Signing up for a credit card is challenging when you have bad credit as there aren’t many options available. Credit card insurers don’t want to take the risks of extending the credit limit and not getting paid for it. The lower your credit score is, the harder it’s to get approved for a credit card, but it’s not impossible as there are options for people with bad credit. According to Experian, one of the “Big Three” credit-reporting agencies, only 16% of Americans have very poor credit and 18% have fair credit. Seniors actually have the highest average credit score of 749, followed by people ages 50 to 59. The lowest average credit score belongs to people ages 20 to 29, with a score of 662.
But, for those with very poor or fair credit, credit-building companies can help you improve your credit scores. So, what’s considered bad credit and which credit cards are best for those with poor credit? You’ll have to continue reading to find out.
If you have bad credit, you probably realized it when you applied for a credit card loan or credit-based services and were denied. For those of you who don’t know your credit score, it’s important to check so you aren’t surprised when you get denied when applying for credit cards. You can request a free credit report through Equifax, Experian, or Transunion.
Your credit score can range between 300 to 850, with lower numbers meaning worse credit and higher number meaning better credit. Very poor credit is 300-579, fair credit is 580-669, good credit is 670-739, very good credit is 740-799, and exceptional credit is 800-850. If you have lower credit scores, you’ll probably be asked to pay additional fees like an annual cardholder fee or higher chargers for late payments because the lender assumes higher risk by lending to those with bad credit. Not all credit cards will give credit to those with bad scores and those that do aren’t created equally.
Best Credit Cards For People With Bad Credit
Most of the credit cards offered for those with poor credit are secured cards, which require a security deposit for the credit limit and have high-interest rates. Many people don’t like this option, but as long as you stay on top of your payments and don’t default on the balance, the deposit will be returned to you. Many secured cards can also be converted to unsecured cards after a year of on-time payments. Unsecured cards, don’t require a security deposit, but getting approved for one is more difficult and they’re usually only available to those with good credit scores. These are our picks for the best credit cards for people with bad credit.
Indigo Platinum Mastercard
The Indigo Platinum Mastercard doesn’t discriminate, even if you’ve filed for bankruptcy. It’s a great last resort option for anyone struggling to get accepted for a credit card. There’s no deposit required, but there is an annual fee of $75 for the first year and $99 after that and an APR (Annual Percentage Rate) of 24.90%. You can strengthen your credit score by paying your balance on time each month.
Credit One Bank Platinum Visa
This card offers some of the perks associated with premier cards, for those with bad credit like 1% cashback on purchases and services. The annual fee ranges from $0-$99 and the APR is between 19.49-25.49%, it’s based on creditworthiness.
Capital One Secured MasterCard
With no annual fee and an APR of 26.99%, you can control and rebuild your credit. Depending on your credit, the refundable security deposit will be $49, $99, or $200. If you pay your first five monthly payments on time, you can get a credit limit increase without having to increase the security deposit. Plus, after you make the security deposit, you’ll get an initial credit line of $200.
Milestone Gold Mastercard
For those trying to rebuild their credit, the Milestone Gold Mastercard is a good choice and you can get prequalified without it impacting your credit score. The APR is 24.90% and the annual fees depend on creditworthiness, starting at $35, $59, or $75, for the first year and $99 after that.
Credit One Bank Unsecured Visa with Cash Back Rewards
This unsecured card, offers the same perks and fee structure as the Credit One Bank Platinum Visa, with an APR between 19.49 and 25.49% and 1% cashback on purchases and services including gas, dining, groceries, cable, mobile phone, etc. There’s zero fraud liability, so you don’t have to worry about paying for services you didn’t use, rental car collision insurance, damage waiver insurance, and travels accident coverage. But, you have to prequalify for the account, which may be difficult if your credit is poor.
OpenSky Secured Visa Credit Card
There’s no credit check necessary to apply as OpenSky believes everyone should be able to get credit, no matter their credit score. The cardholders love the APR of 18.89% and the low annual fee of $35. However, there is a minimum $200 security deposit. If you qualify for this card, you can deposit up to $3,000 to give yourself more flexibility to make purchases each billing cycle and reduce your use of credit. You also don’t need a bank account to be approved.