Guide To Cards For Bad Credit

Getting approved for a credit card can feel like an uphill battle when your credit isn’t in the best shape, but responsibly using a credit card is one of the fastest ways to improve your credit. It’s quite the dilemma. Fortunately, certain types of cards are designed specifically for people looking to rebuild their credit and prove their financial responsibility.

By knowing what qualifies as a poor credit score and understanding which cards you’re most likely to be approved for, you can increase your chances of getting a card sooner rather than later. This guide will show you how to qualify for a credit card with bad credit — and how to use it to improve your financial standing over time.

What is considered bad credit?

What’s considered a “bad” credit score can depend on the credit scoring model being used. For example, a poor FICO credit score falls between 300 and 580, whereas a poor VantageScore credit score falls between 300 and 599.

You can see how bad credit scores fall within each scoring model in the charts below:

FICO credit scores

VantageScore credit scores

Is bad credit the same as no credit?

Bad credit is not the same as having no credit.

• A poor credit score means you have made credit mistakes in the past that led to negative information showing up on your credit report.
• No credit score means you don’t have enough credit history to generate a score at all.

Having no credit is typically a better position to be in since you don’t have to repair your credit, although you do have to begin building it from scratch. In either scenario, you’ll likely qualify for a similar selection of credit cards — secured credit cards that require collateral and unsecured credit cards geared toward people with limited credit history or poor credit.

How to choose a card for bad credit

Getting approved for a credit card with bad credit is only part of the challenge. It’s just as important to understand which card features will actually help you reach your financial goals. By asking the right questions about each offer, you can more easily compare your options and choose the bad credit credit card that’s best for you.

Will using this card responsibly help my credit?

The best credit cards for bad credit report regularly to the credit bureaus. This step means information that can help your score, such as on-time payments and low credit utilization, is recorded on your credit reports. It does work both ways, though. Irresponsible use of your card will also be reported and could hurt your score.

Are the rates and fees reasonable?

While some card issuers charge steeper rates and fees to applicants with poor credit, not all of them do. In fact, there are many secured credit cards that have $0 annual fees and no application or hidden fees.

As you search for bad credit credit cards, make sure you understand any fees you have to pay and why. Ideally, you’ll find a card option with no or very limited fees you can live with.

Is there a prequalification opportunity?

Some credit cards for bad credit let you gauge your approval odds without a hard inquiry on your credit reports. Prequalifying or preapproval lets you see if you are likely to be approved before you fill out a full application.

The Discover it® Secured Credit Card is a good example – you can explore prequalification online with zero credit impact. This card is also available for applicants with no credit history.

Is the card secured or unsecured?

Some credit cards for bad credit are unsecured, meaning you don’t have to put down a cash deposit to begin using them. Others are secured, meaning you have to put down a refundable cash deposit to establish your line of credit.

Opting for a secured credit card can usually get you better approval odds and lower fees. However, you’ll typically have to put down a minimum security deposit of $200, and that amount will usually become your credit limit.

If you can afford a security deposit, the best secured cards are good options for building credit with responsible use. Some secured credit cards even offer rewards for spending and other cardholder perks.

Are there tools to help me manage the card and my budget well?

Some credit cards for poor credit are fairly basic, but others aim to help you improve your credit for the future. They do this by offering free credit scores and score monitoring as well as budgeting tools to help you stay on track toward your financial goals.

Is there a long-term option for this card?

Since the length of your credit history is a major factor that determines your credit score, you’ll want a card you can keep open for as long as possible. Having a $0 annual fee makes this part easy, so prioritize cards that don’t charge this fee or that offer options to change to another card without affecting your credit history or score.

If you’re planning to get a secured credit card, you can also look for options that let you get your security deposit back and be upgraded to an unsecured version of the card in the future. This can help you get a better card later on while maintaining the same line of credit and account history.

Mistakes to avoid with credit cards for bad credit

As you prepare to use a credit card to boost your score for the long haul, you should know about all the pitfalls to avoid. These include:

• Neglecting to check your credit score before you apply: Checking your credit score before you apply can help you determine if you truly have a poor credit score or if your score is better than you thought.
• Failing to compare cards and options: Make sure to compare credit cards for poor credit based on their interest rates, fees, security deposit requirements and other details before you apply.
• Forgetting to read the fine print: Read over the full offer and details for all credit cards you’re considering, and be sure to check for hidden fees or fine print.
• Making late payments: Your payment history is the most important factor affecting your credit score, and late payments can destroy any progress you’ve made in a hurry.
• Maxing out your credit limits: Your credit utilization ratio is another major factor that determines your scores. If you want to keep your credit in the best shape, strive to keep the amounts you owe below 30 percent of your available credit limits at all times.

Applying for a card with bad credit

If you have some time to build or improve your credit before you apply for a credit card, it’s perfectly fine to wait. Using an app like Experian Boost could help you improve your score in the short-term using bills you already pay, or you could see about becoming an authorized user on a trusted person’s credit card in order to get some history on your credit reports.

Once you think you’re ready, the following steps can help you get approved for a credit card for bad credit:

1. Understand your credit situation and needs

Before you apply for a credit card, you should have a general idea of your credit score and where it falls on the spectrum from poor credit to excellent credit. If you find you have better credit than you thought, or a score in the fair credit or good credit range, you will qualify for an entirely different set of card options. If your credit score is truly poor, however, you’ll want to stick with credit cards for bad credit and secured credit cards that require a security deposit.

2. Research your options

Compare cards and options based on all they have to offer. Make sure to look at credit card fees and interest rates, as well as any benefits cards include.

If you think you’ll be better off with a secured credit card, look for cards that have a minimum security deposit amount you can afford. Also look for secured credit cards that let you get your security deposit back and be upgraded to an unsecured credit card in a reasonable amount of time (potentially after six or seven months of on-time payments).

3. Take advantage of prequalification opportunities

Look for cards that let you get prequalified online before you actually apply. This step lets you enter some basic information like your name, your address and the last four digits of your Social Security number (SSN). From there, you can see if you’re likely to be approved for a card without having a hard inquiry show up on your credit reports. You can also use tools like Bankrate’s CardMatch.

4. Apply for the best card

Once you find the best credit card for your needs, you can move forward with a full application. Applying online is easy, but be prepared to submit your full name, home address, phone number, household income, monthly rent or mortgage payment, full Social Security number (SSN) and more.

If you are applying for a secured credit card, you’ll need to pay the security deposit amount from a connected bank account upfront.

The bottom line

Having bad credit doesn’t mean you’re shut out of the credit card market completely. By arming yourself with information on the types of cards you can get approved for, you can position yourself to improve your credit and enjoy some credit card perks and features along the way.

From there, responsible use can help improve your credit score, open the door to better card options and put you back on track toward financial stability.