So you checked your credit score and realized that it could use some help.
Maybe you applied for a credit card, mortgage, or car loan, only to be told that you don’t have good enough credit for approval. This may not be the best situation but it is not the end of the world.
We want you to be empowered to get your credit back on track. That’s why we rounded up some of the best credit cards for bad credit and are providing you with all of the information you need to make a good choice.
The Credit Cards for Bad Credit We RAVE About
What is Bad Credit and How Does it Happen?
So you found out that you have bad credit but aren’t too sure what it is, why it’s bad, and how it is hurting you. Your credit score is a three digit number usually ranging from 300-850, depending on the scoring model. This score tells creditors and banks how trustworthy you are with credit based upon your history and relationship with loans, credit cards, and other types of credit.
In order for your score to be considered “bad” or “poor,” it really depends on who is assessing your score. Generally speaking, anything below about 580 will be considered bad by most lenders. Some may have more stringent criteria and classify a bad score as anything below 600. Either way, this is a less than ideal situation and should be remedied as soon as possible.
There are a number of reasons that your score could have dropped all of which indicate bad habits to lenders and creditors. Lenders like to see a history of responsible use of credit to give them assurance that you will pay them back. If you have maxed out credit cards in the past that is going to hurt your credit score significantly.
It is even worse if you have regularly missed payments or had many late payments on your credit accounts – that will drop your score even lower. These are signs that a particular consumer may be borrowing too much money that they are struggling to pay back.
If your credit history shows a string of applications for credit, that can be a sign to creditors that somebody is trying to use as much money as possible very quickly. That is a tell-tale sign that somebody could be in financial duress and trying to use credit to keep them afloat. You are going to want to avoid all of these things while rebuilding your bad credit, otherwise you will be constantly fighting an uphill battle.
We understand that sometimes things happen in life that are out of your control and finances can have a turn for the worse very quickly. Sometimes you have a bad credit score due strictly to one mistake that led to a string of negative marks on your credit report. Moving forward, we want to help you stop the trend and get your finances back on track and your credit into the good range.
Secured vs Unsecured Credit Cards for Bad Credit
When it comes to credit cards for bad credit, there are two different types: secured and unsecured credit cards. Unsecured credit cards are the traditional type of card – you are approved for the card, get a line of credit, and then make payments monthly.
Secured credit cards operate the same way, but they require a security deposit upon approval for the card. The security deposit then becomes the line of credit. The reason for this is to protect the creditor in the event the balance is not paid. Secured credit cards are used almost exclusively to help consumer build or rebuild credit.
Generally speaking, it is much easier to be approved for a secured credit card. There is low risk to the creditor since the security deposit backs up the loan as collateral. There are some unsecured credit cards for individuals with bad credit, but they are not very common.
Some secured credit cards have the ability to be converted into an unsecured card after a set period of time, assuming the card has been handled responsibly and paid on time. Not all cards have this feature, but it can be a great bonus feature if a card has the ability to be converted. After some time of improving your credit score with a secured card though, you will be able to apply for and open an unsecured credit card.
So you’ve found yourself in the predicament of having bad credit and are trying to bring it back up to a good level. But knowing where to start and how to get approved for a credit card with bad credit can be a heavy undertaking. It may seem like a losing battle, but you can get back on track with some diligence and patience.
Fortunately for you, we have done a lot of research and found some of the best cards that you give you good odds of approval, even with bad credit. When evaluating credit cards for bad credit, the following criteria were considered:
- Annual Fee – Does this card have an annual fee and how much is it? Is it reasonable to pay this fee for the card?
- Minimum Security Deposit – Does this card have a security deposit and how much is it? Is the line of credit the same amount or more or less than the security deposit?
- Rewards Earning – Does this card earn any rewards? If so, what are the rewards worth?
- Other Benefits – Does this card offer any other kinds of perks on top of just improving bad credit? Are these added benefits worthwhile or not have any value?
The Best Credit Cards for Bad Credit
OpenSky Secured Visa Card
- Annual Fee: $35
- Minimum Security Deposit: $200
- Rewards Earning: None
- Other Benefits: No credit check for application, Refundable Security Deposit, 0% introductory APR on purchases for 3 months
- Pros – No credit check required, Low security deposit
- Cons – Annual fee above average
Whenever you open a new credit card account, the issuer typically does a hard inquiry on your credit report, which can ding your score for a while. The OpenSky Secured Visa card does things a bit differently though. When you apply for this card, you will not have a credit check done and there won’t be any damage to your credit score.
This card is ideal for those individuals that want to avoid having a hard inquiry on their credit report of that worry that something on their credit history will make them ineligible for an account. But because this is such a great feature, the card does come with an annual fee. The annual fee is $35, which is not ideal, but it is better than many other similar credit cards.
Like most of the other secured credit cards features, you will need to put down a minimum of $200 for the credit limit. You can put down more, but your credit line will always equal the amount you put down as collateral – up to $3,000. Like all other secured credit cards, the security deposit is refunded when you cancel the account.
The card has a 17.39% variable APR, which is lower than many others. You don’t want to rely on a low APR though as you should pay off the card in full every single month. Interest on credit cards can rack up very quickly if not attended to. However, if you need some money and know you can pay it off within the first few months of having the card, you are in luck. This card offers three months of 0% APR on purchases – this is not a common feature on secured cards – making this credit card stand out.
Green Dot Primor Visa Gold Secured Card
- Annual Fee: $49
- Minimum Security Deposit: $200
- Rewards Earning: None
- Other Benefits: Refundable security deposit, 9.99% APR, No penalty APR
- Pros – Very low APR, No penalty APR
- Cons – High annual fee
The big selling point for the Green Dot Primor Visa Gold Secured Card is that it has the lowest interest rate among secured credit cards. At RAVE, we don’t recommend carrying a balance over from month to month, but we know that sometimes life happens and you need quick cash for an unplanned expense – that is the ideal scenario for this card.
When it comes to interest rates, you will be hard-pressed to find many credit cards that have anything lower than 15% APR. When it comes to cards meant for those individuals with poor credit, the APRs can be even higher. But the Green Dot Primor Visa Gold Secured Card beats all of them by offering a low 9.99% purchase APR.
Being a secured credit card, you will need to put down a security deposit to back up your credit line. You will need to put down at least $200, but if you want to put down more, you can – up to $5,000. A $200 minimum security deposit is typical for most secured cards. Be aware that you will need to pay a $49 annual fee for this card. This is a hefty annual fee for a card like this, but they can’t offer such a low APR without requiring a little extra from you.
Having bad credit is not an ideal situation, especially if you are in a pinch for money due to an unplanned expense. If you know that you will be able to pay the balance off within a few months, this card could be right for you. You want to always avoid carrying a balance over and paying interest, but if you absolutely have to do so, then the Green Dot Primor Visa Gold Secured credit card might be your best bet.
Avant Credit Card
- Annual Fee: $29-39
- Minimum Security Deposit: None
- Rewards Earning: None
- Other Benefits: No penalty APR, No foreign transaction fees
- Pros – No security deposit, Application doesn’t affect credit
- Cons – High APR, Above average annual fee
The Avant Credit Card is one of the few unsecured credit cards that can be good for those with poor credit or who are trying to build credit. It doesn’t have all the bells, whistles, and perks on any premium rewards card, but it does report to all three credit bureaus to help build or rebuild your credit.
Because this is an unsecured credit card, there is no deposit that you will need to put down when approved for the card. There is, unfortunately, an annual fee that could be between $29 and $39, depending on your offer. An annual fee is not ideal and this one is a bit above average. However, to rebuild credit, the fee isn’t terrible among cards for bad credit.
One of the good features on this card is that there is no penalty APR when you miss payments. We highly encourage paying your bill in full and on time every month, but at least you know if you make a mistake, you won’t get hurt twice. The card also has no foreign transaction fees so you can use it when traveling abroad.
When approved for the card you will get anywhere from $300 to $1000 for your credit line – this is on par with most cards meant for bad credit. It has a 25.99% variable APR, but you want to avoid paying any interest anyways.
When applying, you won’t automatically have a hard inquiry show up on your credit report. Instead, they will do a soft inquiry then give you an offer. Once you accept the offer, then they will do a hard inquiry on your report like other credit cards.
Don’t expect too much from this card other than a good opportunity to start building up your credit. Because the card is unsecured, it might have a bit more strict criteria for acceptance, but they will still offer this card even if you don’t have good credit. Don’t overlook the Avant Credit Card as a good option for working on your credit.
Capital One Secured Mastercard
- Annual Fee: $0
- Minimum Security Deposit: $49, $99, or $200 (depending on credit history)
- Rewards Earning: None
- Other Benefits: Refundable security deposit, No foreign transaction fees, Travel accident insurance, Auto rental collision damage waiver, Extended warranty
- Pros – No foreign transaction fees, Low security deposit, No annual fee
- Cons – High APR
The Capital One Secured Mastercard might be one of the best possible cards you could open if you have poor credit. This card offers a tiered minimum security deposit system where you could pay less upfront than the credit line you are given. If you are a bit tight on money but are also looking to improve your credit, this is likely the card for you.
The Capital One Secured Mastercard is a standout among secured credit cards as it has no annual fee. There aren’t too many secured cards that don’t carry an annual fee. On top of no annual fee, this card could give you a credit line significantly higher than the security deposit you put down.
Traditionally, secured credit cards require a minimum deposit (usually a couple hundred dollars) and your credit line is then equal to your deposit. With this card though, depending on your credit history, you could pay as little as $49 as a deposit for a $200 credit limit. You could also have a deposit of $99 or $200 if your credit isn’t quite as good. At worst, you would pay the full $200 for the $200 credit limit, which is equivalent to most other secured credit cards.
The card doesn’t earn sort of rewards, which is typical of secured credit cards or those meant for poor credit. If you are working to improve your bad credit, you shouldn’t worry too much about rewards. Once you get your score back up, you can move on to a card that gives you some extra rewards and benefits.
This card also has no foreign transaction fees, which is unique among a lot of secured credit cards. That means you can use this card abroad without having to worry about any extra charges on your account. You can also have some benefit with traveling thanks to the auto rental collision damage waiver and travel accident insurance. The card does come with a 26.99% variable APR, which is quite high. However, we don’t recommend carrying over a balance if you can avoid it as the interest can build quickly.
Credit One Bank Platinum Visa Card
- Annual Fee: $0-99
- Minimum Security Deposit: None
- Rewards Earning: 1% cash back on eligible purchases
- Other Benefits: None
- Pros – Cash back on purchases, No security deposit, More Cash Back Rewards Program
- Cons – High annual fee, No additional benefits
The Credit One Bank Platinum Visa is different than most of the cards on our list due to it being an unsecured credit card and it offers rewards. This means that it has no security deposit and offers something other than just an improvement of your credit score. But this card isn’t necessarily going to be the perfect card for everybody trying to improve their credit since it can carry a hefty annual fee.
This credit card is particularly ideal for those individuals that are in need of some extra cash quickly but that will be able to pay it off within a few months. This card should really only be used like an emergency loan. Depending on your credit, you could pay a hefty annual fee up to $99, which is the big negative on this card.
You will earn some rewards on this card, but nothing truly outstanding. However, cash back in your pocket is always a good thing. You will earn 1% cash back on eligible purchases, like gas, groceries, internet, among others. You also have access to the More Cash Back Rewards Program which periodically offers additional cash back for your purchases at specific merchants. If you make purchases at some of the featured merchants, you could earn 10% back on this purchases.
Another good feature with this card is that you will periodically have your account reviewed for potential credit limit increases. Having more revolving credit to your name will only help your credit score even more.
Although this card carries a hefty annual fee, it does offer plenty of benefit including not needing a security deposit. Unsecured credit cards that can be opened with bad credit like the Credit One Platinum Visa card are not common so it is worth a look!
First Progress Platinum Elite Mastercard
- Annual Fee: $29
- Minimum Security Deposit: $200
- Rewards Earning: None
- Other Benefits: Refundable security deposit, 19.99% APR
- Pros – Below average APR, Manageable annual fee
- Cons – No additional benefits
The ideal situation with a starter credit card or one meant to help improve poor credit is to not have to pay an annual fee. However, sometimes those have a bit more stringent approval criteria and you are stuck having to pay an annual fee. You will want the fee to be as low as possible so that’s where the First Progress Platinum Elite Mastercard can help. It is a secured credit card that features a low annual fee.
Like many of the other cards on this list, this card requires a minimum of $200 for the security deposit with your deposit equaling the credit limit. You can put down up to $2,000 initially to increase your credit limit. Because this is similar to many other secured cards, you won’t be earning any rewards or points with the card. The reward with this card is improving your credit to a point where you can open a rewards earning card.
We don’t recommend having any remaining balance after paying your bill each month – pay it in full and on time to see your score improve without paying anything extra. But the variable APR on this card is a bit below average at 19.99%. Don’t pay any interest if you can avoid it though.
As you can see, this card doesn’t have much else going for it other than it being a solid credit building or repair card. If you can’t get approved for a no annual fee secured credit card, try the First Progress Platinum Elite Mastercard.
How quickly will my credit score increase after opening a new credit card?
There is no one size fits all answer to how quickly your score will increase after opening the card. First off, you will need to pay your monthly bill every single month on time with these cards. If you miss payments, you are only going to hurt yourself more. You will also want to try and keep the amount of credit you use on the card to a minimum. These are the two biggest factors for your credit score, so keep a close eye on due dates and how much credit you are using. You want a card that also reports to all three major credit bureaus (Experian, TransUnion, and Equifax) so that all of them increase over time.
It also depends on how badly damaged is your credit score. If you have a very low score in the 300s, it is going to take much longer to get your score up into a good range. If you are somewhere in the 500s, it won’t take quite as long. Major dings in your credit history, like severely delinquent payments or bankruptcies could delay the process as well.
If you are diligent about paying off your card on time each month and not overspending, you should start to see a slow increase within a few months.
How does bankruptcy affect my eligibility for these cards?
Bankruptcies are one of the worst items to have on your credit report and can be a severely limiting factor on approval for loans, mortgages, and credit cards. However, most secured credit cards are intended for individuals with bad credit and major blemishes on their credit reports.
Don’t let a bankruptcy prevent you from applying for these types of credit cards. You will have a higher likelihood of being approved for a secured card over an unsecured credit card so try one of those.
How does a credit card improve my credit score?
Simply having a credit card won’t necessarily help your credit score immensely. It is the responsible use of credit that will help boost your score. By opening a credit card, you have one more account on your report that can show on-time monthly payments. You will want to at least spend a little bit on your credit card so that you have a balance to pay off each month. When you pay the bill on time it gets reported to the three major credit bureaus. Over time, you can build a string of on-time payments, which is the biggest factor for your credit score.
You will also want to limit the amount you spend on your credit card. The goal is to have your monthly bill be less than 30% of your credit limit. This shows future creditors that you are handling your credit responsibly and not overspending or maxing out credit cards. If you can keep it under 10% of your credit limit, that is the ideal.
The other factors that can help your credit score are having a long average age of accounts on your credit report, minimizing the number of new credit lines, and having a mix of different types of credit (installment, revolving, etc). These don’t have as much of an effect on your score and can take much longer to build up.
- Capital One QuicksilverOne Credit Card – Once you are able to improve your bad credit up to fair or average credit, you should consider the Capital One QuicksilverOne card. It earns 1.5% cashback on everything making it a solid low annual fee choice.
- MyFICO Credit Monitoring – MyFICO is a premier service that tracks your FICO credit scores, watches for any fraud or identity theft, and offers many other great credit-related services. You can choose from three different tiers, each offering more services.
- Personal Capital Finance and Wealth Manager – Looking to improve your overall finances along with your credit? Personal Capital offers a great service that can help you track your spending trends, finance goals, and retirement progress.
- Limitless Mindset Budget Planner – This budget planner has so many great things to help you build a budget and stay on track – color-coded expense stickers, pockets for receipts, budget categorization, and a cash envelope system.