Key takeaways
- Unsecured credit cards can help build your credit score with responsible usage.
- These cards offer high initial credit limits of up to $1,000 without requiring a security deposit.
- Many of these cards provide additional features such as cash back rewards and fraud protection, enhancing their overall value.
When your credit profile is lacking – as in your credit score is below 670 – finding an unsecured credit card with a high initial credit limit can be tough. But it’s not impossible. A lot of credit issuers understand that mistakes happen and everyone needs a second chance now and again. That’s why multiple card issuers specialize in credit cards for people with poor credit. It’s easier than ever to access credit if you have a low score!
To help you out, we’ve put together a list of 5 unsecured credit cards for low credit scores that give you a little spending wiggle room. Let’s dive in and see if there’s one that suits you.
Jump to:
- Credit cards for low credit scores
- Types of unsecured credit cards
- How to select the best credit card for bad credit
- What credit limit and interest rate can you expect?
- How to apply for a credit card
- How long does it take to rebuild credit with a credit card?
- How to make the most of a credit card
- Bottom line
Credit cards for low credit scores
Initial Credit Limit of $400
Up to $1,000 Credit Limit Doubles Up to $2,000
Unlock a $1,000 Credit Limit & Increase it to $2,000
Greater Access to Credit than Before – $700 Credit Limit
Build Your Access to Credit – $700 Credit Limit
Initial Credit Limit of $400
FIT® Platinum Mastercard® stands out as an option for credit beginners or those with low credit scores as it offers something unique in its class; a chance to double your initial credit limit to $800 in only six months.
Up to $1,000 Credit Limit Doubles Up to $2,000
Reflex® Platinum Mastercard® is a rare unsecured credit card for consumers with low credit scores. It is easy to qualify for, has a high initial credit limit, and is an excellent place to start rebuilding your credit.
Unlock a $1,000 Credit Limit & Increase it to $2,000
Surge® Platinum Mastercard® is a strong option for people starting to build or rebuild their credit. It’s easy to get, provides a high initial credit limit – unique for credit cards for bad credit – and the chance to double it after six months of responsible use.
Milestone® Mastercard® is a reasonable option for consumers looking to build or rebuild their credit and who don’t want to tie up money in a security deposit. The card is easy to qualify for and new customers can enjoy a $700 credit limit.
Destiny Mastercard® is a straightforward card that provides consumers with the opportunity to boost their credit scores, gives them the advantage of a $700 credit limit, and is easy to be approved for.
Types of unsecured credit cards
Unsecured credit cards do not require a security deposit, with most traditional credit cards falling into this category. These include various types such as cash back, travel rewards, and balance transfer cards, in addition to standard credit cards. While most rewards cards are aimed at individuals with good credit, there are some options available for those with lower scores. However, these cards typically come with higher interest rates and often an annual fee.
Cash-back cards
Cash-back rewards cards return a percentage of the amount spent back to the cardholder, either as cash or statement credit. While most rewards cards are aimed at consumers with good credit, some consider applicants with poor ratings. These cards usually have higher APRs to offset the rewards. To maximize benefits, pay your bill in full each month to avoid interest charges.
Travel rewards cards
These cards allow holders to earn points of miles on everyday purchases. They often do not charge a foreign transaction fee, making them perfect for the frequent traveler. As they are a rewards card, most are geared toward applicants with good to excellent credit and will have higher APRs.
Balance transfer cards
Balance transfer cards are great for consolidating debt. They often offer a promotional 0% APR (Annual Percentage Rate) for several months, enabling interest-free purchases during that period. If you choose this type of card, be sure to pay off the entire balance before the promotional APR ends or you may be charged a much higher interest rate.
Credit builder cards
Subprime cards focus on helping users build their credit scores. They report payments to all three major credit bureaus – Equifax, Experian, and TransUnion – and often provide free monthly access to your credit score. Many of these cards have lenient requirements, making them accessible to applicants with poor or fair scores.
Credit union cards
Credit unions are member-owned institutions who often have friendlier terms and more lenient criteria compared to traditional banks. You may be able to find cards geared towards poor scores that have lower APRs and fewer fees. While their rewards may not be as robust, credit union cards can be a good option for those with low credit scores seeking more favorable terms.
By understanding the different types of unsecured credit cards available, you can choose one that best suits your financial needs and goals.
How to select the best credit card for bad credit
Choosing the right credit card when you have a poor credit score requires careful consideration of several key factors:
- Targeted cards: Look for cards specifically designed for individuals with poor credit. These often have more lenient approval requirements. There is no point in applying for cards you don’t qualify for.
- Assess your financial situation: Understand your income, monthly expenses, and existing debts. This will help you determine what you can realistically afford to repay and avoid deeper debt.
- Annual Percentage Rate (APR): Pay close attention to the APR, as cards for poor credit typically have higher rates. Aim to find a card with the lowest possible APR.
- Fees: Examine the fees associated with the card, including annual fees, processing fees, and monthly maintenance fees. Compare these across different cards to find the most cost-effective option. Be aware of standard fees such as late payment fees, returned payment fees, and foreign transaction fees.
- Read the fine print: Carefully review the terms and conditions for any hidden fees or charges. Understand penalty rates, interest rates, and conditions for rewards or benefits.
- Benefits: Check if the card offers additional benefits like cash back, rewards, or credit-building tools. These can add value and help offset higher fees.
- Issuer’s reputation: Consider the reputation and customer service of the card issuer. Look for reviews and ratings to ensure you’re dealing with a reliable company.
- Credit bureau reporting: Ensure the card issuer reports to all three major credit bureaus. This is crucial for building your credit score, as you want your payment history and usage to be recorded across all bureaus.
By focusing on these factors, you can find a credit card that not only helps you manage your finances but also aids in credit building.
What credit limit and interest rate can you expect?
When considering credit cards for individuals with a low credit rating, it’s important to have realistic expectations regarding credit limits and interest rates. These cards generally offer lower credit limits, typically ranging from $200 to $1,000. However, some issuers may increase your limit after six months of responsible use, which can significantly enhance your spending power and help improve your credit score.
Interest rates on credit cards for those with poor scores are usually higher. APRs often start around 24.99%, which is considerably above the national average, and can go up to 35%. The key to managing these high APRs is to pay off your balance in full each month, thus avoiding interest charges altogether.
The combination of low credit limits and high APRs reflects the increased risk card issuers take when approving applicants with low credit scores without requiring a deposit. Individuals with poor or fair credit scores are more likely to default on their payments compared to those with scores above 670. This increased risk justifies the cautious approach and higher charges by issuers.
How to apply for a credit card
Applying for a new credit card is a straightforward process, but following the right steps can increase your chances of approval and help you find the best card for your needs. Here’s a step-by-step guide to help you through the application process:
1. Check your score
Before applying, know your credit score. This will help you identify which cards you’re likely eligible for. You can obtain your score from each credit bureau or through AnnualCreditReport.com.
2. Research your options
Look for cards that match your credit score and offer benefits that align with your spending habits, such as rewards programs, low interest rates, or no annual fees.
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3. Read the fine print
Understand all terms and conditions associated with the card, including fees, interest rates, rewards, and penalties. This helps you avoid unexpected charges.
4. Gather necessary information
Have all required information ready, such as your Social Security number, income, and employment details.
5. Try to prequalify
Many credit card issuers offer prequalification, allowing you to see your chances of approval without affecting your credit score. Prequalify for a few cards and then apply for the best offer you receive.
6. Apply online or in-person
Most applications can be completed online, which is convenient and usually results in a quick decision. Alternatively, you can apply in person at the financial institution.
7. Wait for approval
After submitting your application, there may be a processing period. Some applications might result in instant approval, while others could take a few days or weeks. During this time, avoid applying for other cards, as multiple inquiries can hurt your score.
8. Understand your limit and terms
Once approved, review the credit limit and other terms carefully to understand your obligations and benefits.
9. Activate your card
Upon receiving your card, activate it via phone or online before use.
10. Set up online management
Register for online access to your account to manage your card, view transactions, and pay your bill. Many issuers also offer mobile apps for convenient management on the go.
11. Start using your card responsibly
Use your card for purchases and remember to pay your balance in full each month to avoid interest charges and build your credit score.
By following these steps, you can smoothly apply for a credit card and make the most of your new financial tool.
How long does it take to rebuild credit with a credit card?
Rebuilding credit with a credit card typically takes between three to six months to see noticeable improvements, though this can vary depending on individual circumstances. The key to rebuilding credit lies in consistent, responsible card usage. Making on-time payments is crucial, as payment history accounts for 35% of your credit score. Keeping your credit utilization low, ideally below 30% of your credit limit, also plays a significant role in improving your score.
It’s important to avoid applying for multiple credit cards in a short period, as each application triggers a hard inquiry, which can temporarily lower your score. Additionally, keeping old accounts open, even if they have a low balance, can positively impact the age of your credit history, which contributes 15% to your score.
While three to six months is a general timeframe to see initial improvements, the journey to a healthy credit score is ongoing. Consistent, responsible credit behavior over time will yield the best results, helping you to eventually qualify for cards with better rewards and lower interest rates. Patience and discipline are key to rebuilding and maintaining a strong credit profile.
How to make the most of a credit card
Owning a card can establish your credit history, but using it responsibly is key to building your credit score. Here are the factors that contribute to your score:
- Payment History: 35%
- Amount Owed: 30%
- Age of Accounts: 15%
- Credit Mix: 10%
- New Credit: 10%
Let’s explore practical ways to improve your score:
Maintain low balances
Keep your card balances low, ideally using less than 30% of your available credit. A low utilization rate shows responsible borrowing habits and indicates you’re not overly reliant on credit.
One way to do so is to make multiple payments throughout the month. This is an especially useful strategy if your credit limit is low. Alternatively, request a credit limit increase after demonstrating consistent, timely payments.
Make payments on time
Always pay your credit card bill on time. A single late payment can drag your score down and will stay on your report for up to seven years. Credit card issuers frequently charge late payment fees and many impose a higher penalty APR if you miss payments. It’s essential that you make at least the minimum payment to avoid being marked as late. Paying in full is even better to avoid interest charges.
Set up automatic payments or request payment-due alerts to ensure timely payments. Human errors happen, luckily with modern technology, there are more and more ways to avoid them.
Refrain from too many applications
Each credit application triggers a hard inquiry, temporarily lowering your score by 5 to 10 points. Apply occasionally and wait at least six months between applications to avoid negative impacts.
Too many applications in a short period can signal financial distress to lenders.
Don’t close old accounts
The age of your accounts affects your score. Keeping old accounts open and active (using them at least once a year) helps maintain a long credit history.
Close accounts only if they have high fees that outweigh their benefits.
Have a mix of credit
A diverse mix of credit accounts, such as revolving credit (credit cards) and installment credit (loans), can positively impact your score by showing you can manage different types of credit responsibly.
However, don’t take on debt solely to improve your credit mix. You can achieve a good or excellent score with just credit cards.
Improving your credit score takes time, but if you start with a very low score, you may see significant improvements relatively quickly. By practicing these habits, you can maximize the benefits of your second-chance card and work towards a stronger credit profile.
Bottom line
No matter if you have a good credit score or fall into the poor category, you should be able to access the credit you need. These five unsecured credit cards could be your answer. They are designed to help you build your credit with responsible card usage and prove to lenders that you are a trustworthy borrower. And who knows, you may be rewarded for your good credit behavior. Most importantly, they offer some of the highest initial credit limits on the market, going all the way up to $1,000 without a security deposit! So go ahead and see if one is right for you.
Each of these cards offers unique benefits tailored to help you improve your financial standing. By making timely payments and keeping your balance low, you can demonstrate financial responsibility and potentially qualify for higher credit limits and better terms in the future. Additionally, many of these cards report to all three major credit bureaus, which is essential for building a solid credit history.
These cards also often come with features like cash back rewards, fraud protection, and online account management tools, making them not only practical but also convenient. Take the first step towards improving your credit today by exploring these options and finding the one that best suits your needs and lifestyle.
