Check if Youâ€™re Pre-qualified
Before you apply for a credit card check if youâ€™re pre-qualified from a variety of institutions. This does not hurt your credit score and is a good first step when looking to apply for credit. You can read our complete guide to getting pre-qualified for a credit card here.
Build Credit with Secured Credit Cards
If you are trying to rebuild your credit, one of the best approaches is to get a secured credit card. In order to get the card, you will have to write a check to deposit with the credit card company. This money will be your line of credit.
In order to effectively rebuild your credit, you must actually use the card, and we recommend not charging more than 20% of your credit line. For example, if you have a $500 credit line, you should not charge more than $100. Then, pay off your balance in full every single month. You can even build credit with $10 a month on a secured card and see your credit score rise.
Rebuilding credit is a slow-and-steady-wins-the-race process requiring patience. You may not see dramatic improvements immediately, but if you keep doing the right thing, you may observe noticeable results around the one-year mark.
After youâ€™ve consistently managed your secured card well over a period of time, you may be able to increase your credit line beyond your initial deposit or migrate to an unsecured credit card. With most companies, this is a tedious process that youâ€™ll have to initiate. You also arenâ€™t guaranteed to get results even after youâ€™ve made a request.
Discover operates differently than most companies in this realm, making it our number one pick for secured cards.
If youâ€™re looking for a secured credit card, look no further than the Discover itÂ® Secured<!–Discover itÂ® Secured–>. On top of being great for people with a bad credit score, Discover will also accept applicants who have no credit history at all. Discover offers great ways for you to rebuild your credit and be on the way to an unsecured card.
Magnify Glass Pros
- Bankruptcies May Be OK If you have a Chapter 7 bankruptcy on your credit report, it wonâ€™t automatically disqualify you from getting approved for a Discover itÂ® Secured<!–Discover itÂ® Secured–>. However, there are no guaranteed approvals. This is a positive if youâ€™ve had trouble getting a credit card in the past.
- Helps You Rebuild Your Credit This is a legitimate way to rebuild your credit when you donâ€™t qualify for other cards, or the agreement you are offered by another company is laden with fees and high interest rates.
- Offers a Rewards Program Not only can you rebuild your credit, but youâ€™ll also earn rewards points as you do so. This is a great feature that many secured cards donâ€™t offer and is a reason why we consider Discover number one. Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases â€“ automatically. For new cardmembers, Discover matches the cash back you earn at the end of your first year of card membership, automatically.
- Easy to Transition to a Discover Account Without a Security Deposit Starting at eight months, Discover automatically reviews your account to see if youâ€™re eligible to have your security deposit returned while continuing to enjoy the card benefits. This is typically a process youâ€™d have to initiate with other lenders. Itâ€™s good to note that Discover reviews all loans, and credit cards including Discover when making their decision.
- Rewards Limited Thereâ€™s a quarterly spending limit on the higher rewards rate â€” 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases â€“ automatically. Regardless, thatâ€™s $20 back, which is a great reward when your goal is to increase your credit score.
- Be Careful Not to Overspend As with the other cards in this review, you have to be careful that the rewards program doesnâ€™t entice you to overspend. Otherwise, you run the risk of damaging your credit score further. Make sure that your primary goal, to raise your credit score, supersedes the urge to spend too much money in order to get rewards.
The Discover itÂ® Secured<!–Discover itÂ® Secured–> is a fantastic product for those with bad credit. Pay your balance in full by the end of every statement period and your financial life is almost guaranteed to get rosier. Youâ€™ll even have the added benefit of rewards â€” just be careful not to let the rewards program lure you into overspending. With proper practices, youâ€™ll be on your way to an unsecured card and a better credit score.
Read our full review of the Discover itÂ® Secured<!–Discover itÂ® Secured–>
This card does not do a credit check, and no bank account is needed to apply. This is beneficial for those with low credit scores or no access to a bank account. If youâ€™ve filed for bankruptcy, youâ€™re in luck because they donâ€™t care to know, unlike other institutions. However, OpenSkyÂ® Secured VisaÂ® Credit Card<!–OpenSkyÂ® Secured VisaÂ® Credit Card from Capital Bank N.A.–> charges a $35<!–OpenSkyÂ® Secured VisaÂ® Credit Card from Capital Bank N.A.–> annual fee, which the Discover itÂ® Secured<!–Discover itÂ® Secured–> does not. This can be a deal breaker if you donâ€™t want to pay a fee, since there are many secured cards without fees.
For more options, read our article on the best secured credit cards with low deposit requirements.
Our Credit Union Favorite
If youâ€™re looking to open a credit card with bad credit, it can be hard to find a card you qualify for. Thatâ€™s where credit unions come in. They are sometimes more accepting of your credit history and have cards especially designed for people with low credit scores â€” helping your approval chances.
Georgiaâ€™s Own Credit Union offers a variety of credit cards all with low interest. The VisaÂ® Classic from Georgia's Own Credit Union<!–VisaÂ® Classic from Georgia's Own Credit Union –> is positioned toward those who need to rebuild credit and boasts a low APR. When you apply for a credit card on Georgiaâ€™s Own website you are directed toward an application that is for all credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the VisaÂ® Classic from Georgia's Own Credit Union<!–VisaÂ® Classic from Georgia's Own Credit Union –> as an option. Therefore, if you want to apply directly for the card, the best bet is to speak with a loan officer who will tell you if youâ€™re pre-approved for the VisaÂ® Classic from Georgia's Own Credit Union<!–VisaÂ® Classic from Georgia's Own Credit Union –>.
VisaÂ® Classic from Georgia's Own Credit Union
- Regular Purchase APR
- 11.99-16.99% Variable
There are various types of credit scores. Each creditor uses a variety of different types of credit scores to make lending decisions.
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Magnify Glass Pros
- Good chance of getting approved Georgiaâ€™s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.
- Fair APR This card has a fair APR ranging from 11.99-16.99% variable<!–VisaÂ® Classic from Georgia's Own Credit Union –>. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 25% or more. Although your goal is to pay every bill in full and on time each month, if you keep a balance, this low APR wonâ€™t accrue as much interest as other cards.
- Have to join the credit union In order to get this card, you have to join Georgiaâ€™s Own Credit Union. Anyone can become a member regardless of residence. If you donâ€™t qualify for Georgiaâ€™s Own free eligibility options, you will have to join the GettingAhead Association, which has a $5 annual membership fee. The best bet is to speak to a loan officer (404-874-1166) and see if youâ€™re pre-approved for the credit card, and if pre-approved, you can join GettingAhead while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.
- Foreign transaction fee of 2% of the U.S. dollar amount of each transaction<!–VisaÂ® Classic from Georgia's Own Credit Union –> Make sure to leave this card at home when you travel abroad as youâ€™ll be charged a foreign transaction fee of 2% of the U.S. dollar amount of each transaction<!–VisaÂ® Classic from Georgia's Own Credit Union –>. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.
- No rewards program There is no rewards program for this credit card. Georgiaâ€™s Own offers several other cards that have rewards programs, but you may have a harder time qualifying if you donâ€™t have a good credit score.
The VisaÂ® Classic from Georgia's Own Credit Union<!–VisaÂ® Classic from Georgia's Own Credit Union –> is a good option for people who have a bad credit score. If you donâ€™t mind joining a credit union and plan on practicing proper credit behavior, you can rebuild your credit score. Later on, youâ€™ll be able to qualify for other credit cards that have rewards programs.
Read our full review of the VisaÂ® Classic from Georgia's Own Credit Union<!–VisaÂ® Classic from Georgia's Own Credit Union –>
Best for Cash: Personal Loans
If youâ€™re looking to get some cash in your pocket, credit cards in general arenâ€™t your best answer. Cash advances are not ideal, and putting a purchase you canâ€™t currently afford onto a credit card with a high interest rate attributable to your not-so-great credit score is going to be an expensive venture.
Instead, youâ€™ll want to consider personal loans. Theyâ€™re admittedly a little more work up front with the application process, but the savings can be worth it. You can check to see if you are prequalified without impacting your credit score at most lenders. And LendingTree has created a tool that lets you compare rates from dozens of lenders at once, without impacting your score.
LendingTree offers a one-stop tool that could help borrowers find numerous personal loan offers. After entering some basic information, you may receive offers from up to five different lenders in a matter of minutes based on your creditworthiness. If you prefer to go directly to the lenderâ€™s site you can use one of the options listed below.
Magnify Glass Pros
- Check Multiple Offers at Once You can check personal loan offers from a wide range of lenders including Avant, LendingClub and Best Egg. The entire process happens online for no-cost and is fast and easy.
- Soft Pull on Your Credit LendingTree performs a soft pull on your credit in order to provide you accurate loan offers from lenders. This does not affect your credit score and can give you a good picture of what to expect if youâ€™re approved for a loan.
- Need to Create an Account to View Offers The only way to view your personal loan offers is to create an account at LendingTree. This is a minor step, but it does allow you the ease of saving your offers so you can review them later.
LendingTree offers a great tool that lets you easily check your rates for a variety of lenders, all in a matter of minutes. This is a great way for you to see what rates you may get and allows you to shop around for your best offer, without the hassle of going to multiple websites.
Avant offers personal loans even to those with less-than-desirable credit. Because there is no prepayment penalty, you can pay off your loan before the end of your term without consequence.
Magnify Glass Pros
- Apply Online The entire Avant application process happens online. This saves you the hassle of filling out paperwork and visiting a local branch.
- Check Your Loan Options Before You Apply Avant allows you to check your Loan Options that you would be offered with a soft pull on your credit. This will not impact your credit score. This is helpful if youâ€™re shopping around for different rates and gives you a realistic picture of what to expect should you choose Avant.
- Could Save Money over Subprime Credit Cards Depending on the interest rate and upfront fee percentage you are offered, a personal loan from Avant could save you money over putting purchases on a subprime credit card. The ability to preview your interest rate can also help you compare between personal loans and other possible options.
- High Interest Rates Because youâ€™re a subprime borrower, youâ€™re not likely to qualify for the lowest interest rate offered. Youâ€™re more likely to be offered something closer to the 35.99% rate. This is a very high rate, and will add substantially to your loan repayments.
While thereâ€™s only one con for Avantâ€™s personal loans, itâ€™s a pretty big one. The interest rate can be extremely high, so do your math before deciding if this is a good product for you. And be sure to take advantage of the fact that theyâ€™ll let you check your interest rate before officially submitting your application. Use this feature to shop around for best offers and check if you qualify for a better loan
Avant is easier to apply for as the application process will take place online, but if youâ€™re willing to go somewhere in person, you can also apply with OneMain Financial. Its application is also online, but in order to be approved, youâ€™ll have to show up at a local branch with documentation backing the information you submitted at home.
Magnify Glass Pros
- Same-day funds when you get a prepaid debit card or check, up to $10,000
- No prepayment penalties
- Several locations across 44 states
If you have a lower credit score and are limited in your options to take out a personal loan, OneMain Financial could provide you with a solution. However, be sure you understand the loan terms and the full cost of the loan.
Last Resort: Subprime Credit Cards
Subprime credit cards are those that lending institutions issue to those with â€śbadâ€ť credit. They are not a good solution to your credit woes. They almost always come with high interest rates and a litany of fees â€” both of which make it difficult to use this product responsibly.
For example, First Premier makes a business out of lending to subprime borrowers with bad credit. Most of their applicants are only awarded a $300 line of credit. Thatâ€™s after they pay up to a $95 fee just to apply (which is not a common practice in the credit card industry) and a $75 annual fee. If you are approved for a higher credit limit, your annual fee for the first year may be higher ($79-$125). In the second year, the annual fee drops ($45-$49), but at this point you are charged a $6.25-$10.40 account servicing fee every single month.
The cherry on top? The cardâ€™s APR is 36%. Heaven forbid you are ever late on a payment â€” your balance will skyrocket with the insanely high interest rate. Donâ€™t forget about the late payment fee â€” up to $39.
Another example is Credit One Bank â€” not to be confused with Capital One Bank, though their logos do look eerily similar. Not every Credit One Bank credit card comes with outrageous fees. But if you are a subprime borrower, youâ€™re likely to qualify for higher rates.
Your credit may not be great, but that doesnâ€™t make subprime credit cards a â€śfairâ€ť product. You may qualify for other, better options that arenâ€™t as laden with fees. Thatâ€™s why we recommend you first check if youâ€™re pre-qualified for offers then look at store cards and personal loans before choosing a subprime credit card.