Key takeaways
- The best unsecured credit cards for poor scores provide an opportunity to access credit despite a low score without a security deposit.
- These cards are specifically tailored to help individuals with poor ratings improve their scores. They offer features like credit reporting and autopay to help users build a positive credit history through responsible use.
- Unsecured cards for bad ratings typically come with higher interest rates and additional fees compared to cards for good to excellent scores.
Unsecured credit cards for bad credit can be a powerful tool in managing your financial situation, particularly if you’re dealing with a low income or a less-than-perfect score. While often misunderstood, these financial products are not just a last resort—they are a proactive strategy for improving your financial health.
Utilizing these cards responsibly can open doors to new opportunities by not only facilitating necessary purchases but also by helping to build or repair your score.
In this article, we will explore the five best unsecured credit cards for bad credit, providing you with valuable options to consider as you work towards rebuilding your financial health.
Jump to:
- Our top picks
- How does an unsecured credit card work?
- How to choose the best unsecured credit card
- Should you consider applying for an unsecured credit card now?
- Is it possible to get an unsecured credit card with bad credit?
- Do unsecured cards build credit score?
- Is there a limit on an unsecured credit card?
- How to make the most of unsecured credit cards for bad credit
- Can you get a credit card after bankruptcy?
- Next steps: Consider secured credit card options
- Think about your spending habits and credit options
- How to increase approval chances for unsecured cards for bad credit
- Can I get an unsecured credit card with a 500 credit score?
- Are secured or unsecured credit cards best for rebuilding credit?
- Can a secured credit card become unsecured?
- How can I get approved for a credit card with bad credit?
- Bottom line
Our top picks
When choosing the best unsecured cards for bad credit, it’s important to find options that not only provide the opportunity to build your score but also offer terms that are manageable under tighter financial constraints.
Here are our top picks for unsecured cards designed to meet the needs of those with less-than-perfect scores.
Want even more credit card options?
How does an unsecured credit card work?
Unsecured cards do not require a security deposit as collateral. Instead, they extend a line of credit based solely on your creditworthiness as assessed through your credit history, income, and financial behavior.
When you’re approved for an unsecured card, the lender trusts you to manage the borrowing responsibly and repay your debts on time without any safeguard. Each month, you’ll receive a credit card bill for purchases made with the card, and it’s crucial to at least make the minimum payment by the due date to avoid penalties and interest charges.
Regular, on-time payments can help improve your score, making unsecured cards a valuable tool for those looking to rebuild their financial standing.
How to choose the best unsecured credit card
Choosing the best unsecured credit cards for bad credit involves several considerations:
Know your credit score: Before applying for any card, especially unsecured ones, it’s essential to know your score. This three-digit number gives lenders a quick, objective assessment of how risky of a borrower you are and plays a critical role in determining whether you qualify for a card and the terms you receive.
Typically, bad scores range from 300 to 670. Knowing where you stand can help you target the right cards.
Assess your financial situation: Understand your current financial situation, including your income, monthly expenses, and existing debts. This assessment will help you determine what you can realistically pay back and avoid falling into deeper debt.
Search for cards that fit your score: Aim for cards that are designed for your score range. Cards targeting lower scores might have higher interest rates or limited features but are more likely to approve your application.
Consider the fees: Look for cards with reasonable fees. Some unsecured cards have high annual fees or other charges that can make them expensive to hold.
Read the fine print: Check the terms and conditions carefully for any hidden fees or charges. Understanding the penalty rates, interest rates, and conditions for rewards or benefits is crucial.
Evaluate credit building features: Some cards include features like automatic limit increases or regular reporting to all three national credit bureaus, which can help boost your score.
Should you consider applying for an unsecured credit card now?
Deciding whether to apply for an unsecured card involves a careful assessment of your current financial situation. If your score is low and you’re looking to improve it, or if you need a credit line for necessary expenses but don’t have the cash for a deposit, an unsecured card could be a suitable option. However, it’s important to consider your ability to manage your finances responsibly.
High interest rates and potential fees associated with unsecured cards for poor scores require a disciplined approach to spending and payments. If you regularly struggle with financial management, or if your income is unstable, taking on an unsecured card might not be the best choice.
Evaluate your budget, your spending habits, and your financial stability. If you feel confident in your ability to make payments on time and keep debt levels manageable, applying for an unsecured card could be a beneficial step towards rebuilding your score.
Ready for a new credit card?
Is it possible to get an unsecured credit card with bad credit?
Yes, it is possible to get an unsecured card even with a bad rating. Although it might seem counterintuitive, many financial institutions offer products specifically designed for individuals with lower scores.
These cards often come with features tailored to help users manage spending and raise their rating, albeit usually at the cost of higher interest rates and additional fees.
It’s essential to carefully evaluate these offers and understand the terms to ensure that the card will truly help in improving your financial standing without leading to further debt.
Check out 10 tips for getting your credit card application approve even with bad credit.
Do unsecured cards build credit score?
Unsecured cards are a valuable tool for building or rebuilding your score. When you use an unsecured card responsibly—by making purchases within your budget and paying the full balance on time each month—you demonstrate to creditors that you can manage debt effectively.
Regular on-time payments are reported to the three national credit bureaus (TransUnion, Equifax, and Experian), which helps to build your credit history. The key is to maintain low balances and avoid late payments, as negative information is also reported and may hurt your score.
Is there a limit on an unsecured credit card?
All unsecured cards come with a limit which is the maximum amount you can charge to the card. Limits on unsecured cards can vary widely based on your creditworthiness, income, and the lender’s policies.
For those with poor scores, the initial limit will likely be low, but many issuers offer opportunities to increase your limit after a period of consistent on-time payments and responsible use. You can also request an limit increase if you’ve received a raise at work
It’s important to understand that maintaining a balance well below your limit can also positively impact your score by keeping your utilization ratio low.
How to make the most of unsecured credit cards for bad credit
Subprime unsecured cards can be a valuable tool for rebuilding your score when used responsibly. Here are some tips to make the most of these cards:
- Timely payments: Always pay your bill on time. Late payments can significantly damage your score. Set up automatic payments or reminders to avoid missing due dates.
- Keep balances low: Aim to keep your utilization ratio below 30%. This means if your limit is $500, try to keep your balance under $150. Low balances show that you are not overly reliant on lenders.
- Monitor your credit: Regularly check your credit report for errors and track your score. Many financial institutions offer free score monitoring tools that can help you stay informed about your status.
- Use responsibly: Treat your card like a debit card. Only charge what you can afford to pay off each month to avoid accumulating debt and paying high interest rates.
- Upgrade when possible: As your score improves, consider asking for a limit increase or upgrading to a card with better terms and rewards. This can further boost your score and provide additional benefits.
By following these strategies, you can effectively use unsecured cards to improve your financial health and build a stronger rating.
Can you get a credit card after bankruptcy?
Yes, it is possible to get a card after bankruptcy, though it may be challenging. Bankruptcy significantly hurts your score and can make lenders wary of working with you. However, there are steps you can take to rebuild your score and obtain a card.
Secured cards: One of the most accessible options post-bankruptcy is a secured card. These cards require a cash deposit as collateral, which reduces the lender’s risk. Using a secured card responsibly can help you rebuild your rating over time.
Subprime unsecured cards: Some issuers offer unsecured cards specifically designed for individuals with very poor scores, including those who have undergone bankruptcy. These cards will come with higher interest rates and additional fees, but they do not require a security deposit.
Retail cards: Retail store cards are often easier to obtain than traditional cards. While they may have lower limits and higher interest rates, they can be a good starting point for rebuilding your score.
Become an authorized user: Another strategy is to become an authorized user on a friend or family member’s card. This can help you improve your score without the responsibility of managing the account independently.
Rebuilding your score after bankruptcy takes time, discipline, and patience. Luckily there are financial institutions willing to give you a chance. Use the cards responsibly by making timely payments, and keeping balances low, you can gradually improve your score and qualify for better options in the future.
Next steps: Consider secured credit card options
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If an unsecured card doesn’t seem like the right fit for you at the moment, considering a secured card is a wise alternative. Secured cards require a deposit that typically also serves as your limit, minimizing the risk to the lender and making it easier to get approved even with a bad rating. Here are two excellent secured card options that can help you enhance your score:
Think about your spending habits and credit options
When choosing a card, it’s crucial to consider your spending habits and the available options to ensure you select the best card for your financial situation.
Evaluate your spending: Analyze your monthly expenses and spending patterns. Determine how you plan to use the card—whether for everyday purchases, emergencies, or improving your score. This will help you choose a card with appropriate limits and rewards, if available.
Compare options: Research and compare different cards designed for poor scores. Look at secured versus unsecured options, interest rates, annual fees, and additional charges. Secured cards require a deposit but may offer lower interest rates and fewer fees, while unsecured cards may have higher costs but no deposit requirement.
Consider rewards and benefits: Some cards offer rewards programs or cash back on purchases. While these may not be as generous as those for good scores, they can still provide valuable perks. Prioritize cards that offer rewards in categories where you spend the most.
Check the terms: Read the fine print of each card’s terms and conditions. Pay attention to fees, interest rates, and credit reporting practices. Ensure the card issuer reports to all three major credit bureaus, as this is the only way your score will improve.
By carefully considering your spending habits and the available options, you can select a card that not only fits your needs but also aids in rebuilding your rating effectively.
Dreaming of a higher limit?
How to increase approval chances for unsecured cards for bad credit
Improving your chances of getting approved for an unsecured card, even with a poor score, involves a combination of strategic actions and financial discipline. Here are some steps to enhance your approval odds:
Check your credit report: Obtain and review your credit report from the major credit bureaus. Look for any errors or inaccuracies that could be negatively affecting your score. Dispute any discrepancies to ensure your report is accurate.
Reduce existing debt: Pay down outstanding balances on existing accounts. Lowering your utilization ratio (the amount of credit you’re using compared to your limit) can significantly boost your score and make you more attractive to lenders.
Make timely payments: Ensure all your current bills and existing card payments are made on time. A consistent history of timely payments demonstrates reliability to potential lenders.
Consider a co-signer: If possible, ask a trusted friend or family member with a good score to co-sign your application. A co-signer provides additional assurance to the issuer and can increase your chances of approval.
Apply strategically: Avoid multiple applications in a short period, as each hard inquiry can lower your score. Research and apply for cards specifically designed for individuals with in your score range to improve your chances of approval.
By taking these proactive steps, you can enhance your creditworthiness and improve your likelihood of being approved for an unsecured card, even with a less-than-ideal rating.
Can I get an unsecured credit card with a 500 credit score?
Obtaining an unsecured card with a 500 score is challenging but not impossible. While a score of 500 is considered poor, some lenders specialize in offering cards to individuals with low ratings. Here’s what you should look for:
Specialized cards: Look for unsecured cards specifically designed for people in this score range. These cards often come with higher interest rates and fees, but they don’t require a security deposit.
Pre-qualification: Many issuers offer pre-qualification checks that do not affect your score. Use these tools to gauge your chances of approval without harming your rating further.
Credit unions: Consider joining a credit union. They often have more lenient lending criteria and might be more willing to approve you for an unsecured card than a traditional bank.
Build and improve: If you’re initially denied, don’t get discouraged. Focus on improving your score by paying down debt, making timely payments, and reducing your utilization ratio. Over time, these actions will boost your score and increase your chances of approval.
While securing an unsecured card with a 500 score is tough, by exploring specialized options and improving your financial habits, you can increase your approval chances and begin rebuilding your score.
Want to know more about how credit card approval times?
Learn exactly how long it takes to get approved for a credit card.
Are secured or unsecured credit cards best for rebuilding credit?
When rebuilding your score, both secured and unsecured cards can be effective, but each has its own advantages and considerations.
Secured Cards:
- Security deposit: Secured cards require a refundable security deposit, which acts as your limit. This makes them accessible to those with very low or no score at all.
- Lower fees and interest rates: They often come with lower fees and interest rates compared to unsecured cards for poor ratings.
- Credit deporting: Most secured cards report to the major credit bureaus, helping you improve your score with responsible use.
Unsecured cards:
- No deposit required: Unsecured cards don’t require a security deposit, which can be a significant benefit if you don’t have extra funds available.
- Higher fees and interest rates: They may come with higher fees and interest rates, making them more expensive if you carry a balance.
- More accessible limit increases: Some unsecured cards offer opportunities for limit increases with consistent on-time payments, further helping your score.
Ultimately, the best choice depends on your financial situation. If you can afford a security deposit and want to minimize costs, a secured card may be the better option. If you prefer not to tie up your funds in a deposit, an unsecured card designed can also effectively rebuild your rating, provided you manage it responsibly.
Can a secured credit card become unsecured?
Yes, a secured card can potentially become unsecured over time. It all depends on the issuer and how you use the card. The first thing you need to do is consistently demonstrate responsible financial behavior. This includes making on-time payments, keeping your utilization low, and managing any other debts you may have. As you use your card responsibly, your score will improve, and you’ll build a positive credit history.
The next part depends on your issuer’s policies. Some card issuers have policies in place that automatically review your account after a set period, typically 6 to 12 months. If your score has improved, they may offer to convert your secured card to an unsecured card. If your issuer does not automatically review your account, you can proactively request an upgrade. Contact your card issuer’s customer service to inquire about the possibility of transitioning to an unsecured card.
Once your secured card becomes unsecured, your security deposit is typically refunded. You will have to close your account in good standing—not owe any money—to get it back fully.
By using a secured card wisely and building a solid rating, you can eventually transition to an unsecured card, which often comes with better terms and benefits.
Need a bigger credit line?
Check out credit cards with $1,000 limit – unsecured options too!
How can I get approved for a credit card with bad credit?
Getting approved for a card with poor rating requires a strategic approach and careful financial planning. Here are steps to improve your chances:
Review your credit report: Obtain your credit report from the major credit bureaus and check for errors or inaccuracies. Dispute any incorrect information to ensure your report reflects your true financial situation.
Reduce outstanding debt: Pay down existing debts to lower your utilization ratio. High utilization can negatively impact your credit score, so aim to keep your balances below 30% of your available credit.
Make consistent payments: Establish a history of timely payments on current bills and accounts. Consistently paying on time demonstrates reliability and improves your creditworthiness.
Start with a secured card: If you’re having difficulty getting approved for an unsecured card, consider a secured card. Secured cards require a refundable deposit, which acts as collateral and makes approval easier.
Pre-qualification tools: Use pre-qualification tools offered by many card issuers. These tools perform a soft check, which doesn’t impact your score, and can help you identify cards you’re likely to be approved for.
Credit union membership: Consider joining a credit union, which often has more lenient approval criteria and personalized customer service. They may offer cards with better terms for those with bad credit.
By following these steps and managing your card responsibly, you can enhance your approval chances and start rebuilding your credit effectively.
Frequently asked questions
1. What is the easiest unsecured card to get?
The easiest unsecured card to get will be one that has a very low score requirement. Most of the cards we listed above fall into that category. Look for an issuer who even accepts applicants with a 300 rating.
2. Can I get an unsecured credit card with a 500 credit score?
Yes, it is possible to get an unsecured card with a score of 500. All the cards we mentioned above are designed for consumers with lower ratings. These cards may offer limited benefits and come with higher interest rates, but they can be valuable tools for rebuilding your score if used responsibly.
3. What credit card is easiest to get with no credit?
The easiest card to get when you have no credit history at all is a secured card. These cards require a security deposit that serves as collateral in case you don’t make your payments. This decreases the risk for the issuer and, in turn makes them more likely to approve applicants with very poor scores.
Bottom line
Navigating the world of unsecured cards when you have a poor score can be daunting, but it’s far from impossible. With the right approach and responsible financial behavior, an unsecured card can be a valuable tool in rebuilding your score and enhancing your financial flexibility. It’s crucial to carefully assess each card’s fees, interest rates, and potential for enhancing your score. While the cards discussed in this article each have their merits, they also come with significant costs that could outweigh the benefits if not managed carefully.
Remember, the best card for you is one that aligns with your financial habits and goals. If an unsecured card seems too risky or expensive, consider a secured card as a viable alternative. These cards require a deposit that serves as your limit, reducing the risk to the issuer and often resulting in lower fees and interest rates. Whether you choose an unsecured or secured card, the most important factors are always your ability to make payments on time and manage your finances responsibly.
