Best Credit Cards for Bad Credit 2023

Credit card issuers can help you build and repair your credit so you can qualify for the credit card of your choice. Having bad credit means your options are limited. It can be harrowing trying to apply for a credit line when you have bad credit, especially if you don’t meet pre-qualification standards that credit lenders have in place. The good news is that there are many credit card options for people with bad credit that can help you start to rebuild your credit score.

What is considered bad credit?

The FICO Score scale, which estimates your creditworthiness, starts at 300 and goes up to 850. A bad credit score is below 570, while anything between 580 and 690 is fair.

The higher your credit score, the more likely you are to qualify for credit cards with better interest rates. It can be harder to get good credit or be approved for a card or loan if your FICO score is too low.

Maintaining good credit can be useful when an emergency comes up. For example, if your car needs a last-minute repair and you don’t have accessible cash, a credit card can pay for the necessary repairs.

Having a bad credit score can mean you don’t qualify for loans or higher lines of credit, like car loans, mortgages, personal loans, student loans, and more. It could even be challenging to apply for rent if the landlord conducts credit checks. Some utility companies may require security deposits if you are switching, and cell phone carriers may check your credit history.

What causes bad credit?

Bad credit can happen if the cardholder misses a payment or defaults on payments entirely. If this happens, your credit lender will file a report with the 3 credit bureaus.

Your credit report will show whether you pay on time, pay late, or miss your payments altogether. This is important because your credit report is public which means other lenders and creditors can access this information.

If you’ve been turned down for a credit card, loan, or mortgage because of a bad credit score it isn’t the end of the world. It’s possible to turn things around! Knowing why your credit score dropped is half the battle.

Here are six of the most common reasons people get a bad FICO rating:

Who should get a credit card for bad credit?

When you have bad credit, your credit card options are limited, but all of us have to start from somewhere.

The great news for most of us is that there are many credit cards for poor credit or for those who are building their credit profile. It’s important to also remember that each time you apply for a card and get rejected, your credit score could be impacted by the credit inquiry.

Your credit journey starts with choosing which credit cards for bad credit are right for you.

Typically, you have two options for credit cards if you have poor credit: secured cards that require a deposit that equals the line of credit, or unsecured cards that are designed for those with bad credit.

While putting down a security deposit may not sound ideal, just know that many unsecured cards for those with poor credit usually also come with hefty annual fees and higher-than-average APRs. Going with a secured card could help you build your credit if it reports to the three major credit bureaus and you make your payments on time.

Whatever you decide, if your credit card options are limited because of your credit history, consider applying for a credit card for bad credit, where your approval odds are high and you can work towards building a stronger credit profile so you can eventually qualify for a better credit card or credit loan in the future.

Secured and unsecured credit cards: How to choose

The primary difference between a secured and unsecured credit card lies with the security deposit.

Secured cards require a refundable security deposit that determines your card’s credit limit. Many secured cards require a minimum or maximum security deposit, often ranging from around $200 all the way to $3,000. Since you are essentially borrowing from yourself, you remove the risk of loss to the card issuer, so it’s typically easier to qualify for a secured card.

Outside of the security deposit, both secured and unsecured cards allow you to make purchases and build your credit by paying off the balance in full every month in order to avoid interest. Both require that you at least make the minimum monthly payments to avoid late fees or hurting your credit score. If you miss too many payments, the card issuer may decide to close your account or keep the security deposit, so it’s important that you only apply for a card if you are ready for the responsibility of monthly payments.

The rest is up to you. Many secured and unsecured cards for bad credit may charge high annual fees, monthly fees, variable APR, and maintenance fees. It may be challenging to find a card with a high rewards structure.

As far as secured cards go, the best ones for their value don’t have an annual fee and even offer cash back rewards. While you will have to put up a refundable deposit, it could still retain a higher value than an unsecured card if you are good with your credit and make on-time payments.

For some people who do not want to have a hard credit check impact their score or who do not have a bank account, paying an annual fee can be worth it. For example, the OpenSky® Secured Visa® Credit Card from Capital Bank has a $35 annual fee but it is easier to qualify for.

Ultimately, credit cards for poor credit are designed to have less frills and more opportunities to start building or improving your credit history.

What is the easiest card to get approved for?

Generally, secured credit cards are the easiest to get approved for. While you’ll have fewer options overall, you may qualify for a variety of secured cards and a few unsecured credit cards even if you have bad credit.

When choosing between the two types of cards, consider the following:

• Security deposit:
  Many secured cards require a security deposit, which could be challenging if you don’t have the funds. Most deposits start at $200 and get higher from there.
• Rewards:
  Typically, cards with a sign-up bonus or rewards are combined with good credit history. However, some credit cards for poor credit do offer rewards like cash back. If you plan on using your card regularly, this could be worth looking into. Rewards like travel or airline benefits and hotel perks only tend to be for those with good to excellent credit.
• Fees:
  Both secured and unsecured cards can come with different types of fees, including monthly maintenance, annual, late fees, foreign transaction fees, etc. If you don’t want to get locked into regular fees, take a look at the fine print. If you don’t use your card regularly, it may not be worth it to pay a monthly fee.
• Credit limit increase:
  If you’re good about paying your balance off every month and not being late, your credit card issuer may periodically monitor your account and even upgrade your credit limit or refund your security deposit.

How to choose a credit card when you have bad credit

Even those with poor credit still have options when trying to apply for a credit card. Some credit card issuers design certain cards specifically for those with bad credit.

For many, these credit cards work the same way as traditional cards with a few exceptions. Any purchase you make is protected, for example. However, your credit limit may be lower, and you may have to pay higher interest than with a standard card.

You can use these cards as a building block towards better interest and a higher credit line, as long as you make on-time payments each month and show that you are responsible enough to manage a credit agreement.

If you have declared bankruptcy, you may need to search for cards that are specific for credit building. The same goes if you have no credit history whatsoever.

Over time, you’ll notice that your FICO score improves, which increases your credit opportunity. If you decide to apply for a credit card to help improve your bad credit, you should make sure it is the right card to fit your needs.

There are many types of cards, each one with its own application. Some have lower interest rates, zero balance transfer fees, zero annual fees, cash back rewards, etc. Many of these cards are only available for good to excellent credit scores, but don’t worry! Even if you have poor credit now, you can eventually build your way up to a better score.

How we selected our top cards

First, we analyzed many different types of cards that were designed to help people rebuild their credit or start their credit journey for the first time. Every credit card has its own benefits and cons, depending on what your particular lifestyle and financial needs are. We focused on cards that help you build strong credit by reporting to the three major credit bureaus. We looked for cards that are specific to those with bad credit and even tried to find cards that offered rewards, zero annual fees, or low APR rates.