Browse Credit Cards for Bad Credit Scores

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What Is a Bad Credit Score?

A bad credit score is a score that falls below what credit reporting bureaus deem to be average, or “fair.” Bad scores indicate that a person is at a higher risk of missing payments, making late payments, or defaulting on their loans.

To put it bluntly, a bad or poor credit score tells a bank or lender that an individual is less creditworthy than someone with a higher score. Fortunately, credit scores are not set in stone. Instead, they are easily changeable through proactive measures and following financial best practices.

Credit Score Range

Before fixing a damaged credit score, it is crucial to understand what a credit score is, and what is considered good, bad, or ugly by different credit reporting bureaus. The two main credit scoring models that banks use to gauge creditworthiness are FICO and VantageScore.

FICO Score

FICO is the oldest of the credit scoring systems, and as such, is the most popular among banks. A FICO score ranges from 300 to 850, with ratings ranging from Very Poor (bad) to Exceptional.

The FICO scoring model breaks down as follows:

VantageScore

VantageScore is a newer scoring model created by the three leading credit agencies: Experian, Equifax, and TransUnion. Like FICO, VantageScore ranges from 300 to 850, but places more scoring weight on newer credit histories than FICO.

The VantageScore model breaks down as follows:

What Influences a Credit Score?

As you can see from both models, there are plenty of Americans currently struggling with a sub-prime or bad credit score. But what are the items and factors that influence credit scores?

FICO places significant weight on payment history, as this is the biggest indicator of a person’s ability to repay any new credit they may receive. Nearly as important is the amount of available credit that individual is currently utilizing, which makes up 30% of the score.

Of less significance, but still important) are the types of credit a person has, the number of hard inquiries they have in the past 12 months, and the length of their overall credit history. VantageScore places a much greater emphasis on types of credit (or credit mix) than FICO. Equally important, however, is payment history.

How Bad Credit Can Hurt You Financially

What impact can a bad credit score have on your financial life? Or even your everyday life, for that matter?

Tougher to Receive Credit

The most obvious impact of bad credit is a more difficult time getting approved for new lines of credit. Those with poor credit will struggle to get most credit cards with a few notable exceptions. Banks are much less willing to extend credit to those with bad credit, and only credit cards for bad credit or secured credit cards will be an option. People with bad credit will also struggle with getting personal loans, car loans, and mortgages.

Related Article: What is the easiest credit card to get with bad credit?

Higher Loan Terms

Poor credit will not eliminate any chances at getting cards or loans, but those lines of credit will come with less favorable terms. Loans and credit cards for poor credit feature very high-interest rates, higher annual fees, and potentially monthly service fees.

Difficulty Renting Apartments

Poor credit directly impacts your ability to find housing. Landlords may be less willing to take a risk with someone with bad credit, viewing them as a potential liability.

Loss of Employment Opportunities

Bad credit can even impact your professional life. Many employers access the credit reports of potential hires to see if they are a trustworthy, reliable individual. While companies can’t access your credit score, the information on your report may make you seem like a liability. Some government agencies won’t hire people with poor credit, viewing them as a security risk due to their financial situation.

How to Improve a Bad Credit Score

Bad credit has serious ramifications in everyday life. Fortunately, there is something you can do about it! Here are some of our top tips for improving your credit score:

• Check Your Credit Score: The first thing you should do is check your credit score to see where you stand. You might already know your credit score is bad, but how far down on the scale, does it go? Knowing how fast you can improve your credit from “bad” to “fair” is crucial to making a financial plan of attack.
• Get a Credit Card for Bad Credit: Part of boosting your credit score is increasing your use of credit. For those with bad credit, this may seem counter-intuitive. After all, if your score is already and, how can you get a credit card? Fortunately, there are many unsecured credit cards for poor credit and secured cards that can help you repair your credit score.
• Always Pay on Time Every Month: As seen in the scoring models, payment history is the biggest factor in your credit score. Because payment history is so important, paying your credit card bill on time each month is essential to boosting sub-prime credit. Missed payments stay on a credit report for seven years. This means they can harm your score for years to come.
• Keep Your Credit Utilization Low: Credit utilization is as important as paying on time. Credit utilization shows lenders how you use your credit. Those who keep their credit use below 30% can expect their score to improve, while those who use less than 10% can expect a much faster score rise. Using too much of your available credit may make banks think you are stretching yourself thin financially. This makes you a greater risk in their eyes.

What Are the Best Credit Cards for Bad Credit?

Bad credit scores do not automatically mean you can’t get credit cards. There are credit cards for bad credit with no deposit. A bad score simply means your options are limited.

Secured Cards for Poor Credit

What are the best secured cards of 2020?

Secured credit cards are one of the best options for those with poor credit. They work by requiring a cash deposit that also acts as the credit line. This deposit makes the line of credit less of a risk to lenders, meaning they are easier to get – even with bad credit.

Secured cards work in the same way as a traditional credit card, just with an initial deposit. Want to raise your credit limit? Increase your deposit. Make your payments on-time, and you can even graduate to an unsecured card.

When you close your account, your deposit is returned, provided your account is in good standing.

The Best Secured Cards for Bad Credit

• For Lowest APR: First Progress Platinum Prestige Mastercard® Secured Credit Card
• If You’re Looking for Rewards: Discover It Secured
• Best for No Credit Check: OpenSky Credit Card

Unsecured Credit Cards for Bad credit

There are also several good unsecured credit cards for bad credit scores. These cards differ from secured cards in that they don’t require a security deposit. They are your traditional credit cards, just designed for rebuilding credit.

While secured cards are ideal for someone whose credit journey started without a credit score, unsecured cards are great for people whose score is bad. The lack of deposit requirement means no prepaid card limits and more available money in your bank account.

Credit cards for bad credit (no deposit) usually feature an annual fee, which can range from around $30 to $99 depending on your credit history and score. These cards also have higher interest rates and fees for late payments. Of course, those serious about repairing their credit score won’t have to worry, as paying your balance in full and on time won’t result in any interest payments at all.

The Horizon Gold Card and Group One Platinum Card are the closest things to a guaranteed approval secured credit card for bad credit. These cards offer an intro $500 line of credit to the Horizon Shopping Outlet and regularly report to the major credit bureaus.

The Best Unsecured Credit Cards for Bad Credit

• For a Credit Limit Increase: Reflex Mastercard® Credit Card
• If You’re Looking for Pre-Qualification: Milestone® Gold Mastercard®
• Best for Easy Approval: Group One Platinum Card
• Top Visa for Bad Credit: First Access Solid Black VISA® Credit Card

Another great unsecured card for bad credit is the First Digital NextGen Mastercard®. The First Digital NextGen Mastercard® is a sleek and straightforward credit card for people with bad credit scores. NextGen receives its name from its streamlines – and easy – application process, creating a new way to look at repairing damaged credit.  Start with a respectable, $300 credit limit, and work your way towards a credit line increase with on-time payments and financial responsibility.

Tips for Finding the Perfect Bad Credit Card

There are thousands of credit cards for bad credit on the market today. These include secured cards and unsecured cards. Some cards are from larger issuers, such as the Capital One Secured Mastercard. Others are from smaller banks, like the OpenSky Visa.

With so many options to choose from, how can you determine what the right credit card is for your credit score and needs? Here are some key factors to examine when deciding on your next credit card:

• APR: Pay close attention to the interest rates that your card charges. Some cards may offer a fixed-rate, meaning the APR won’t vary based on creditworthiness. Others have a variable APR. A variant rate means people with different credit scores get a different rate.
• Fees: Always read the terms and conditions before choosing a card. Some cards feature hidden fees, making it very expensive to miss payments or even use the card every day. These conditions are available on the web sites of the card issuer, as well as on our comprehensive review pages.
• Credit Score Needed: Always check the credit score you’ll need to apply. Again, BestCards always includes this information in our reviews. Some cards, like the Total Visa, require no credit or poor credit. This low credit needed requirement makes it a very accessible option.
• Credit Bureau Reporting: Make sure your card regularly reports to the three major credit bureaus. Monthly reporting is key to building your credit score. This is especially true if you practice good financial habits and pay your balance in full every month.

Find the Best Card for Rebuilding Credit Today

The team at BestCards.com knows how hard it can be to rebuild credit, especially without the right tools and knowledge. That’s why we strive to provide insightful credit card reviews, as well as informative articles and advice to guide you. Take advantage of these resources and more to find credit cards for a 500 credit score, credit cards for a 550 credit score, or anywhere in between!