Credit Cards for Bad Credit

There are indeed steps that you can take to boost your credit score in a month’s time but you must understand that true credit building is a multi-year process, which means any improvements you may manage to make in a month are likely to be purely cosmetic. You’ll still need to manage your money responsibly moving forward for your credit-score gains to last. Perhaps even more importantly, make sure to never, ever pay for credit repair. Nonprofit credit counselors can be very helpful, but services that make wild (borderline illegal) promises and charge fees, especially up front, are best avoided.

With all of that being said, here’s what we recommend to get a quick rise out of your credit score:

• Dispute Credit-Report Mistakes: Removing negative information from your credit report is perhaps the best way to generate substantial short-term credit-score improvement. But you can remove such information only if it’s wrong or the result of fraud.
  So go over your report with a fine-tooth comb, cross-referencing each item with your own financial records. If you find something fishy, investigate it further and, if necessary, file a dispute with the credit bureau.

• Become An ‘Authorized User’: If your spouse or other family member has excellent credit, ask him or her to add you as an authorized user on an existing credit card (preferably the oldest one with the highest credit limit and no negative records). This might take too long to process to benefit you in a month’s time, but it should provide a bump pretty quickly.

• Request Removal Of Negative ‘Authorized-User’ Records: Not many people know this, but if you are/were an authorized user on an account that is dragging down your credit score because of negative information, you can simply ask the credit bureau to remove the record from your credit report. Authorized users are not responsible for unpaid balances, for example, but they can still benefit from responsible use by the primary accountholder.

• Write A ‘Goodwill’ Letter: If your credit report bears only a minor blemish — perhaps a notation for one late payment — and the rest of your credit history is solid, you have the option of essentially asking the issuer for a favor. This could be as simple as calling them and making a case for why your past transgression should be forgiven and stricken from the record, so to speak. Or you could send an official “Goodwill Adjustment Letter,” which formalizes the request. This is easiest to achieve before a negative record actually makes its way to your credit report, but it’s worth a shot afterward as well.

• Ask For A Higher Credit Limit: More available credit will reduce your overall credit utilization ratio, a key component of your credit score. However, many credit-card issuers will re-check your credit history — causing a hard inquiry and short-term credit-score damage — before approving a higher limit. So make sure to ask about your creditor’s policies before formally requesting a boost in your credit line.
  Similarly, you should make sure that all of your credit limits are expressed accurately on your credit reports. If the listed limit is lower than it should be, ask the issuer to report an updated figure to the credit bureaus. Take note, however, that if you have an “NPSL” credit card, there might not be much you can do about an unusually reported credit limit.

• Make A Big Debt Payment: If you’re carrying a credit-card balance from month to month or your end-of-month balance is high relative to your spending limit, both making a larger payment than normal and paying earlier than usual could help your credit score. If you can, try to reduce your credit utilization to less than 30% (below 10% is optimal) across all of your credit lines. The same principle applies to any loan without a prepayment penalty, too.

You can keep track of your credit score’s latest developments by signing up for a free WalletHub account. WalletHub is the first and only website to offer free credit scores and full credit reports that are updated on a daily basis. Additional information about increasing your credit score can be found in our comprehensive Credit Improvement Guide.

There are two main types of credit cards with bad credit: secured credit cards and unsecured credit cards for bad credit.

Secured credit cards require a refundable security deposit that doubles as your credit line and prevents overspending. As a result, issuers can afford to charge fairly low fees and interest rates on secured credit cards. In contrast, unsecured credit cards for people with bad credit provide a small amount of spending power that you don’t have to prepay. But they offset the risk of not being paid back by charging very high rates and fees.

Here’s a quick snapshot of how the two types of credit cards for bad credit compare, based on the latest information from WalletHub’s database of 1,000+ offers:

Secured Credit Cards – Market Overview

 Unsecured Credit Cards for Bad Credit – Market Overview

Finally, it’s worth noting that a third option sometimes exists for people with poor credit: partially secured credit cards. Such cards are a hybrid of sorts, combining features from secured and unsecured offers. Basically, they require a security deposit but may give you a credit line in excess of the amount you put down. Partially secured cards tend to be a bit harder to get than fully secured cards.

Yes, it is possible, but we don’t recommend it unless you truly need access to an emergency line of credit. So-called unsecured credit cards for bad credit tend to charge prohibitive fees without offering much spending power in return. Nevertheless, you can check them out here. If you’re mainly interested in a way to build credit, you may want to reconsider your stance on security deposits. You’ll get the full amount back if you close your account with no balance, and the presence of this deposit is the reason why you can find secured cards with no annual fee. You can compare secured cards here​​​​​​​. Hope this helps.

First of all, it's good that you are expressing a desire to rebuild your credit because too often people simply decide credit card use isn't for them and try to make do with a bad credit score. Doing so obviously forces them to pay unnecessarily high costs on loans and insurance premiums, not to mention the fact that they have a harder time getting approved for a plethora of things, including home and car leases, mortgages and even jobs that require security clearances or the handling of money.

With that being said, your best bet is going to be a secured credit card, for a few different reasons. For starters, no matter how bad your credit is, you can get approved for a secured card. This is because they require that you place a refundable security deposit, which acts as your credit line, both protecting the card’s issuer in the event that you default and precluding the need for high fees.

A secured card's low fee structure not only makes it easier to pay all of your bills on time, but it also gives you the option of simply locking your card in a drawer and thereby building credit without the temptation that comes with making purchases. You see, information about a credit card account is relayed to the major credit bureaus (Experian, Equifax and TransUnion), regardless of whether the cardholder makes purchases or not. As long as your account is in good standing, this information will be positive and your score will gradually rise.

While the gains won't be as pronounced as if you were making purchases and on-time payments, this is a great option for people who’ve run into trouble in the past and are nervous about repeating their mistakes. What’s more, you can also add to your security deposit over time and, in doing so, increase your available credit as well as your credit score.

You should be able to move to an unsecured card after about a year of responsible secured card use. (That means if you do make purchases, you must make them on time!)

Hopefully that helps!

Simply put, get a credit card for bad credit and use it responsibly. To improve bad credit, you need to add positive information to your credit report on a regular basis, so as to basically bury negative records from the past. 

A credit card for bad credit is the best tool for the job. You should be able to get approved for one. And it doesn’t have to cost you a thing. There are a handful of credit cards for people with bad credit with no annual fees. You can even build credit without making any purchases, if you’re worried about overspending.

All credit cards relay account information to the major credit bureaus each month. And that information will benefit your credit score as long as it reflects on-time payments and low credit utilization.