Key takeaways
- The best credit cards for 500 credit score are specifically designed to aid in rebuilding credit. They welcome low credit scores, offer score monitoring, and report payment history.
- To choose the best card it’s imperative to know your score. Then find a card that has low fees and focuses on building credit.
- Use your card responsibly to boost your score. Pay your bills on time, don’t max out your card, and limit your applications for the best results.
Credit cards for a 500 credit score are not impossible to find but it is more challenging. You’ll discover that you have limited options but you’re not excluded from credit entirely. There are plenty of credit cards for a 500 credit score designed with rebuilding scores in mind.
Let’s go over the best cards that give you a chance at credit all while offering a pathway to improve your financial health.
Jump to:
- Unsecured credit card options for a 500 credit score
- Is a 500 credit score good or bad?
- How to choose a credit card for bad credit
- How to improve bad credit score?
- Will two credit cards build credit faster?
- What is the easiest card to get approved for with poor credit?
- More tips to improve your 500 credit score
- How to compare $500 credit cards for bad credit
- Bottom line
Unsecured credit card options for a 500 credit score
If you have a low score, you might be curious about what credit card options are available to you with a 500 credit score. Your options are of course limited, especially if you don’t want to put down a security deposit, but there are quite a few choices.
Here are the best credit cards for a 500 credit score.
Is a 500 credit score good or bad?
A 500 score is in the bad range. As of April 2023, 3% of Americans have a score of 500 or lower according to FICO. This can make it hard to qualify for cards or loans, especially ones with favorable terms.
Your score indicates how much of a risk you pose to lenders. The lower your score, the higher the risk. With a 500 score you’re considered a big risk. You’ll find that it’s harder to be approved for loans or cards, and if you are, you’ll end up paying higher interest rates and possibly extra fees.
This doesn’t mean that all doors are closed. There are cards designed for people with lower scores. These cards give you access to credit but often come with higher costs. With responsible use, you can use them to move your score into the good category.
How to choose a credit card for bad credit
You can get a credit card with a 500 credit score but you need to carefully assess your options. Let’s go over in detail how to approach this decision.
Know your score
Before applying, know where you stand. Not all subprime cards accept applicants with a score of 500. Some prefer consumers who have reached a 580 rating. Find out your rating and only apply to cards within your range to reduce the likelihood of rejections.
Familiarize yourself with fees
When exploring options scrutinize the fees. The majority of subprime cards have annual fees, setup fees, and monthly maintenance fees. Read the fine print, beware of hidden fees, and compare offers.
The best cards will have reasonable annual fees and a lower APR.
Almost all cards have late payments, rejected payments, and foreign transaction fees (except for travel cards). These fees are entirely avoidable. It’s a good idea to be aware of them and how to circumvent them so that you will not be surprised if they pop up.
Focus on building credit
Look for cards that report payments and usage to all three major credit bureaus – Experian, TransUnion, and Equifax. Reporting your activity is the only way your score will go up.
Many issuers provide free access to your score each month. You may also find cards that offer incentives like limit increases or a chance to graduate to a card with better rewards after a period of on time payments.
Choosing the right credit card for a under 500 credit score involves knowing what to watch out for. Make sure you can afford the fees, try to prequalify, and double check the issuer reports payments to all three bureaus.
How to improve bad credit score?
Poor score? Know that you’re not alone. It might seem counterintuitive, but everyone starts off with a low score. The good news is it’s not permanent. You can easily improve it by following these tips.
Don’t max out your card
A large balance signals to lenders that you’re at a higher risk of default. Aim to keep your utilization ratio — the percentage of your limit you’re using — below 30%. This signals that you can afford to repay what you owe.
Always pay on time
Payment history is the most influential scoring factor. Even one late payment can have a detrimental effect. Make payments well before they’re due. Set up autopay or reminders so you’ll never miss a due date.
Pay in full
Don’t fall for the minimum payment trap. You’ll only accrue interest. It’s much better to pay your balances in full. This will save you money, keep your balances low, and help your score.
Avoid new inquiries
Each time you apply for a card or loan, a hard inquiry is made, which causes a dip in your score. Only apply when necessary and wait at least six months between applications.
Keep your starter card
The length of time you’ve had credit counts. The older your accounts, the better. Keep your first card open and active – unless it has high annual fees – to increase the average age of your accounts.
Diversify your accounts
Lenders want to see that you can handle different types of accounts, namely cards and loans, responsibly. This is a small factor, though. Only diversify if you need to and don’t take on excess debt.
Building your score won’t happen overnight. Adopt these policies, be consistent, and you’ll see improvements in a few months.
Visit MoneyFor for more advice on cards, debt, and more.
Will two credit cards build credit faster?
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The short answer is yes. Having two cards will make it easier to keep your utilization low, ideally below 30%. Try for 10% and your score will rise faster.
The catch is you must manage both cards responsibly. Pay off your balances in full each month to avoid interest and make all payments on time. Mismanaging multiple cards can lead to high balances, missed payments, and ultimately do more harm than good.
What is the easiest card to get approved for with poor credit?
The easiest cards to get approved for are secured cards. Secured cards require a refundable security deposit, which sets your limit. The security deposit serves as collateral, minimizing the risk for the issuer.
Secured credit cards are an excellent starting point. Issuers typically report payments, offer lower interest rates, and fewer fees. If you can afford to have money tied up in a security deposit, a secured credit card is a good choice.
More tips to improve your 500 credit score
More and more companies offer products to help boost your rating go up faster. Take advantage of a few and watch your score climb over time.
Credit Builder Loan: You don’t get the money right away with this loan. Instead the lender holds onto the funds, you make small monthly payments, and they report your on time payments. Once the loan is paid off, you receive the money.
Becoming an Authorized User: Ask someone with a good score to add you as an authorized user on their card. You benefit from their positive payment history.
Report Monthly Payments: Normally only card and loan payments are reported. Some companies will report all monthly payments including rent, utility bills, and subscription services.
Check Your Credit Report: Regularly check your report for any errors or discrepancies. If you see anything wrong, dispute it since it could be dragging down your score. Everyone is entitled to one free copy of their credit report each year from annualcreditreport.com.
How to compare $500 credit cards for bad credit
When comparing cards for bad ratings with a $500 limit, it’s essential to consider the cost of the card and the benefits it gives you. By comparing several key factors you can select the best option for your financial situation.
Here’s a detailed breakdown of what to look for:
Fees
Start by examining the fee structure of each card. Subprime cards often come with various fees, including annual fees, monthly maintenance fees, and sometimes even application or processing fees. Some cards may advertise low or no annual fees, making them more affordable in the long run. Be vigilant about hidden charges that could increase the overall cost of the card. For example, some cards might have fees for balance transfers, foreign transactions, or late payments. Understanding the complete fee schedule can prevent unexpected costs and help you manage your finances better.
Security deposit
Secured cards are a common option for individuals with less-than-perfect scores. These cards require a security deposit, which typically equals your limit. For a $500 limit, you’ll need to deposit $500. Look for cards with reasonable deposit requirements and consider those that offer the possibility of upgrading to an unsecured card after a period of responsible use. Some issuers may allow partial refunds of the deposit as your score improves, providing more flexibility.
Interest rates
Interest rates, or Annual Percentage Rates (APRs), are an important factor to consider, especially if you plan to carry a balance from month to month. Cards for low ratings often come with higher APRs of 25% to 35%, which can quickly accumulate and become costly. Compare the APRs of different cards, and look for those offering lower introductory rates. Some cards may also have penalties for late payments, resulting in even higher interest rates. Paying your entire balance in full and on time will help you avoid these extra costs.
Credit reporting
For rebuilding your score, it’s crucial that the card issuer reports your activity to all three major credit bureaus: Equifax, Experian, and TransUnion. This reporting allows your responsible use to be reflected in your score. Confirm that the card you’re considering reports regularly and accurately. Timely payments and maintaining low balances can positively impact your score over time.
Rewards and benefits
While rewards are less common for cards aimed at those with poor scores, some do offer perks like cashback, rewards points, or benefits such as free monthly score monitoring. These rewards can add value and provide an incentive to use your card responsibly. However, don’t let rewards overshadow the importance of other factors like fees and interest rates. Sometimes, the benefits can justify slightly higher fees, but this depends on your spending habits and financial goals.
Customer service
Reliable customer service is vital, particularly if you’re working to improve your score. Research the card issuer’s reputation for customer service by reading reviews and ratings. Good customer service can help resolve issues quickly, provide guidance on credit management, and offer support if you encounter any problems with your account. Look for issuers with 24/7 customer support, user-friendly mobile apps, and accessible online account management tools.
By carefully evaluating these aspects, you can choose the best $500 limit card to help rebuild your score effectively. Balancing costs, benefits, and support will ensure that the card you select meets your needs and aids in your journey toward a better rating.
Frequently asked questions
1. Will I get approved with a 500 credit score?
Getting approved for a credit card with a 500 credit score can be challenging but not impossible. You may qualify for secured cards, which require a deposit, or specific cards designed for individuals with poor scores. These options can help rebuild your rating with responsible use and timely payments.
2. Can I get a credit card with a $500 credit limit?
Yes, you can get a card with a $500 limit, even with a low score. Secured cards are a common option, where your limit often matches your deposit. Some unsecured cards for bad ratings also offer modest limits, allowing you to improve your score with responsible use and consistent, on-time payments.
3. What credit card can I get approved for with a 500 credit score?
With a 500 score, you can get approved for secured cards or subprime unsecured cards. Look for cards specifically designed for consumers with low ratings. The cards we listed above cater to individuals with lower scores. They are designed to give almost anyone a second chance and help rebuild your rating.
Bottom line
A low credit score presents challenges, but it’s not the end of the road. If you prefer not to use a secured card or can’t afford a security deposit, there are unsecured credit cards for a 500 credit score. While these cards may not offer the best rewards or the lowest fees, they provide a pathway to improving your score through responsible financial habits.
When selecting an unsecured card, prioritize those that report your payment history to all three major credit bureaus—Equifax, Experian, and TransUnion. This reporting is crucial for improving your score. To maximize the benefits of these cards be sure to never miss a payment, keep your balances low, and be consistent.
By diligently following these practices, you can gradually improve your score, paving the way to qualify for better cards with more favorable terms and rewards in the future. Remember, rebuilding your rating takes time and patience, but with consistent effort, you can achieve your financial goals.
