You can get a credit card with bad credit, but your options are narrower and the terms will be less favorable than cards for people with good credit

Banks and card companies see bad credit as a sign you have missed payments or owed more than you could pay back before. They will still issue you a card, but they protect themselves by charging higher interest rates, requiring a cash deposit, or both. The cards available to you fall into three categories: secured cards (backed by your own money), unsecured cards for bad credit (no deposit, but higher fees and rates), and store cards (easier to get, but only usable at one retailer). Your job is to pick the one that costs you the least and actually helps your credit score climb.

Key Takeaways

  • Secured credit cards require a cash deposit that becomes your credit limit, and most charge annual fees between $0 and $95, but they report to the three major credit bureaus and can raise your score if you pay on time.
  • Unsecured bad-credit cards have no deposit requirement but charge annual fees of $35 to $150 and interest rates of 25% to 36%, making them expensive if you carry a balance.
  • Your credit score, recent payment history, and income all affect whether you are approved and what terms you receive, but no card company will turn you down solely because of bad credit.
  • Paying your full balance every month keeps interest charges at zero and builds your credit faster than making minimum payments.
  • After 6 to 12 months of on-time payments, you can often move to a better card with lower fees and rates, or request a credit limit increase on your current card.

How secured credit cards work and why they rebuild credit fastest

A secured credit card requires you to put cash into a savings account held by the bank. That deposit becomes your credit limit. If you deposit $500, you get a $500 limit. You then use the card like any other card—swipe it, pay the bill each month—and the bank reports your payments to Equifax, Experian, and TransUnion, the three major credit bureaus. After 6 to 18 months of on-time payments, many issuers will convert your card to a regular unsecured card and return your deposit.

Secured cards rebuild credit because they prove you can handle borrowed money without defaulting. The deposit removes the bank's risk, so they are willing to take a chance on you. Your payment history is what matters to your credit score, not the deposit itself. Missing a payment on a secured card hurts your score just as much as missing a payment on any other card.

The cost varies by issuer. Some charge no annual fee; others charge $25 to $95 per year. Interest rates typically run 18% to 24%. If you pay your full balance every month, the interest rate does not matter—you pay zero interest. The annual fee is the only cost you bear. Compare the fee, the interest rate, and the bank's conversion timeline before you choose.

Unsecured bad-credit cards: faster approval, higher ongoing costs

An unsecured bad-credit card does not require a deposit. The issuer approves you based on your credit score, income, and recent payment history alone. Approval usually comes within days. The trade-off is cost: annual fees run $35 to $150, and interest rates sit between 25% and 36%.

These cards make sense if you cannot afford to lock up a deposit right now, or if you need a card when ready. They also make sense if you plan to pay your full balance every month—the high interest rate does not affect you if you carry no balance. But if you expect to carry a balance month to month, the interest charges will be steep. A $1,000 balance on a 30% card costs you $300 per year in interest alone, on top of the annual fee.

Read the terms carefully. Some unsecured bad-credit cards charge fees for things secured cards do not: fees to increase your limit, fees to make a payment by phone, or fees just for having the account open. These hidden costs add up. A card with a $95 annual fee and no other charges is often cheaper than a card with a $35 annual fee but $10 fees for each limit increase request.

Store cards and retail credit: easier to get, but limited use

Retail store cards—issued by Target, Walmart, Amazon, or other large retailers—are often the easiest cards to get with bad credit. The approval process is quick, sometimes when ready at checkout. Many have no annual fee. But they only work at that one store or its affiliated websites, so they do not help you build credit as broadly as a Visa or Mastercard does.

Store cards do report to the credit bureaus, so on-time payments help your score. They can be a stepping stone: use one for a few months, make all payments on time, then move to a secured or unsecured Visa or Mastercard. But do not treat a store card as your main credit card. You need a general-purpose card that you can use everywhere, because credit bureaus want to see you managing different types of credit responsibly.

What banks look at when you explore with bad credit

Your credit score is one factor, but not the only one. Banks also look at your income, your employment history, and whether you have missed payments recently. A score of 500 with no missed payments in the last six months is stronger than a score of 550 with a missed payment last month. Recent payment history matters more than an old default from three years ago.

You will also be asked about your income. Banks want to know you can afford to pay the bill each month. Income does not have to come from a job—it can be disability payments, Social Security, unemployment benefits, or money from a roommate you live with. Be honest about what you earn. Lying about income can result in the card being canceled later.

Some banks ask about your savings or checking account history. If you have been banking with the same institution for years and keep a positive balance, that works in your favor. If you have overdrafted your account multiple times in the last year, that works against you. Banks see your bank account as a sign of how carefully you manage money.

The process process and what to expect

Most applications happen online and take 10 to 15 minutes. You will need your Social Security number, your current address, your income, and your employment information. Some issuers ask for a phone number to call you during business hours to verify information.

After you submit, the bank pulls your credit report from one or more of the three bureaus. This is called a hard inquiry and it lowers your score by a few points for a few months. Multiple hard inquiries in a short time can hurt your score more, so do not explore for five cards in one week. Space applications out by at least a week or two.

Approval or denial usually comes within a few days. If you are approved, the card arrives by mail within 7 to 10 business days. If you are denied, the bank must send you a letter explaining why, and it will include contact information for the credit bureau they used. You can request a free copy of your credit report from that bureau to see what information led to the denial.

Using your new card to raise your credit score

Getting the card is the first step. Raising your score is the second, and it takes time. Your payment history makes up 35% of your credit score—the single largest factor. Missing even one payment can drop your score 50 to 100 points. Paying on time, every time, is the only way to rebuild.

Set up automatic payments for at least the minimum due, ideally the full balance. Automatic payments remove the chance you forget. If you cannot pay the full balance, pay as much as you can above the minimum. Paying only the minimum keeps you in debt longer and costs you more in interest.

Keep your balance low relative to your credit limit. If your limit is $500 and you carry a $450 balance, that hurts your score even if you pay on time. Aim to use no more than 30% of your limit—so on a $500 card, keep your balance below $150. This is called your utilization ratio, and it makes up 30% of your credit score.

After 6 to 12 months of on-time payments and low balances, check your credit score. Many card issuers let you see your score for free in your online account. If your score has risen, you may be able to move to a better card with lower fees and rates, or you can ask your current issuer for a credit limit increase. A higher limit makes it easier to keep your utilization ratio low.

Moving to a better card once your credit improves

Your goal is not to stay on a bad-credit card forever. It is a tool to rebuild, not a permanent solution. Once your score reaches the mid-600s or higher, you become may be able to access for cards with better terms: lower interest rates, lower or no annual fees, and rewards like cash back or points.

Do not close your old card when ready after you move to a new one. Closing it can hurt your score because it lowers your total available credit and shortens your average account age. Instead, keep the old card open, use it occasionally for a small purchase, and pay it off in full each month. This keeps the account active and reporting positive payment history to the bureaus.

The timeline varies. Some people move to a better card in 12 months; others take 18 to 24 months. It depends on how bad your credit was to start, how consistently you pay on time, and how much you lower your balances. Patience and consistency matter more than speed.

Frequently Asked Questions

Can I get a credit card if I have been denied before?

Yes. A denial does not prevent you from explore again. Wait at least a few months and explore to a different issuer. In the meantime, work on the reason you were denied—if it was a low income, look for additional income sources; if it was recent missed payments, make sure your payments are current. When you explore again, your situation will be stronger.

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

A secured credit card requires a deposit and reports to credit bureaus, building your credit score. A prepaid card is like a gift card—you load money onto it and spend only what you loaded. Prepaid cards do not report to credit bureaus and do not build credit. For rebuilding credit, a secured card is the right tool.

Will getting a bad-credit card hurt my score?

The process itself causes a small, temporary drop because of the hard inquiry. But once you have the card and start making on-time payments, your score will rise. The short-term dip is worth the long-term gain. Do not let fear of a temporary drop stop you from explore.

Can I use a bad-credit card to pay off other debts?

You can, but be careful. If you use the card to pay off a credit card or loan, you are moving debt from one place to another, not eliminating it. You may also face a balance transfer fee. Only do this if the new card has a significantly lower interest rate and you have a plan to pay off the balance quickly.

What happens if I miss a payment on my bad-credit card?

A missed payment is reported to the credit bureaus and will lower your score. If you miss a payment by 30 days or more, the bank may charge a late fee, usually $25 to $40. If you miss a payment by 60 days or more, your interest rate may increase. If you miss a payment by 120 days or more, the bank may close your account and send it to a collection agency. Contact your bank when ready if you cannot make a payment—many will work with you on a payment plan.