Comparing the Best Credit Cards for Bad Credit
Okay, so your credit isn’t at its best. Maybe you don’t have much experience with paying bills, or perhaps you’ve had a couple of late payments. Well, we’ve got your back.
It may seem counterintuitive, but one of the best and fastest ways to rebuild credit is with a credit card. That’s right. Believe it or not, with the right credit card, you can improve your credit in a few short months. The trick is to know how. We’ll tell you what you need to know and how to do it so there aren’t any surprises along the way. Here’s what we look at:
Best Credit Cards for Bad Credit in 2021
Why this is the best credit card for bad credit for credit building
You will be automatically considered for a higher credit line in as little as 6 months of holding your account with no additional deposit needed.
This card is light on the fees, with no annual fee and no foreign transaction fee. Also, the refundable deposit can be as low as $49, $99 or $200.
The credit limit only starts at $200, and there is no sign-up bonus and no ongoing rewards.
Capital One will monitor your account, and when you pay on time and practice other responsible card use, you may be able to earn back your deposit as a statement credit.
Why this is the best credit card for bad credit with a low annual fee
The maximum annual fee you’ll pay with this card is $99, but it could be as low as $0, depending on your creditworthiness. If you choose to see whether you prequalify for the card, you’ll get an idea of what your annual fee will be and can decide whether it’s worth it to you.
This card rewards the everyday essentials at a rate of 1% cash back on gas, groceries, and services such as mobile phone, internet, cable and satellite TV. Terms apply. Plus, there’s no security deposit required.
You should be aware of all potential fees and how likely you are to trigger them before applying for this card. There are fees associated with cash advances and foreign transactions on top of a high ongoing purchase APR of 17.99% to 23.99% Variable.
A free monthly credit report will be sent to you through Experian, a great way to keep a close watch on your progress. Also, you’ll be protected from fraud as a cardholder.
Why it’s the best credit card for bad credit with fast application
The Fit Mastercard Credit Card offers what it advertises as a fast and easy application, promising results in seconds. This can be handy if you need to get an approval decision quickly.
This is a great card for consumers with bad to fair credit. Also, because it’s a Mastercard, this is a widely accepted card. You also get online access all day, every day.
The starting credit limit isn’t the best, at $400 (subject to available credit). Also, a checking account is required. Finally, the fees could be onerous, with an annual fee, a one-time processing fee and a monthly maintenance fee after your first year.
Your credit habits are sent monthly to the 3 major credit bureaus– Experian, Equifax and TransUnion.
Why this is the best credit card for imperfect credit
With the Destiny Mastercard, your past financial mistakes don’t matter as much. Even with a prior bankruptcy on your credit report, you may still qualify and can begin building your bright financial future.
The Destiny Mastercard is not a secured card, so there’s no deposit required. Plus, your payment history is reported to all 3 credit bureaus monthly.
You won’t earn rewards, and you’ll have to pay an annual fee of $59-$99.
Pre-qualification is available with this card, so you can see whether you’re eligible without any impact on your credit score.
Why this is the best credit card for bad credit with no annual fee
The Petal 1 not only offers no foreign transaction fee, but also there’s no annual fee. Late and returned payment fees may apply.
You can earn 2%-10% on purchases with select merchants, and you can get a credit limit of $500-$5,000 with this card.
There is no sign-up bonus with this card, and there are no ongoing rewards. Also the regular APR is super high at 19.99%-29.49% variable.
This issuer reports to all 3 major credit bureaus (Experian, Equifax and TransUnion), an important step to improving your credit.
Why it’s the best credit card for bad credit with no credit check
The card doesn’t require a credit check, so you won’t risk your score in applying. You don’t even need a bank account: You can pay your security deposit via check, Western Union or money order.
You can put down a deposit of up to $3,000 (and get a $3,000 credit limit) to help keep your credit utilization low. Also, should you need to carry a balance, the card’s 17.39% (variable) APR is relatively low.
You won’t earn any cash back, points or miles with this card. It also carries a $35 annual fee.
OpenSky hosts a credit education page on its website to help support your credit-building journey.
Why it’s the best financial product for establishing credit
The Self – Credit Builder Account + Secured Visa Credit Card doesn’t require credit history, and you dodge any credit dings since there is no hard credit pull. You also enjoy features like credit monitoring and account alerts to help you stay on track.
After opening the account, you’ll be automatically approved for the card once you’ve made 3 consecutive timely payments and at least $100 in savings. These payments are reported to all 3 credit bureaus to boost your credit before even receiving the card.
Because no credit checks are needed, you’ll have to wait to receive your deposit (plus interest) until your 12- to 24-month payments are complete. There’s also a one-time $9 account fee and a $25 annual fee on the secured card. Carrying a balance means you could pay interest on your loan and card.
Unlike other secured card options, your repaired credit is stronger since this loan-and-card combo helps build a credit mix – worth 10% of a good credit score – with all 3 credit bureaus. The interest rates and eligibility requirements for the secured card also encourage healthy credit activity.
Why it’s the best credit card for bad credit with a high limit
If you’re approved for the unsecured version of the card, you can get a credit limit of $300 – $750, which is fairly high for someone with damaged credit.
This card could be a good option if you’d rather not pay a deposit. You’ll also have a grace period of 25 days after your last billing cycle to pay your balance with no interest charges.
There’s no guarantee you’ll be offered the unsecured version of the card. Such a low credit ceiling may make it difficult to keep your credit utilization in check, which is a key factor in credit scoring.
Continental Finance states that your account will be reviewed for a credit limit increase after 6 months, which should incentivize you to stick to responsible spending and payment habits.
Why it’s the best credit card for bad credit with quick pre-qualification
Its pre-qualification tool should help you get a sense of your approval chances without impacting your credit score. And if your credit profile isn’t a match, you may be invited to apply for another card.
You can qualify for the card even with a previous bankruptcy, and its foreign transaction fee – 1% of each transaction – is much lower than that of many competing cards.
If you struggle with paying on time, this card could cost you: A penalty APR of 29.90% may kick in after late payments and could apply to your account indefinitely.
It includes fraud protection, so you won’t be liable for any charges made if your card is lost or stolen.
Why it’s the best credit card for bad credit with instant approval
You can get an approval decision in as little as 60 seconds – no waiting around for days only to be denied.
You could get a $300 credit limit without putting down a deposit. Plus, if you need the card immediately, you can pay an additional fee to get it more quickly via Expedited Processing.
In exchange for the chance to rebuild your credit without putting down a deposit, you’ll pay a lot in fees, including an annual fee, a one-time Program Fee and, after the first year, a monthly servicing fee. You may even be asked to pay a fee if you accept a higher credit limit after your first year.
The card reports monthly to all 3 major credit reporting agencies.
Summary of the Best Credit Cards for Bad Credit
|Credit Card||Best for||Annual Fee||Deposit Requirement|
|Secured Mastercard® from Capital One||Credit Building||$0||$49-$200|
|Credit One Bank® Visa® for Rebuilding Credit||Low Annual Fee||$0 - $99||$0|
|Fit Mastercard® Credit Card||Fast application||See Terms*||$0|
|Destiny™ Mastercard®||Imperfect Credit||$59-$99||$0|
|Petal®1 “No Annual Fee” Visa®Credit Card||No Annual Fee||$0||$0|
|OpenSky® Secured Visa® Credit Card||No credit check||$35||$200-$3,000|
|Self – Credit Builder Account + Secured Visa Credit Card||Establishing Credit||One Time $9 + Secured Card $25||$0|
|Surge Mastercard Credit Card||Credit card with a high limit||See Terms*||$0|
|Milestone® Gold Mastercard®||Quick prequalification||$35-$99||See terms*|
|First Access Visa® Credit Card||Instant approval||See Terms||$0|
Research methodology: how we got to our top picks
Credit cards for bad credit analyzed: 269
Criteria used: credit needed: deposit required (if any); annual fee; regular APR; other rates and fees, including hidden fees such as copy fees and new card fees; customer service; ability to improve credit line; tools to track credit score; rewards rates; security; and miscellaneous benefits, such as no foreign transaction fees and extended warranty protection.
What is bad credit?
A “bad credit” score is typically under 580 out of a range of 300-850 as defined by FICO, with 850 being the best possible score. Using the same 300-850 scale, a VantageScore defines “poor credit” as a credit score under 550.
To get a good or excellent rating, you’ll want to shoot for at least 700. Below that, you’ll be offered higher interest rates and other less-than-stellar offers for financial products.
How many people have bad credit?
According to a study by the credit bureau Experian, about 16% of consumers have bad credit, and more than a third of the population has what lenders call a subprime score, which includes the fair and poor categories.
Here’s how credit scores break down in the U.S.:
|Credit score||Rating||% of people||Impact|
|300-579||Poor||16%||Credit applicants may be required to pay a fee or deposit, and applicants with this rating may not be approved for credit at all.|
|580-669||Fair||18%||Applicants with scores in this range are considered to be subprime borrowers.|
|670-739||Good||21%||Only 8% of applicants in this score range are likely to become seriously delinquent in the future.|
|740-799||Very good||25%||Applicants with scores here are likely to receive better than average rates from lenders.|
|800-850||Exceptional||20%||Applicants with scores in this range are at the top of the list for the best rates from lenders.|
How do you get bad credit?
You can end up with bad credit in a variety of ways, including:
- Credit card or loan defaults – As you might expect, failing to pay off your credit card bills or pay back a loan – also known as defaulting – marks you as a clear credit risk to lenders.
- Late payments – Your payment history accounts for 35% of your credit score. If you’re late with your payments – be they credit cards, student loans or mortgages – your credit will take a big hit.
- Maxing out your cards – Credit utilization – the amount you’ve borrowed compared to your total available credit – accounts for another 30% of your score. While you may have heard an old rule of thumb that says you should keep your credit utilization below 30%, this is a myth. The lower your credit utilization, the better.
- Charge offs – When a creditor decides you have no intention of paying back your debt and stops collection attempts, your account will become charged off.
- Bankruptcy ‐ While it’s sometimes your only option to get out from under debt, bankruptcy is a credit score disaster, and should only be used as a last resort.
- Foreclosure – The higher your starting credit score, the bigger a drop you’ll see as a result of foreclosure (as much as 140 points according to FICO research).
- Judgments – Judgments show lenders that the court system had to force you to pay off your debt. Be sure to settle your debts, as an unpaid judgment is worse than a paid judgment.
What are the effects of bad credit?
You’ll face higher interest rates, trouble with credit and loan application approval, difficulty renting an apartment, higher insurance premiums and even trouble getting certain jobs.
What to look out for in a credit card for bad credit
With a proper amount of research and consideration, a credit card for bad credit can be a lifeline for rebuilding your credit. However, you need to do your research. Some credit cards for bad credit compensate for riskier lending with high APRs and harsh penalties. Especially if you’re inexperienced when it comes to credit, you should weigh the benefits against potential pitfalls.
Here are the key elements to keep in mind when evaluating credit cards for bad credit:
- Fees: Credit cards for people with bad credit tend to carry a lot of fees, so take note of any annual fees, program fees, inactive account fees, or any others. To find the info you need, take a look at the card’s rates and fees on the application page: Primary fees – late fee, foreign transaction, etc. – are shown at the top of the document (called the Schumer Box), but keep an eye out for lesser-known fees appearing further down in the text.
- APR: Cards for bad credit often bring along high interest rates and in an unfortunate situation – penalty APRs. As such, getting the lowest rate possible should be one of your top priorities if you know you’ll carry a balance.
- Minimum/maximum security deposit: If your card requires a deposit, check the range offered to see if it makes sense. Can you afford to tie up $1,000?
- Credit limit: You’ll want to be sure the card offers a limit that’s high enough to allow you to keep your credit utilization low.
- Be wary of targeted mailers: Watch out for mailings that target your situation. Banks have been found to send these disproportionally to people with less formal education.
How to get a credit card with bad credit
If you’ve made a few financial mistakes or don’t have a credit history, you may be wondering if it’s even possible for you to get accepted for a credit card. Fear not, because it is possible to get a credit card with bad credit. Here are a few steps you can take to increase your odds of approval.
Check your credit report
Before you begin browsing and applying, it’s important to know where you stand – you might be surprised. Maybe your credit score falls within the “fair” range instead of “poor,” which gives you a better selection of cards you’re likely to be approved for. Even if your credit is poor, knowing how close you are to having fair credit allows you to decide whether you should apply now or wait until you’ve given your credit a boost and have better options.
Since you can check your credit score for free and without any damage to your score, there’s no reason not to. Though “get your free credit score” may sound like a gimmick, the 3 major credit bureaus are legally required to give you a free credit report at least once per year. You can request yours online, by phone or by mail.
Dispute any fraudulent or incorrect activity
If your credit score is surprisingly low, you may want to do some investigating. It’s possible that fraud or mistakes are wrongfully affecting your credit. If you’ve been a victim of fraud or if you find mistakes on your credit report, be sure to dispute the incorrect items on your credit report.
Pay down any debt if you’re able
One of the major factors that go into your credit score is your credit utilization ratio, which is basically the percentage of your available credit limit that you’re borrowing. A high utilization ratio can lower your credit score, so it’s a good idea to pay down existing balances before you apply for a new credit card.
Look for a card that matches your situation
Once you’ve done your research and feel comfortable with your standing, it’s time to start browsing credit cards. Be sure to pick a card with credit requirements that you satisfy. That is, don’t waste time looking at or applying for cards that require good credit if yours isn’t quite there yet.
The cards at the top of this page have low credit requirements. Secured credit cards are another great option for applicants with bad credit. They require a one-time, refundable security deposit and some even offer rewards.
What to do if your application is denied
Luckily, you won’t be left in the dark on the “why,” as issuers are legally required to send you an adverse action notice explaining why you were denied.
Here are some common reasons for denial and what you can do about them:
- Too much debt – Your balances are too high. Make a budget and pay more than the minimum each month to pay down your existing debt.
- Limited credit history – Wait a couple of months, then apply for a secured card designed for credit building. Within months, your score will improve with on-time payments.
- Low income – Next time, try a card that is not a premium product, but has the features you are looking for.
- Too many applications – Take a break from applying for cards for several months and focus on building your credit with a credit-builder loan.
- Too young – People under 21 must have an independent source of income to get a card, but you can be an authorized user and still build credit
- Negative information on credit reports – Late payments or judgments, such as bankruptcies, take time to drop off your reports. Just pay on time and in full going forward.
- Score too low – If the issue is your credit score, you can look at a credit-builder loan at your credit union. About 1 in 5 credit unions offer credit-builder loans.
FAQ: Credit cards and bad credit
When you have a bad credit score and are looking for a new credit card, it can be tough to know where to begin. Check out these commonly asked questions to get a sense of which direction you should go.
Can you get a credit card with no bank account?
It will be very difficult to get a credit card without a bank account. Even most cards backed by a deposit require you to have a bank account. One exception is the OpenSky Secured Visa: You can pay your security deposit via money order or have someone send the issuer a check or transfer on your behalf.
Can you prequalify for a credit card with bad credit?
You certainly can, though not all issuers offer prequalification. Luckily, those that do typically determine who prequalifies for a card with a soft credit pull, which won’t impact your credit score. That said, your application can still be denied even after you’ve prequalified.
Credit cards for bad credit that offer prequalification include:
Can you get a credit card after bankruptcy?
Yes. Not only is it possible to find a credit card after bankruptcy, it’s a great way to get your credit back on track. To save time and protect your credit score, it’s best to only apply for credit cards designed for bad credit and rebuilding credit. Indeed, a few such cards explicitly state that previous bankruptcy is OK, including the Indigo Platinum Mastercard and the Milestone Gold Mastercard.
Secured vs. unsecured credit cards for bad credit
There are two main types of cards to consider when you’re looking for a credit card with bad credit: secured and unsecured cards. Both can be a useful tool in your credit-rebuilding efforts.
Secured credit cards
Secured cards require a refundable deposit, which is usually equal to your credit limit. With many cards, after 6-12 months of on-time payments, you should be able to get your deposit back and graduate to a traditional (unsecured) credit card with a higher limit.
Examples of secured credit cards for bad credit:
|Card||Credit Recommended||Annual Fee|
|Secured Mastercard® from Capital One||Limited/Bad Credit||$0|
|Discover it® Secured||Limited/Bad Credit||$0|
|First Progress Platinum Prestige Mastercard® Secured Credit Card||Bad Credit||$49|
|OpenSky Secured Visa Credit Card||No Credit Check||$35|
Unsecured credit cards
An unsecured credit card, as the name implies, offers an “unsecured” line of credit, so you won’t have to put down a security deposit to borrow money. You’re given a credit limit based on your creditworthiness and can borrow up to that amount. A high credit limit will also likely improve your credit score by helping your credit utilization.
Examples of unsecured credit cards for bad credit:
|Card||Credit Needed||Annual Fee|
|Total Visa Unsecured Credit Card||Bad/Fair Credit||See Terms|
|Credit One Bank Visa for Rebuilding Credit||Bad Credit||$0 – $99|
Can you do a balance transfer with bad credit?
It’s technically possible to do a balance transfer with bad credit, but it may not be practical. The only cards you’re likely to qualify for that allow balance transfers are secured cards, and it usually makes more sense to pay down a portion of your existing balance or wait until you’re eligible for better balance transfer cards.
Can you get blacklisted by a credit card company?
While there’s no official credit “blacklist,” if you’ve burned a credit card company in the past, they may be unlikely to offer you any new credit for years to come. Additionally, if you have a history of bounced checks or refusing to pay a negative balance at your bank, you could be flagged by ChexSystems, a consumer reporting agency that gathers reports of checking account misuse or fraud. Activity stays in a ChexSystems report for five years.
Can I use a store credit card to repair my bad credit?
A store credit card could be a solid bad credit option, offering a low entry barrier and a chance to build credit while you earn rewards at your favorite retailer.
Pros of using a store card for bad credit
- Qualifying for a store credit card is usually easier.
- You can build credit with responsible use.
- Store cards offer money-saving store rewards, perks and discounts.
- Store cards rarely charge an annual fee.
Cons of using a store card for bad credit
- Store cards tend to carry extremely high APRs.
- You could get stuck with deferred interest.
- Store cards are often “closed loop” cards.
- A store card could spark frivolous spending.
Bottom line: The best store credit card for bad credit is one that keeps you on track with your credit-building goals. To ensure good habits, pick a card tied to a store you visit frequently for everyday purchases.