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 flexible security deposits
The required security deposit ranges from $49 to $200, depending on your credit. It’s one of the only secured cards that allows your initial credit limit to be higher than your security deposit (if you qualify). Plus, there’s no annual fee and after 6 on-time monthly payments, you’ll automatically be considered for a higher credit line, which could boost your credit.
Why this is the best credit card for cash back
This card offers rewards, which isn’t common among credit cards for bad credit. Cardholders get 2% cash back at gas stations and at restaurants (up to $1,000 in combined purchases per quarter, then 1%). The ongoing APR on purchases (22.99% variable) is high even for a secured card, but utilizing your cash back to help pay down your balance may make it avoidable and will pay off when Discover reports your credit behavior to the 3 credit bureaus.
Why this is the best credit card for building credit
You’ll get your quarterly FICO Score for free on each monthly billing statement, making it easy to keep track of your progress. Plus, cardholders can access several account management tools that make it easy to stay on top of your payments, like the ability to make payments online, 24/7 account access by phone, and the ability to enroll in email or text payment reminders. Be sure to pay off your balance with this card, as the APR for purchases is sky-high at 36% variable. You’ll also have to pay several fees, including a one-time program fee, an annual fee and a monthly fee.
Why this is the best credit card for bad credit with no security deposit required
One nice feature about this card is that no security deposit is required, yet you can get a credit limit of $225-$300, depending on your annual fee ($0-$99). The Indigo Platinum Mastercard also offers Mastercard ID theft protection, zero fraud liability and reporting your habits to all 3 credit bureaus. Unfortunately, the card doesn’t offer any rewards and features a high regular APR at 24.90%.
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 a decision quickly, but you will need a checking account to be approved. Thanks to Mastercard, this option has widespread acceptance and your cardholder habits will be reported to Experian, Equifax and TransUnion. Some things to know if you do elect for fast approval: You’ll be given an initial credit limit of $400 (subject to available credit) and there are a few fees, including an annual fee and a one-time processing fee, that can be avoided elsewhere.
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. In addition to automatically being approved for the card once you’ve made 3 consecutive timely payments and at least $100 in savings, you also enjoy features like credit monitoring and account alerts to help you stay on track. There are fees that come along and you’ll have to wait until your 12- to 24-month payments are complete to receive your deposit, but this card can be a major help. Your payments will be reported, and 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.
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 (up to $3,000) via check, Western Union or money order. Also, should you need to carry a balance, the card’s 17.39% (variable) APR is relatively low. The card does feature a $35 annual fee and lacks any rewards-earning capabilities.
Why this is the best credit card for bad credit with no annual fee
The Petal 1 not only offers no foreign transaction or annual fees, but you can earn 2%-10% on purchases with select merchants and get a credit limit of $500-$5,000. The card’s regular APR is super high at 19.99%-29.49% variable, but sufficient and on-time payments will save you from that lofty APR. Plus, getting in a routine of good habits will serve you well when they’re reported to all 3 major credit bureaus.
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. Also, offering some leeway to newer cardholders, you’ll 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, but your tendencies as a cardholder can pay off either way: 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 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. To help decide whether the card’s 1% cash back on eligible gas, groceries, and services such as mobile phone, internet, cable and satellite TV is worth it, you can check and see if you prequalify to get an idea of what your annual fee would be. This card protects cardholders from fraud, but has several things you’ll want to keep an eye on, such as fees associated with cash advances and foreign transactions and a high ongoing purchase APR of 17.99% to 23.99% variable.
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. You’ll have to pay an annual fee of $59-$99, but your payment history will be reported on a monthly basis, and prequalification is available ahead of time to avoid any impact on your credit score.
Summary of the best credit cards for bad credit
|Credit Card||Best for||Annual Fee||Deposit Requirement|
|Secured Mastercard® from Capital One||Flexible security deposits||$0||$49-$200|
|Discover it® Secured Credit Card||Cash back||$0||$200-$2,500|
|First PREMIER® Bank Mastercard® Credit Card||Building credit||See Issuer Website||See Terms|
|Indigo® Platinum Mastercard®||No security deposit||$0-$99||$0|
|Fit Mastercard® Credit Card||Fast application||See Terms*||$0|
|Self – Credit Builder Account + Secured Visa Credit Card||Establishing Credit||One Time $9 + Secured Card $25||$0|
|OpenSky® Secured Visa® Credit Card||No credit check||$35||$200-$3,000|
|Petal®1 “No Annual Fee” Visa® Credit Card||No Annual Fee||$0||$0|
|Surge Mastercard Credit Card||Credit card with a high limit||See Terms*||$0|
|Credit One Bank® Visa® for Rebuilding Credit||Low Annual Fee||$0 - $99||$0|
|Destiny™ Mastercard®||Imperfect Credit||$59-$99||$0|
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 670. Below that, you’ll consistently see less-than-stellar offers for financial products.
Bad credit can lead to several obstacles. You’ll face higher interest rates, trouble with credit and loan application approval, difficulty renting an apartment, higher insurance premiums and even issues when applying for certain jobs. Luckily, understanding why you might have bad credit could be an early step to turning your financial situation around. You can end up with bad credit in a variety of ways, including:
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.
No matter your reason for having bad credit, there are ways for you to improve your score. Oftentimes, a secured card or a card for bad credit can be used as a tool to grow out of a poor credit rating. According to a study by the credit bureau Experian, only about 16% of consumers have bad credit, the smallest percentage across all credit ranges. With some financial discipline and the right habits, boosting your credit score out of that bottom range is more than possible.
Why improving your bad credit is important
Just as bad credit hinders what you can do, good credit can open doors to new possibilities. Getting out of bad credit will lead to numerous benefits:
- Interest savings. When taking out a loan to finance a home or car, the slightest difference in interest rate can cost thousands over the lifetime of the loan. The better your credit score, the more likely you are to be approved for the best rate.
- Better terms. In addition to saving on interest with large loans, a good credit score can earn you more generous payment schedules and dollar limits.
- Access to top credit cards. After some time building up your credit, cards with lucrative rewards, friendlier interest rates and can’t-miss sign up bonuses will become available. By demonstrating you can keep up with proper payment habits, you’ll have the ability to get more value out of your credit card.
- Save on insurance. A good score may qualify you for lower premiums on car insurance.
- Better financial reputation. Some landlords, rental management companies, utility companies and potential employers may look at your credit score when making decisions. Your score is meant to show how financially trustworthy you are, so being in good standing will protect you from any hassle.
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 explicitly stating that previous bankruptcy is OK, such as 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/No Credit||$0|
|Discover it® Secured Credit Card||Limited/No 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’s probably not practical. The only cards you’re likely to qualify for that allow balance transfers are secured cards, and it usually makes more sense to tackle paying down your balance and building your credit for a bit 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.
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.