Credit Cards for Poor Credit: Having a poor credit score can feel like a major roadblock, especially when you’re trying to get approved for loans, mortgages, or even a simple credit card. However, having poor credit doesn’t mean you’re out of options. There are credit cards designed specifically for people in your situation. These cards can help you rebuild your financial reputation, improve your credit score, and open doors to better opportunities.
In this guide, we’ll explore the best credit cards for poor credit, how to use them responsibly, and alternative ways to improve your credit. Let’s get started!
Understanding Poor Credit
What Is Considered Poor Credit?
Your credit score is a three-digit number that lenders use to determine your creditworthiness. The most commonly used credit scoring model, FICO, categorizes scores as follows:
- Excellent (800-850)
- Very Good (740-799)
- Good (670-739)
- Fair (580-669)
- Poor (300-579)
If your score falls below 580, you’re considered to have poor credit. This can make it difficult to get approved for loans, credit cards, or even rental applications.
How Does Poor Credit Affect Your Financial Life?
Having a low credit score can impact multiple aspects of your financial life:
- Higher Interest Rates – Lenders see you as a high-risk borrower, so they charge higher interest rates on loans and credit cards.
- Lower Credit Limits – If you do get approved for a credit card, your limit will likely be low.
- Difficulty Renting an Apartment – Many landlords check credit scores before approving lease applications.
- Challenges Getting a Loan – Personal loans, auto loans, and mortgages may be harder to obtain with poor credit.
Common Reasons for a Low Credit Score
Your credit score might be low due to:
- Late or missed payments
- High credit card balances
- Defaulting on loans
- Bankruptcy or foreclosure
- Too many credit inquiries in a short period
- Lack of credit history
Can You Get a Credit Card with Poor Credit?
Yes, getting a credit card with poor credit is possible, but your options may be limited. The key is to find cards specifically designed for individuals with low credit scores.
Types of Credit Cards Available for Poor Credit
Here are the main types of credit cards available for those with poor credit:
- Secured Credit Cards – Require a security deposit, which acts as collateral.
- Unsecured Credit Cards for Bad Credit – Don’t require a deposit but may have high fees and interest rates.
- Store Credit Cards – Easier to get but often come with high interest rates.
- Prepaid Cards – Not technically credit cards, but they can help you manage finances.
How to Improve Your Chances of Approval
- Apply for credit cards designed for bad credit.
- Check if you prequalify before applying.
- Reduce existing debt before applying.
- Ensure your income is sufficient to support new credit.
- Avoid applying for multiple credit cards at once.
Best Types of Credit Cards for Poor Credit
Secured Credit Cards
Secured credit cards are a great option if you have poor credit. These cards require a security deposit, which usually serves as your credit limit. The benefits include:
- Easier approval process
- Helps build or rebuild credit
- Lower risk of overspending
However, some secured credit cards charge high fees, so it’s important to choose wisely.
Unsecured Credit Cards for Poor Credit
Unsecured credit cards don’t require a deposit, but they tend to come with high fees and interest rates. They may also have lower credit limits. If you go this route, look for a card with:
- No hidden fees
- Reasonable interest rates
- A path to upgrade to a better card
Store Credit Cards
Many retail stores offer credit cards that are easier to qualify for, even with poor credit. However, these cards often have:
- High interest rates
- Limited use (can only be used at specific stores)
- Low credit limits
Still, they can be a stepping stone toward improving your credit.
Prepaid Cards vs. Credit Cards – Key Differences
Some people confuse prepaid debit cards with credit cards, but they are not the same.
| Feature | Prepaid Card | Credit Card |
|---|---|---|
| Requires a credit check? | No | Yes |
| Builds credit history? | No | Yes |
| Interest charges? | No | Yes |
| Spending limit | Based on money loaded | Based on credit limit |
A prepaid card won’t help you build credit, but a secured or unsecured credit card can.
How to Choose the Right Credit Card for Poor Credit
When looking for a credit card to help rebuild your credit, it’s important to compare options carefully. Some cards may seem appealing but come with hidden fees or high interest rates that make them more expensive than they’re worth.
Key Features to Look for in a Credit Card
Here are the most important features to consider:
- Low Fees – Some credit cards for bad credit charge high annual fees, processing fees, or monthly maintenance fees. Look for a card with minimal costs.
- Reports to All Three Credit Bureaus – A card that reports your payments to Experian, Equifax, and TransUnion will help improve your credit score over time.
- Reasonable Interest Rates – While cards for bad credit tend to have high APRs, some are more reasonable than others. Try to find one with an APR under 30%.
- Ability to Upgrade – Some secured credit cards allow you to upgrade to an unsecured card once your credit improves. This can save you from having to apply for a new card later.
- Rewards and Benefits – Some cards offer cashback or other rewards even if you have bad credit.
Common Fees to Watch Out For
Credit cards for poor credit can sometimes come with hidden costs. Here are some to be cautious of:
- Annual Fees – Some cards charge $75–$100 just for having the card.
- Application or Processing Fees – Some lenders charge an upfront fee just to open the account.
- Monthly Maintenance Fees – These can range from $5 to $15 per month.
- Penalty Fees – Late payments can result in additional charges of up to $40.
- Cash Advance Fees – Withdrawing cash from your credit card can come with high interest and fees.
Before applying, always read the fine print to understand the total cost of the card.
Top Credit Cards for Poor Credit
There are many credit cards available for those with bad credit, but not all are created equal. Below are some of the best options.
Best Secured Credit Cards
- Discover it® Secured Card – Offers cashback rewards and a path to upgrade.
- Capital One Platinum Secured Card – Requires a deposit but offers a low starting limit.
- Citi® Secured Mastercard® – A good choice for those looking for a reputable lender.
Best Unsecured Credit Cards
- Credit One Bank® Platinum Visa® – A popular option with flexible terms.
- Milestone® Gold Mastercard® – Designed for people with poor credit.
- Indigo® Mastercard® – No security deposit required, but higher fees.
Credit Cards with No Annual Fees for Bad Credit
- Chime Credit Builder Visa® – No annual fees and reports to all three credit bureaus.
- Petal® 1 “No Annual Fee” Visa® – Designed for people with limited credit history.
- OpenSky® Secured Visa® – No credit check required, making it easier to qualify.
How to Use a Credit Card Responsibly to Rebuild Credit
Once you have a credit card, using it wisely is the key to improving your credit score. Here’s how:
Paying on Time Every Month
Your payment history makes up 35% of your FICO score. Set up automatic payments or reminders to ensure you never miss a due date.
Keeping Credit Utilization Low
Your credit utilization ratio (how much of your available credit you use) should be below 30%. If your card has a $500 limit, try to keep your balance under $150.
Avoiding Unnecessary Debt
It can be tempting to overspend with a credit card, but carrying high balances will hurt your score. Only charge what you can afford to pay off each month.
Monitoring Your Credit Score Progress
Use free services like Credit Karma or Experian to track your credit score and see how your responsible usage is improving it over time.
Alternative Ways to Build Credit Without a Credit Card
If you don’t want to use a credit card or can’t qualify for one, there are other ways to build credit.
Credit-Builder Loans
Many banks and credit unions offer credit-builder loans, where you make small monthly payments into a savings account. Once the loan is paid off, you receive the money and improve your credit.
Becoming an Authorized User on Someone Else’s Card
If a family member or friend has good credit, they can add you as an authorized user on their credit card. This allows their positive payment history to be added to your credit report.
Using Rent and Utility Payments to Build Credit
Some services, like Experian Boost and RentTrack, allow you to add rent and utility payments to your credit report, helping you build credit without a credit card.
Common Mistakes to Avoid with Credit Cards for Poor Credit
Applying for Too Many Cards at Once
Each credit card application results in a hard inquiry on your credit report, which can temporarily lower your score. Apply for just one card at a time.
Ignoring Interest Rates and Fees
Some credit cards for poor credit charge high APRs (30% or more). If you carry a balance, interest charges can add up quickly.
Missing Payments and Hurting Your Score Further
Even one missed payment can significantly damage your credit score. Always pay at least the minimum due each month.
FAQs about Credit Cards for Poor Credit
1. What is a credit card for poor credit?
A credit card for poor credit is designed for individuals with lower credit scores who may struggle to qualify for standard credit cards. These cards often come with specific features to help rebuild credit, such as lower credit limits and higher interest rates.
2. Can I get a credit card if I have bad credit?
Yes, it is possible to get a credit card even with bad credit. Providers offer secured and unsecured credit cards tailored for those with less-than-ideal credit scores, focusing on helping users rebuild their credit over time.
3. What are the benefits of getting a credit card for poor credit?
The main benefits include the opportunity to improve your credit score by making timely payments, learning credit management skills, and sometimes, earning rewards in tailored credit programs.
4. What should I look for when choosing a credit card for poor credit?
When selecting a credit card for poor credit, consider the annual fee, interest rate, and whether it reports to all three major credit bureaus. Also, check if it offers free credit score monitoring or financial education resources.
5. Are there risks associated with credit cards for poor credit?
Yes, these cards typically come with higher interest rates and fees. If not managed carefully, they can lead to further debt and damage your credit score. It’s crucial to understand the card’s terms and commit to on-time payments.
6. How can I improve my credit score with a poor credit credit card?
To improve your credit, use the card responsibly by keeping balances low and paying your bills on time. Consistent responsible use can help demonstrate your creditworthiness and improve your credit score over time.
7. How long does it take to rebuild credit with a credit card for poor credit?
The time it takes to rebuild credit varies depending on individual credit histories and the level of debt. Generally, showing consistent, responsible credit behavior over months can start to positively impact your credit score.
Rebuilding your credit takes time and discipline, but the right credit card can make the process much easier. Choose wisely, make timely payments, and watch your credit score improve over time.
