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With bad credit you’ll have fewer credit card options than a person with good credit, but there are still many cards designed for people in your situation. Our favorite options include certain unsecured credit cards, secured cards, and store cards
By Brendan Harkness
By Brendan Harkness
If you have bad credit (generally considered a FICO Score 8 credit score of around 579 or less) you won’t qualify for the best credit card offers on the market. Instead, you’ll usually need to settle for a card with higher interest rates and fewer features until your credit improves.
In most cases it will be easiest to qualify for a secured credit card, which will require a security deposit. This deposit will fund your credit limit.
Some unsecured credit cards are designed for fair credit, sometimes called average credit, and some people with credit near the bad credit/average credit border may have a shot at them. There are also unsecured cards designed for poor credit, but these options are more limited. Many of them have very high fees and below-average customer service, and we typically recommend avoiding them (go for secured cards instead).
Lastly, there are store credit cards. These cards usually have lower credit requirements, making them easier to get. But they tend to be restricted in how you can use them, and they don’t always have the best customer service either.
If you’re a student, chances are you have limited or no credit rather than bad credit. You also have access to special cards designed for young people in school who are just starting to build up their credit. Take a look at our picks for the Best Credit Cards for College Students if so.
You can also consider checking your local banks or credit unions for their credit card offers. In some cases you may be able to leverage an existing relationship to help qualify for a card.
Although secured cards are usually the go-to option for people with poor credit, there are also some decent unsecured cards out there. You may be able to qualify for one of them even if you have bad credit (or if you have limited or no credit), because card issuers take several elements into account when deciding if you’ll be approved for a card or not, and there’s seldom a hard minimum credit score requirement.
Besides just looking at your credit, issuers also want to know about your income, whether you’re a renter or a homeowner, and your employment status, among other factors.
So, don’t assume that you’ll be denied for a particular card just because of your credit scores. Sometimes people are approved for cards they didn’t expect to be, and sometimes people are denied when they thought their credit was good enough.
With bad, limited, or no credit, secured credit cards will be some of your best options.
By providing a refundable security deposit to fund the credit limit, you reduce the risk for the credit card issuer. But this doesn’t mean you’re guaranteed to be approved for secured cards. You can still be denied for various reasons, such as:
In most cases your credit line will be equal to the amount of your security deposit. Make a $1,000 deposit, and your credit line will be $1,000. Credit limits tend to be no higher than $2,000 or $3,000, and, depending on the card, your maximum limit might be based on your creditworthiness. Sometimes you can make an additional deposit later on to increase the credit limit.
Secured cards usually don’t offer rewards of any kind, although there are a few that do. In most cases they have pretty high interest rates, and very few extra benefits. These cards usually report to the three major credit bureaus — Experian, Equifax, and TransUnion — just like most unsecured cards.
Some issuers may review your credit card account and your credit periodically, to see if you qualify to have your deposit returned or even to upgrade to an unsecured card. But not all issuers offer this handy service, which allows you to continue using the same account rather than canceling it and opening a new credit card. This is better for your average account age.
Store credit cards generally have lower credit requirements, making them easier to get than regular credit cards. But they also usually have higher interest rates, and may have some different rules about how and where you can use them. Your credit line will usually be smaller than what you get with other reward cards.
If you shop at a particular store very often and it offers a credit card, it could be a good idea to use that card. As long as you completely understand the terms and use it responsibly, you can improve your credit and move on to better cards if you’d like.
Sometimes these cards are connected with a payment network, like Visa or Mastercard. But in other cases they aren’t. This is important, because unless your card is part of a network like Visa you can only use it at the store it’s associated with.
Take a moment to watch our video below on a few of the most important things to know about store cards. If you decide that one is right for you, check out our picks for the Best Store Credit Cards. You can also browse full lists of cards issued by Synchrony Bank and Comenity Bank, major issuers of store cards.
Store credit cards can be a good way to build or rebuild your credit and get some rewards while shopping, as long as you’re sure to follow the terms and pay them off by the due date. In some cases, store cards have special financing deals that you need to pay very close attention to, or you can end up getting burned with retroactive interest charges. If you’re not careful, not only will you end up paying more for interest, you can also do damage to your credit scores.
So always use your cards responsibly, and keep an eye on your credit scores too. In time, you’ll be able to qualify for some great credit cards.
If your credit is in especially bad shape, you may not qualify for the cards we’ve recommended above. And if that’s the case, you may have begun searching for guaranteed approval cards, which require no credit check.
There’s good news and bad news.
The bright side is that there are certain cards you can apply for without a credit check, which almost guarantees approval. With that said, there are still some things that could prevent you from being approved, like if you’re not old enough, or you don’t have the cash required for a deposit (in the case of secured cards).
The not-so-great news is that these guaranteed approval cards are usually very bad, featuring unfavorable terms and exorbitant fees.
A few notable guaranteed approval credit cards include:
Guaranteed approval cards are usually secured, which means you’ll have to put down a deposit. That deposit generally sets your credit limit.
There are outliers, though, that don’t require deposits.
Take the Total Visa for example. It’s an unsecured card designed for bad credit that requires a valid checking account, but it charges a plethora of high fees. It also sets credit limits based on the applicant’s credit scores, which means your limit will probably be very low if your scores are bad.
Usually, the only way to get a high-limit card with bad credit is if you have the cash to fund it yourself with a secured card. There’s nothing wrong with secured cards — they cost some money up front, but they can help build your credit and you can get one from a major issuer.
And it’s worth noting that some secured cards have fairly high deposit limits, like the Wells Fargo Secured Visa Card, which accepts deposits up to $10,000. You’re not guaranteed approval for this card, however.
The bottom line? You’re almost always better off applying for a credit card that doesn’t guarantee approval.
You may have to shop around to find something you can actually get, but once you do, there’s a decent chance you’ll find a better offer than the guaranteed approval cards we’ve detailed here.
A credit builder loan offers another good way to build or improve your credit. This is a type of installment loan, and you can use it along with or instead of a credit card to help raise your credit scores.
Unlike other installment loans, the funds for a credit builder loan go into a special account that you can’t access. You’ll make a regular payment each month to “pay off” the loan, generating a positive record of activity which the lender will report to the major credit bureaus.
After paying off the entire amount of the loan, you’ll get the money that was initially placed in the special account. It’s a bit like a loan in reverse, which requires you to pay it off in full before you can access the funds. It gives you a chance to add an account to your credit reports with a history of on-time payments, showing that you’re a responsible credit user.
Learn more about credit builder loans offered by Self Lender.
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