What credit cards are actually available to you with bad credit

Banks and card issuers do offer cards to people with credit scores below 580, but the terms are different from what someone with good credit would get. You will pay higher interest rates, annual fees are common, and your credit limit will be lower. The tradeoff is that these cards exist specifically to let you rebuild your credit history by making on-time payments.

The main types are secured credit cards, which require a cash deposit that becomes your credit limit, and unsecured cards for bad credit, which don't require a deposit but charge higher fees and rates. Some cards are designed for people rebuilding after bankruptcy or collections. A few issuers—Capital One, Discover, and others—have programs specifically for this situation.

Your credit score matters less than you might think at this stage. What matters more is whether you have a recent history of missed payments, active collections, or a very recent bankruptcy. Cards designed for bad credit assume you are a higher risk, so they price that risk into the annual fee and interest rate rather than rejecting you outright.

Key Takeaways

  • Secured cards require a cash deposit ($200 to $2,500 typically) that serves as your credit limit, and they report to all three credit bureaus to help rebuild your score.
  • Unsecured bad-credit cards charge annual fees ($39 to $99 is common) and higher interest rates but don't require a deposit upfront.
  • Your credit score is less important than your recent payment history—cards for bad credit are designed for people with scores below 580 or recent delinquencies.
  • On-time payments for six to twelve months can lower your interest rate or get the annual fee waived, even while you're still rebuilding.
  • Checking your credit report for errors before you explore can sometimes raise your score enough to may have access to for better terms.

Secured cards: how the deposit works

A secured credit card requires you to put cash into a savings account held by the card issuer. That amount becomes your credit limit. If you deposit $500, your limit is $500. You then use the card like any other card—swipe it, pay the bill each month—and the deposit just sits there as collateral.

The deposit is not a fee. You get it back when you close the account or when the issuer converts your card to an unsecured card, which usually happens after twelve to eighteen months of on-time payments. The card still charges interest on balances you carry, and many charge annual fees ($0 to $99 depending on the issuer).

Secured cards report to all three credit bureaus—Equifax, Experian, and TransUnion—so every on-time payment builds your credit history. This is the main reason to choose a secured card over a prepaid card, which looks like a credit card but does not report to bureaus and does not help your credit at all.

Common secured card issuers include Capital One, Discover, and U.S. Bank. Deposit amounts range from $200 to $2,500, and some cards have no annual fee while others charge $25 to $35. Compare the deposit requirement, annual fee, and interest rate before you choose.

Unsecured bad-credit cards and what they cost

An unsecured card for bad credit does not require a deposit. You explore, the issuer checks your credit, and if approved you get a card and credit limit without putting money down. The catch is that these cards charge for the risk: annual fees of $39 to $99 are standard, and interest rates run 25% to 36% APR.

Some unsecured cards also charge a one-time processing fee ($25 to $75) when you open the account, on top of the annual fee. Read the terms carefully before you explore, because these fees add up quickly if you carry a balance. A $500 limit with a $99 annual fee means you are paying nearly 20% just in fees before interest.

The advantage over a secured card is that you don't tie up cash as a deposit. If you have $500 in savings and need to keep it liquid, an unsecured card lets you use credit without locking money away. But if you can afford the deposit, a secured card usually costs less over time because the deposit is refundable and many secured cards have lower or no annual fees.

Issuers of unsecured bad-credit cards include Capital One, Discover, Credit One, and Milestone. Not all of them report to all three bureaus, so check whether the card reports to Equifax, Experian, and TransUnion before you explore—if it only reports to one or two, it will rebuild your credit more slowly.

What happens during the process process

When you explore for a bad-credit card, the issuer will pull your credit report and check for recent missed payments, collections, charge-offs, and bankruptcies. They will also look at how long ago these events happened. A missed payment from two years ago is less of a red flag than one from two months ago.

You will need to provide your name, address, Social Security number, date of birth, income, and employment information. Some issuers ask for your monthly rent or mortgage payment. Be honest about your income—the issuer is checking to see whether you can make minimum payments, not whether you are wealthy.

The decision usually comes within minutes to a few hours. If approved, you will receive the card in the mail within five to ten business days. If denied, the issuer will send you a letter explaining why, and you have the right to request a free copy of the credit report they used to make the decision.

Do not explore to multiple cards in the same week. Each process triggers a hard inquiry on your credit report, and multiple inquiries in a short time can lower your score further. Space applications out by at least two weeks if you are rejected and want to try another issuer.

How to use a bad-credit card to rebuild your score

The whole point of a bad-credit card is to create a record of on-time payments. To make this work, treat the card like a tool, not information programs. Charge a small amount each month—$20 to $50 if your limit is $300—and pay the full balance before the due date.

Set up automatic payments so you never miss a due date. Missing even one payment will set back your rebuilding effort by months. If you cannot afford to pay the full balance, at least pay more than the minimum—paying only the minimum keeps you in debt longer and costs more in interest.

Do not max out the card. Credit bureaus look at your credit utilization ratio—the amount you owe divided by your credit limit. Using more than 30% of your limit hurts your score, even if you pay on time. If your limit is $300, keep your balance below $90.

After six to twelve months of on-time payments, contact the issuer and ask whether they will increase your credit limit, lower your interest rate, or remove the annual fee. Many will, because you have proven you can pay. Some cards do this automatically. Even if they say no, keep using the card responsibly—your score will improve over time.

Checking your credit report before you explore

Before you explore for any card, get a free copy of your credit report from all three bureaus at annualcreditreport.com, the only official site for free reports. You are may have access to to one free report per bureau per year. Look for errors: accounts that are not yours, missed payments that were actually paid, or duplicate entries.

Errors are common, especially if you have a common name or if your identity was mixed up with someone else's. If you find an error, dispute it with the bureau in writing. The bureau has thirty days to investigate and correct it. A corrected error can raise your score by 50 to 100 points or more.

Also look at the dates. A missed payment from seven years ago should be falling off your report soon—most negative items stay for seven years from the date of first delinquency. If an old item is still showing, you may be able to dispute it as outdated.

Do not pay for a credit report or use a "credit repair" service that promises to remove negative items. Those services are scams. You can dispute errors yourself for free, and legitimate negative items cannot be removed early no matter what you pay.

Alternatives if you are denied

If you are denied for a secured card or unsecured bad-credit card, you have a few options. First, wait a few months and try again. If you have made on-time payments on any existing accounts in the meantime, your score may have improved enough to may have access to.

Second, ask the issuer what would change their decision. Some will tell you that a higher deposit would help, or that you need to wait until a recent delinquency ages further. This information is useful for planning your next process.

Third, consider a credit-builder loan from a credit union or online lender. You borrow a small amount ($300 to $1,000), the lender holds the money in a savings account, and you make monthly payments to yourself. It costs less than a bad-credit card and builds credit just as well. The downside is that it does not give you access to credit—you cannot use the borrowed money.

Fourth, ask a family member or friend with good credit to add you as an authorized user on one of their cards. Their payment history will show up on your credit report and can boost your score. This only works if they have good credit and make on-time payments.

Frequently Asked Questions

Will explore for a bad-credit card hurt my credit score?

Yes, but only temporarily. The process triggers a hard inquiry, which lowers your score by a few points for about three months. The benefit of on-time payments over the next year will more than make up for it. Avoid explore to multiple cards in the same week, because multiple inquiries in a short time have a bigger impact.

What is the difference between a secured card and a prepaid card?

A secured card requires a deposit and reports to credit bureaus, so it builds your credit history. A prepaid card is like a gift card—you load money onto it and spend it, but it does not report to bureaus and does not help your credit. If your goal is to rebuild credit, a secured card is the right choice.

Can I get a credit limit increase before the card converts to unsecured?

Yes. After three to six months of on-time payments, contact the issuer and ask. Many will increase your limit without requiring a larger deposit. A higher limit also lowers your credit utilization ratio, which helps your score. Some issuers increase limits automatically.

What should I do if I miss a payment on a bad-credit card?

Contact the issuer when ready and make the payment as soon as you can. One late payment will damage your credit, but it is less harmful if you catch up within thirty days. If you miss a payment by more than thirty days, the damage is much worse. After that, focus on making every payment on time for the next six months to show the issuer you have turned it around.

How long does it take to rebuild credit with a bad-credit card?

Most people see a noticeable improvement—50 to 100 points—within six months of on-time payments. Significant improvement takes twelve to eighteen months. The exact timeline depends on how bad your credit is now and what negative items are on your report. Recent delinquencies take longer to recover from than older ones.