Your credit score determines what types of loans and credit cards you can qualify for. You may find yourself with a bad credit score due to a few missed bill payments or a previous bankruptcy. You may have no credit score at all if you’ve never taken out a loan or used a credit card.
Secured credit cards help people with the process of rebuilding credit. They are specially designed credit cards for bad credit, or no credit at all, offering nearly guaranteed and instant approval.
We looked at the many credit cards on the market today and asked, “what are the best credit cards for rebuilding credit?” By and large, secured cards are the best available option thanks to their low fees and easy approvals. While you should try to avoid paying interest by paying your card off in full every month, having a credit card with a low interest rate is important if you ever do have to carry a balance. Our picks are highlighted below.
The Green Dot Visa® Secured Credit Card offers a low interest rate and a customizable credit limit. Your limit will be equal to your deposit, which can range from $200 to $1,000.
The Green Dot primor Visa Gold Secured Credit offers one of the lowest rates you’ll find on a credit card at 9.99% APR. You can customize your credit limit by depositing $200 to $5,000.
The Assent Platinum Mastercard Secured Card offers a low-fee way to get a secured credit card. If your credit improves enough after one year that you can qualify for an unsecured card, you can close the account and not pay any fees. If you do have to keep the card for multiple years, you’ll pay less than $30 per year to keep the account open.
|Card||Best For||Deposit||Standard APR||Annual Fee|
|Capital One Secured Mastercard||People who want a low deposit or a customizable credit limit||$49, $99 or $200||24.99%||$0|
|OpenSky Secured Visa Credit Card||People who don’t want their credit checked||$200||18.64%||$35|
|Green Dot Visa® Secured Credit Card||People who want a low annual fee||$200||19.99%||$39|
|Green Dot primor Visa Gold Secured Credit Card||People who want the lowest possible rate at the cost of a higher annual fee||$200||9.99%||$49|
|First PREMIER Bank Secured Credit Card||People who need some time to find a security deposit||$200||19.9%||$50|
|Assent Platinum Mastercard Secured Card||People who want a low-fee secured card||$200||24.74%||$0 in the first year, $29 in subsequent years||The Secured Visa from Merrill Bank||People who want to spread their card fees out over the year||$200||19.2%||$36 on account opening, then $3 per month after the first year|
The number one thing you should look for when making a credit card application with bad credit is a card that you have a good chance of qualifying for. This typically means that you will need to choose credit cards designed for bad credit. Focus on applying for credit cards for poor credit with no annual fee and low interest credit cards for bad credit. There’s no point in paying more than you need to in order to rebuild your credit.
Many companies specifically focus on customers with poor credit, offering instant approval credit cards for bad credit so you can start using building your credit faster.
If you want the best chances of getting a credit card approval with bad credit, choose a secured card. You’ll need to offer collateral in the form of an upfront cash deposit, but you’re nearly guaranteed to be approved for the card as long as you meet the card’s credit requirements.
Different companies categorize credit score ranges, but each usually breaks down scores into the following buckets; excellent, good, fair, poor and bad. On the 850-point scale, scores of 500-600 are typically considered poor.
Rebuilding your credit can be a difficult process that takes time. The most important thing to do is to make timely bill payments, as this makes up more than a third of your score. At the same time, pay down your existing debts, avoid maxing out your cards and check your credit report for errors.
Depending on your credit score and your situation, you could see improvements in just a few months. Although it can take years to move from poor to great credit, you could move from poor credit to fair credit in a few months if you make your credit card payments on time. As time goes on, your previous missed payments, bankruptcies and charge-offs will have a smaller effect on your score, allowing it to rise further as long as you continue paying your bills on time and avoid maxing out your credit cards.
Secured credit cards are best for building credit because even people with poor or no credit can qualify for them. They also limit how much you can spend, making it easier to make on-time payments each month, which is the most important part of building your credit score.
Yes, it is possible to get a credit card with a 550 credit score. You won’t be able to get the most sought-after premium cards, but you can easily qualify for a secured credit card. You can then use that to prove your trustworthiness by making on-time payments.
Secured credit cards are easiest to get if you have bad credit because you offer the bank collateral. This means you need to have some savings to get a secured card. You temporarily give the bank some of your savings in exchange for the card, all but guaranteeing your approval. If you have no collateral, you can’t get the card.
Secured credit cards, like any other credit card, help build your credit if you use them properly. Avoid maxing out your credit limit and make your monthly payments on time to see your credit score go up. Make sure the secured credit card you choose reports to the three major credit reporting bureaus every month. Otherwise, the good behavior you exhibit by paying your secured credit card on time and in full every month won’t make a difference on your credit score.
Most issuers will pull your credit when you apply for a secured card, which can cause your score to drop. Some banks have hard rules against people with certain things on their credit report, so they have to check. A few issuers won’t pull your credit, and some will do a soft check, which has a lower impact on your credit score than a hard credit pull.
Secured credit cards work just like any other card, with the exception that you provide the issuer with cash as collateral when you get the card. You can then use the card to make purchases and pay the bill like normal. Once you’ve proven your good financial habits, or close the card, the bank will return the collateral.
You have to provide cash to the card issuer when you apply for a secured credit card so that the issuer has some collateral on-hand. The minimum deposit on a secured credit card is the least amount of collateral that the lender will accept. For example, you might have to offer at least $200 to get approved for the card.
Secured cards do charge interest, like other credit cards. When you make a purchase, you don’t need to pay the bill in full each month. Instead, you can make just the minimum payment. If you don’t pay your statement balance in full, the next month’s bill will include an interest charge.
Secured credit cards are best for people who are trying to improve their credit. They are easy to qualify for and limit your ability to overspend and fall deep into debt. Unsecured cards are best for people with better credit because they offer more flexibility and features.
A prepaid card works much like a debit card. You load it with a certain amount of money upfront and then deplete the balance as you use it. Some cards allow you to reload the balance as needed. You cannot go into debt with a prepaid card because you can’t spend money you haven’t loaded to the card.
Prepaid cards cannot be used to build credit because they never involve borrowing money. You must load cash onto the card before using it, so you never have the chance to use it as a line of credit. Thus, they do not appear on your credit report.
MyThreeCents’ personal finance team carefully evaluates each credit card and ranks them based on their merit. The process involves analyzing various factors, including but not limited to, Annual Percentage Rate (APR), fees, cash back offers, airline miles and other rewards. Our team independently collects the information and carefully assesses each credit card, looking for maximum consumer value. As always, we strive to help consumers to become better educated before making a purchase.
The information we provide and the analysis we share is always free. So, how do we survive? We get compensated by our partners, which may sometimes influence the products or services we review and the order in which they appear. Our suggestions and guidance are unbiased and are based only on our thorough research.