Comparing Credit Cards for Bad Credit
Updated: February 19, 2018
CreditCards.com's Best Credit Cards for People with Bad Credit:
Here’s the good news about bad credit – it’s a temporary state. No matter how low your credit, with a change in habits and consistency, you can improve your score within months. Here, we look at:
- What do cards for bad credit offer?
- How to properly use a credit card for bad credit
- What happens to me if I miss a card payment?
- What should I do if I miss a card payment?
Not sure where to start? We can help:
What do cards for bad credit offer?
- Credit building. The greatest advantage to a card for bad credit is that you can build your credit. That said, make sure your card issuer reports your good credit habits to the 3 major credit bureaus.
- No annual fee. Cards for bad credit or no credit will sometimes be offered with no annual fee.
- Unsecured credit. Some secured cards will evaluate your credit after several months to see if you qualify for an unsecured line of credit. In some cases, you can get an unsecured card right away for bad credit, although there may be fees.
- Rewards. For example, the Discover it Secured Card lets you earn 2% cash back on restaurants and gas stations on up to $1,000 in combined purchases per quarter. It’s 1% back on all other purchases.
- Choose your payment date. The Credit One Visa Credit Card allows you to pick the date when your payment is due.
- FICO score. Some cards, such as the First Premier Bank Mastercard, provide your quarterly FICO score on your monthly statement.
- No processing or application fees. Some cards for bad credit don’t charge processing or application fees.
- Car rentals and hotels. Many hotels and car rental businesses require a credit card to make reservations or require you to present one when you arrive. A credit card for bad credit can be used for that, although you want to make sure the company doesn’t put a hold on your card that exceeds you credit limit.
How to properly use a credit card for bad credit
- Pay on time. The single most important aspect of building credit is on-time payments. It takes months to build good habits (and a good score). It takes one late payment to drop your score as much as 100 points. You can also face late fees and a rise in your interest rate for late payments.
- Put a small charge on it. To keep your account active, place a small charge on your card each month. You can’t build credit if your card is canceled for inactivity.
- Pay in full. The second most important aspect of building credit is your utilization ratio, which is your balance by your available credit. You want to keep it as low as possible. How? By paying in full each month.
- Pay multiple times a month. While you’re at it, pay in full multiple times a month, because you don’t know when the issuer will send your data to the credit bureaus. Also, because you have a low credit limit with a starter card, you have less room for maintaining a low utilization ratio. If you have $500 in available credit, and you have a balance of $250, that means your ratio is at 50%, which is much too high. You want the ratio as close to 0% as possible.
- Check your credit. Regularly check your credit with the 3 major credit bureaus for errors. Have the bureaus correct any errors you find.
What happens to me if I miss a card payment?
- Impact on your credit score. The higher your credit score, the harder a late payment can hit you. FICO data shows that a payment that is 30 days late can cause a 90- to 110-point drop for a consumer with a 780 score who has never missed a payment.
- Late fee. Even if you are a day late on paying your credit card, you can face a late fee. Some issuers, such as Discover, have cards that don’t charge a late fee your first time.
- Interest rate hike. If you regularly miss payments, the issuer may raise your interest rate. That means you will pay more each month if you carry a balance.
- Lose your card. If you violate the card agreement enough, you can lose the card altogether.
What should I do if I miss a card payment?
- Call your card issuer. Don’t put your head in the sand. As soon as you realize you’ve missed a payment, contact the issuer and make it right.
- Make a budget. That missed payment is a wakeup call – establish on a spreadsheet or app a realistic budget, with room for fun and saving. Also, set up reminders so that you don’t forget again.
- Raise the money. Have a balance you’re struggling to pay down? Look at taking on a part-time job or selling unwanted items on Craigslist. Or use your new-found budgeting skills to cut costs and pay off the debt.
- Stay current on your other accounts. While you work to resolve the late payments, keep paying your other accounts on time.
- Consider automatic debits. While not a cure-all, automatic payments can help you pay on time. Keep in mind that if you debit the minimum due on a credit card, you are paying interest if there’s a balance carried over.
- Monitor your credit report. That late payment will stay on your account for 7 years, but newer habits will have greater importance. That said, regularly check your credit reports for errors and have the credit bureaus correct them.
Recap: Best Credit Cards for Bad Credit 2018
|Card||Annual Fee||Deposit Requirement||Instant Approval|
|Capital One® Secured Mastercard®||$0||$49, $99, or $200 (Refundable)||Yes|
|Discover it® Secured Card||$0||$200 (Refundable)||Yes|
|Total VISA® Unsecured Credit Card||See Terms*||None||Yes|
|Credit One Bank® Visa® Credit Card||$0 - $99||None||Yes|
|First PREMIER® Bank Mastercard® Credit Card||See Issuer Website||None||Yes|
|First Progress Platinum Prestige Mastercard® Secured Credit Card||$49||$200 or more (Refundable)||Yes|
|Credit One Bank® Unsecured Visa® with Free Credit Score Tracking||$0 - $99||None||Yes|
|First Progress Platinum Elite Mastercard® Secured Credit Card||$29||$200 - $2,000 (Refundable)||Yes|
|OpenSky® Secured Visa® Credit Card||$35||$200 or more (Refundable)||Yes|
|First PREMIER® Bank Credit Card||See Issuer Website||None||Yes|
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