Adene Sanchez/E+/Getty Images
A bad credit score, or any score below 579 on the FICO scale, can put a wrinkle in nearly any financial plan, including if you want to get a credit card. Most credit card issuers require good or excellent credit (670 to 850) to qualify for their best offers — especially if you’re looking for an unsecured card. If you have at least fair credit, or a FICO score between 580 to 669, you’ll likely have more unsecured credit card offers available to you. If you have bad credit, however, your options might be limited.
Still, a handful of unsecured credit cards for bad credit are available. Keep in mind that they tend to have annual fees, fewer perks and lower credit limits compared to cards for fair or better credit. Below, we list some of the better picks available.
Comparing the best unsecured cards for bad credit
| Credit card | Best for | Annual fee | Bankrate score |
|---|---|---|---|
| Credit One Bank® Platinum Visa® for Rebuilding Credit* | Cash back | $75 for the first year. After that, $99 annually ($8.25 per month) | 2.3 |
| Mission Lane Visa® Credit Card* | Potentially no annual fee | $0 – $59 | 3.4 |
| Indigo® Mastercard®* | Traveling abroad | $175 for the first year. $49 thereafter | 2.2 |
| Prosper® Card* | Instant credit access | $39 (waived for the first year if you sign up for autopay before your first statement) | 3.1 |
Top unsecured credit cards for bad credit
-
The Credit One Bank Platinum Visa for Rebuilding Credit is a popular unsecured credit card available for consumers with bad credit, for better or for worse. This card lets you earn 1 percent in cash rewards on eligible gas and grocery purchases and mobile phone, internet, cable and satellite TV services (terms apply).
Unfortunately, this card comes with a $75 annual fee for the first year, then an annual fee of $99. You would have to spend $9,900 per year within the eligible 1 percent cash back categories to offset that $99 fee in full, so it’s best to think of the cash back as a small annual fee reduction.
-
Pros
- It earns 1 percent cash back within popular spending categories.
- The card offers free credit score access to help you track your progress.
Cons
- Its credit limit can be as low as $300, depending on your credit score.
- This card charges a $75 annual fee the first year, then $99 annually ($8.25 per month).
-
If you’re looking for a straightforward, unsecured card that will help you build credit, the Mission Lane Visa Credit Card could be a good fit for you. It has no hidden fees, which are common with many subprime cards, and depending on your creditworthiness, you may qualify for a $0 annual fee. This makes the card a good place to start when you’re considering your credit-building options.
-
Pros
- You may qualify for a $0 annual fee, depending on your creditworthiness.
- Mission Lane may consider you for a credit limit increase after seven months of on-time payments.
Cons
- You may need to pay up to a $59 annual fee depending on your credit score.
- It has a potentially low minimum starting credit limit of $300, which makes managing credit utilization ratio difficult.
-
Like the other unsecured card options for bad credit, the Indigo Mastercard comes with few perks, but can help you build your credit so you can qualify for better cards in the future.
However, this card comes with a 1 percent foreign transaction fee, which is much lower than other similar cards, which typically charge a foreign transaction fee of 3 percent. This can be handy if you need to use your card in a pinch abroad, though the card’s low credit limit prevents it from being of greater use.
-
Pros
- This card reports your credit usage to all three credit bureaus, which can help you build credit.
- This card’s maximum credit limit is $700, which is a bit higher than other similar unsecured cards for bad credit.
Cons
- This card comes with a steep annual fee of $175 for the first year, then $49 after.
- This card has a very high APR of 35.9%.
-
For a comparatively low annual fee of $39 (waived for the first year if you sign up for autopay before your first statement), you can get access to an up to $3,000 initial credit limit. This is quite impressive for a card in this category. Plus, the issuer provides automatic credit limit increases.
Additionally, the Prosper is an instant-use credit card. That means you can use it for purchases with your digital wallet right after approval. You can access half of your credit limit immediately when you’re approved while you wait for your physical card to arrive.
-
Pros
- The card comes with a relatively low annual fee compared to other unsecured cards for bad credit.
- Cardholders can get access to a credit line as high as $5,000.
- Half of the card’s credit limit becomes accessible instantly upon approval.
Cons
- This card offers no rewards that could help offset the annual fee.
- This card’s 23.74%-35.24% Variable APR is rather high — even for a bad-credit card.
How to choose an unsecured credit card for bad credit
Though unsecured credit cards for bad credit have fewer features and options than standard credit cards, you’ll still want to choose carefully. Here’s what to consider when looking for the right card:
Look for automatic upgrade opportunities
Some cards offer automatic reviews for a credit line increase.
Unsecured cards for bad credit are likely to start you out with a low credit limit. However, some give you the chance to qualify for a higher credit limit in as little as six months, which could boost your credit score in addition to expanding your purchasing power.
Some banks consider more than just credit score
These cards may prove easier to get if you have bad credit.
Some cards for bad credit look at other factors, like your banking history, for approval. This can be useful if your credit score is really low or if you have no credit score at all.
Make sure the card reports to all major credit bureaus
You want all three bureaus up-to-date on your credit to improve your score.
Ensure the cards you’re considering report balances and payments to the three credit bureaus — Equifax, Experian and TransUnion. This reporting is what will help you to build credit over time, so you want it to be accurate and updated no matter which bureau an issuer or creditor checks.
Review the card’s fees carefully
Cards for bad credit can hide expensive, unexpected fees.
Unfortunately, annual fees are common with unsecured credit cards for bad credit. If possible, you should look for a card that charges a low annual fee or no annual fee at all.
In addition to looking for cards that don’t charge high annual fees, watch out for hidden charges, such as application fees or monthly account fees. If you travel internationally, you should also consider a card that doesn’t charge foreign transaction fees.
How to repair your credit with a credit card
Repairing your credit with a credit card can take some time, but the following tips can help you get the best results in the shortest time.
- Always pay your bill on time. The most important factor that makes up your FICO score is your payment history, so you should strive to pay all your bills early or on time each month. Late payments can have negative effects on your credit and take a long time to recover from.
- Keep your credit card balance at a minimum. Your credit utilization ratio is another large contributor to your credit score. For the best results, keep your balance below 30 percent of your available credit. So, if you have a $300 credit limit, keep your balance less than $90.
- Ask for a higher credit limit as soon as you can. Getting a higher credit limit can lower your utilization ratio. If you are eligible for a credit line increase at any time, you should take one — but don’t increase your spending just because you have a higher limit.
When a secured credit card might make more sense
If you have bad credit and can’t get approved for an unsecured credit card, a secured credit card might be your best option. Secured credit cards require a security deposit upfront, which serves as your credit limit. Putting down a cash deposit may not seem ideal, but secured credit cards may give you the chance to build credit when other cards won’t.
Plus, the best secured credit cards can offer rewards, no annual fees, and paths to upgrade to an unsecured credit card once your score has improved. And remember that your security deposit isn’t lost — when you close or upgrade a secured credit card account in good standing, you’ll get your security deposit back.
Frequently asked questions
-
Some of the easiest unsecured cards to get approved for are the Indigo® Mastercard®, Mission Lane Visa® Credit Card, Prosper® Card and Milestone® Mastercard®. While these cards are geared toward people with bad credit and have easy approval odds, they tend to charge high fees and interest, which can make building credit costly.
-
Yes, you can get an unsecured credit card with a 500 credit score. Some of the top unsecured cards that someone with a 500 credit score can get include the Petal® 1 “No Annual Fee” Visa® Credit Card* and the Mission Lane Visa® Credit Card.
-
It depends on the card. If a card has high interest rates, tons of fees and no real credit-building benefits, it may not be best for people with bad credit. If you have bad credit and want to get a card that rewards you for shopping, consider the Discover it® Secured Credit Card or Capital One Quicksilver Secured Cash Rewards Credit Card.
The bottom line
The best unsecured credit cards for bad credit let you build credit for a low or no fee, which should be your main focus when you have bad credit. Just make sure to look at some of the top credit cards for bad credit and fair credit before you choose a card.
*The information about the Credit One Bank® Platinum Visa® for Rebuilding Credit, Indigo® Mastercard®, Mission Lane Visa® Credit Card, Prosper® Card and Petal® 1 “No Annual Fee” Visa® Credit Card have been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
Read the full article here
