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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?
- Next steps: Consider secured credit card options
- 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?
- Frequently Asked Questions
- 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.
Aspire Mastercard®
Aspire Mastercard® is a rare find in the world of poor scores. It is easy to qualify for, gives you a decent starting limit, and you can earn cash back rewards on all purchases.
The Aspire Mastercard® offers a pre-qualification process that allows potential cardholders to check their chances of approval without impacting their scores. This step is completed online using an acceptance code received through a mail offer, making it convenient to explore offers without a hard inquiry.
However, if you decide to proceed with an application, a hard inquiry will be performed, which might temporarily lower your score—a common occurrence with most card applications.
The card, while accessible, comes with a variety of fees that could make it costly to hold over the long term.
Fortiva® Mastercard®
Fortiva® Mastercard® is a good choice for anyone with a poor or fair credit score. It offers a high initial limit of $1,000, cash back rewards up to 3%, and the option to prequalify before you apply.
The Fortiva® Mastercard®, issued by the Bank of Missouri, serves as an unsecured option for individuals with less-than-ideal scores, presenting an appealing choice for those unable to secure a deposit. However, the appeal of no security deposit requirement is countered by its high cost due to fees and interest rates.
The card does offer some redeeming features cash back rewards up to 3% in qualifying categories and periodic limit increase reviews.
FIT® Platinum Mastercard®
The FIT® Platinum Mastercard® caters to consumers who are working on rebuilding their score. It offers an initial limit that doubles after six months of on-time payments.
The FIT® Platinum Mastercard®, issued by The Bank of Missouri and serviced by Continental Finance, positions itself as an accessible option for those looking to build or rebuild your rating without a security deposit.
The issuer reports payment history to all three credit bureaus and promises to double your limit after six months of responsible use.
As a Mastercard, it offers the flexibility of being accepted nearly everywhere. However, the card’s fee structure might make it less appealing for budget-conscious consumers.
Indigo Mastercard®
The Indigo Mastercard® is a solid choice for individuals with lower scores. It offers easy approval, reports your monthly payments, and provides a reasonable limit.
The Indigo Mastercard®, issued by Utah-based Celtic Bank, is marketed as a tool for rebuilding your score. You can prequalify before you apply without impacting your rating and giving you a glimpse of your approval odds and the annual fee you might incur.
The Indigo card can help enhance your score as it reports to all three major credit bureaus—TransUnion, Equifax, and Experian.
While the card does report your payment history and utilization, and a variety of colors and designs, potential cardholders should be wary of its fee structure, which can make it an expensive option in the long run. The card comes with high annual fees that are non-refundable, unlike security deposits on secured credit cards.
Surge® Platinum Mastercard®
The Surge® Platinum Mastercard® is a decent choice for consumers with low scores. It offers straightforward approval, starts with a limit of up to $1,000, and provides the chance to double it after six months of responsible use.
The Surge® Platinum Mastercard®, issued by Celtic Bank and managed by Continental Finance, is designed for individuals looking to rebuild their scores. It does not require a security deposit and offers a pre-qualification process that allows potential cardholders to assess their chances of approval without affecting their rating initially.
Moreover, the card provides the possibility of a limit increase after six months of timely payments, which can help reduce your utilization ratio—a significant factor in calculating your score.
Despite these advantages, Surge® comes with high costs that may outweigh its benefits, particularly for those with FICO scores of 670 or lower.
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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.
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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.
Next steps: Consider secured credit card options
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:
Current Build Card
Current’s Build Card offers a distinctive opportunity to improve your score. This card does not require a security deposit or a hard inquiry, making it more accessible. However, an existing Current Spend Account is necessary to qualify.
The Build Card is designed for individuals looking to build or rebuild their scores without the typical barriers.
It is one of the best unsecured credit cards for bad credit because it requires no deposit or credit check, making it accessible to a broader audience. This card operates more like a charge card, where purchases reduce your available credit instantly, ensuring you spend within your means and avoid interest since balances cannot be carried month-to-month.
While the card offers flexible rewards ranging from 1x to 7x points at participating merchants, it only reports to TransUnion, potentially limiting its effectiveness in building a comprehensive credit history.
Additionally, the absence of an upgrade path to an unsecured card and potential fees for certain transactions like out-of-network ATM withdrawals and foreign transactions should be carefully considered before applying.
Chime Credit Builder Visa®
The Chime Secured Credit Builder Visa® Credit Card stands out in the market. It has no hard inquiry, requires no minimum security deposit, and comes without annual fees or interest charges. If you value these features, this card is certainly worth considering.
The Chime Credit Builder Visa® offers a flexible and user-friendly approach to building or rebuilding your score. Accepted wherever Visa is accepted, this card allows you to make everyday purchases like gas, groceries, and recurring bills.
The key feature is that you fund the Credit Builder secured deposit account, which sets your spending limit based on the amount you transfer—there’s no preset spending limit, and you decide how much to allocate.
Using the Credit Builder is straightforward and cost-effective. There’s no interest or fee for cash advances at in-network ATMs, and the SpotMe® feature can cover you up to $200 fee-free. More importantly, Chime uses the funds in your secured account to automatically pay off your monthly balances when you enable the Safer Credit Building feature, ensuring on-time payments that are reported to all three national credit bureaus.
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.
Frequently Asked Questions
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.
