the Digital Federal Credit Union to get this card, although you can become a member of a partner organization for just $10.

How to tell if you need a credit card for bad credit

When you apply for a regular credit card, you are essentially asking the card issuer to lend you money, but there is no (other than your promise) that you will pay it back. Unlike a mortgage or auto loan, there is no collateral for the transaction. If the applicant does not have a good credit rating, the issuer considers it too risky and rejects the application.

However, bad credit cards have features that reduce the risk of card issuers, allowing them to admit more people. The application process for bad credit cards is more “forgiving” than regular credit cards. A bad credit card might be a good choice for you if:

Your credit score is below 630

Generally speaking, a credit score below 630 (in the 300-850 range) is considered bad credit or bad credit. If you don’t know your credit score, you can get it for free through NerdWallet. Get your free credit score here. If you have a poor score, one of the best tools you can use to rebuild your credit score is to have a credit card designed for the person in your situation.

you have no (or very little) credit history

The term “poor credit” is often associated with errors such as: B. Delinquent money or transferring an account to a collection agency. However, even people with low or no credit ratings can benefit from credit cards with bad credit because they are also considered risky borrowers.

What causes bad credit?

There are several factors that affect credibility. Some are relatively small — applying for a new credit card, for example, may temporarily deduct points from the score, as it indicates a need for more funds. Others are more serious. Bankruptcy, direct debit or payment defaults can be extremely damaging to creditworthiness.

Here are the main factors that affect your credit score and how they can lead to poor credit:

Payment history. This is the single biggest factor in your score. Are you paying your bills on time? Paying your bills a few days late may not affect your credit score at all (though you may face late fees). But once a bill is more than 30 days late, expect it to show up on your credit report and affect your score. Even one late payment can significantly affect your score. This damage will diminish over time, but it will get worse if you repeatedly miss payments.

the amount you owe. Your total debt load is important, but the scoring system pays special attention to credit utilization—the amount of credit you use. The closer someone gets to “maximizing” their credit limit, the more likely they are to be in a bad financial situation. A $190 balance on a $2,000 limit card doesn’t raise many red flags, but a $190 balance compared to a $200 credit limit indicates that someone is breaking their over-average limit.

length of credit history. If you haven’t earned credit for a long time, it can be reflected in a low score. A common mistake people make is closing old accounts they don’t use, which affects that part of their score. From a scoring standpoint, a 10-year-old credit card account is valuable, even if the card is just sitting in a drawer. If there is no annual fee, turn it on and use it once a year so the issuer doesn’t turn it off due to inactivity.

credit type. Valuation formulas like to see a mix of different types of accounts – credit cards, loans, etc. Of course, you have to start somewhere, but it’s best not to have your entire credit history in one account.

New loan application. Each application is expected to temporarily subtract a few points from your score. However, applying for more than one card at a time increases the effect, as it may indicate that someone is in dire need of money. Because of this, it’s important to “make your decision” and only apply for a card when you have a good chance of being approved.

Which credit card is easiest to get approved?

Credit card approval is never guaranteed. In addition to your credit history, the issuer looks at your income and other factors. Still, some cards have standards that aren’t as difficult to meet as others.

The lower the risk for the credit card issuer, the easier it is to get approved. Because of this, secured credit cards are the place to recommend people to start building or repairing their credit. These cards require you to leave a cash deposit, which the card issuer holds as security in case you don’t pay your bill (which you can get back if you close or upgrade your account). Deposits reduce risk, allowing issuers to make these cards available to more people. The cards on this page are security cards.

Business credit cards are also generally easier to qualify than bank cards. They generally have lower credit limits and high interest rates, but they’re a viable credit-building tool if you keep your balance low relative to your limit and pay it off monthly.

In general, NerdWallet does not recommend unsecured credit cards for bad credit. An unsecured card is a card that does not require a deposit. All “regular” credit cards are unsecured. However, unsecured cards sold to people with bad credit are notorious for high fees and confusing terms. Also, issuers of such cards often don’t have good cards that can be upgraded, which means you either have to keep the high-fee card open (which costs you money) or close it (which can hurt your credit score). Most of the options in the credit cards section below that we want to avoid are unsecured.

If you’ve started building credit and getting scores in the mid-600s, check out credit cards for fair credit. These offer more benefits, but do not require maximum credit. Check out our best credit cards for fair credit.

Best Credit Cards for Bad Credit From Our Partners

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