No one sets out to ruin their credit, but sometimes financial emergencies happen. Maybe your lost your job and weren’t able to make credit card or loan payments. Or maybe you have an unpaid hospital bill that was reported to collections and has drastically lowered your credit score.
While having a bad credit score has a huge impact on a lender’s decision to approve your application to borrow money, you’re not option-less. If you’re ready to start rebuilding your credit, have no fear! Keep reading to learn about five of the best credit cards for bad credit.
1. Capital One Secured Mastercard
If rebuilding your credit and improving your credit score is your main financial priority, one of the best cards to apply for is the Capital One Secured Mastercard. Because this is a secured card, you must pay a deposit before using it. Deposits can range anywhere from $49 to $200, depending on your credit standing and history.
One of the best perks of this card is that if you make payments on time for five months, then you can increase your credit limit as needed. Another notable benefit is that the card doesn’t have an annual fee.
The one factor to be aware of is the variable interest rate. This means that your rate is subject to change each month, which will affect your payment.
2. OpenSky Secured Visa
Most credit card companies conduct a credit check when reviewing applications. However, the OpenSky Secured Visa is one of the few credit cards that doesn’t require a credit check. This means that you can have an extremely low credit score and still apply and get approved for this card.
Instead of a credit check, OpenSky looks at income level and job security. To qualify you must have a job that offers steady month-to-month income. Because the OpenSky Secured Visa is a secured card, you must pay a deposit. The minimum deposit amount is $200, though if you put down a larger deposit, you’ll qualify for a larger credit limit.
When making payments on this card you don’t have to have a bank account. OpenSky accepts payment through money order, wire transfer, or a debit card.
The one drawback to this card is the $35 annual fee, but in the grand scheme of things, this is one of the best cards to apply for if you have really bad credit.
3. Discover Secured Card
Discover Secured Card is another credit card that doesn’t offer an annual. The most notable advantage of this card is it’s awesome rewards program. For every purchase you make on the card you earn 1% in rewards. Restaurant and gas purchases will earn 2% in rewards. After using the card for a year you get a dollar-for-dollar match for all of your rewards points.
To qualify for this card you must pay a $200 deposit. After eight months, Discover will review your account to determine if you’ve made payments on time and how large of a balance you’re carrying on the card.
If you follow good credit habits, you’re likely to see a credit score increase. Discover may also determine that you qualify for an unsecured card which means you don’t have to pay a deposit.
4. Credit One Unsecured Visa
If you’re looking for a credit card that doesn’t require a deposit and offers a great rewards program, look no further than the Credit One Unsecured Visa. The card not only offers prequalification services, you also earn cash rewards on certain purchases.
With this cash-back credit card, you earn 1% cash-back on all purchases including gas, groceries, restaurants, and any other purchase you make. While this is an unsecured card, it does require an annual fee, ranging between $0 to $99. Annual fees are dependent on your credit score.
5. Indigo Platinum Mastercard
Bankruptcy is one of those things that greatly impact your credit score. Not only does it lower your score immediately, the effects last for years. In fact, Chapter 7 bankruptcy stays on your credit report for ten years while other forms remain for seven years. Filing for bankruptcy makes it much harder to get approved for a credit card. Thankfully the Indigo Platinum Mastercard is an option.
If you’re lacking funds, this is a worthwhile card as it doesn’t require a deposit like other credit cards for those with bad credit. Indigo offers a prequalification service so that you can quickly determine whether or not you qualify for the card.
Once you qualify for the card, your credit score and history will be reviewed to determine the annual fee you must pay. Annual fees range between $0 to $99.
Rebuilding your credit after years of bad spending habits can feel like an uphill battle. To start, apply for one of these five credit cards so that you can put good credit habits to use. By making payments on time and paying your balance in full each month, you will see a great improvement to your credit score.
If you have any experience with using credit cards to build your credit score, leave a comment and share your best tips and advice in the section below.