Best Bad Credit Credit Cards For March 2022
When you have bad credit, it can be difficult to be approved for a new credit card, which can be exactly what you need to help rebuild your credit. Thankfully, there are credit card designed specifically for those with credit problems. Here are the best credit cards available to applicants with bad credit:Total Visa® Credit Card: Best Unsecured Credit Card for Bad CreditDiscover it® Secured: Best Secured Card for RewardsCapital One QuicksilverOne Secured Credit Card: Best for Rewards OverallCapital One Secured Mastercard®: Best for Those With No CreditPetal® 1 Visa® Credit Card: Best Card For Building Credit with a High LimitCredit One Bank® Platinum Visa®: Best for Getting Prequalified Online
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Credit Repair companies can help you repair and improve your credit so you can apply for the credit card of your choice. Bad credit can weigh you down. Find out what credit repair can offer you.
Total Visa® Credit Card: Best Unsecured Credit Card for Bad Credit
The Total Visa® Credit Card is ideal for consumers who want to build credit without putting down a cash deposit.Reports to all three credit bureausEasy to qualify with poor credit or no creditNo security deposit requiredGet a decision in as little as 60 seconds$89 program fee and $75 annual fee the first year ($48 annually after that).Fees are deducted from your initial line of credit.
This unsecured credit card is available to consumers with all kinds of credit profiles, and it’s possible to get approved online in a matter of minutes. The biggest benefit of this card is that all your monthly payments are reported to the three credit bureaus, meaning you can use it to improve your credit score over time with responsible use.
The upfront costs with this card are high. You’ll pay $89 just to apply for the Total Visa® Credit Card, and a $75 annual fee applies the first year (annual fee is $48 for following years). You do have the option to choose your card’s design, and have manageable monthly payments.
Discover it® Secured: Best Secured Card for Rewards
The Discover it® Secured Card is easily the most rewarding secured credit card on the market today.Earn 2% back on up to $1,000 in spending at gas stations and restaurants each quarter, plus 1% back on everything elseNo annual fee or application feeFree FICO score on your monthly statementReports to all three credit bureausThe Discover card isn’t as widely accepted overseas as Visa or Mastercard.
This card requires a cash deposit as collateral, but you’ll earn 2% back at gas stations and restaurants up to $1,000 in combined purchases each quarter, plus earn 1% back on all other purchases. Discover will also double all the rewards earned in the first year.
The Discover it® Secured Card doesn’t charge an annual fee or application fee and you’ll get access to your FICO credit score on your statement each month. This card also reports to the three credit bureaus so with responsible use, you can use it to improve your credit over time.
Capital One QuicksilverOne Secured Rewards Credit Card: Best for Rewards Overall
The Capital One Quicksilver Secured Rewards Credit Card is the best rewards credit card for bad credit on our list, and it has similar terms to the standard, unsecured version.Earn 1.5% cash back on all your spending$39 annual feeQualify for a higher credit limit in as little as 6 months (with on-time payments).Open an account with as little as a $200 refundable deposit.High standard interest rate of 26.99% APR
This is a secured card, meaning you have to put down a cash deposit if you get approved. Yet it offers a high rate of rewards that’s easy to understand. You’ll earn a flat 1.5% cash back for each dollar you spend without any spending caps or limits. There’s no annual fee, but you will have to make a minimum refundable deposit of $200 to open your account. With responsible account use, you could qualify for a higher credit limit in just six months with Automatic Credit Line Reviews.
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Secured Mastercard® from Capital One: Best for No Credit
When you have a limited credit history, you need a good place to start.No credit history requiredMinimal deposit requiredStrong cardholder benefitsNo annual feeInitial credit line limited to $200
The Capital One Secured Mastercard starts you off with a $200 line of credit after you make a minimum refundable deposit of $49, $99 or $200, depending on your credit history. You can also deposit more money to receive a higher line of credit. Capital One will automatically review your account after six months to see if you’re eligible for a higher line of credit.
Capital One is a respected credit card issuer that offers additional benefits such as account alerts, Card Lock, $0 fraud liability and no foreign transaction fees. Best of all, there’s no annual fee for this card.
Petal® 1 Visa® Credit Card: Best Card for Building Credit with a High Limit
The Petal 1 Visa is a card designed for those with bad credit, a limited credit history or no credit at all.Credit limit of $500 to $5,000No annual feeApproval based on alternative dataCash back from select merchants
It uses your banking history to produce an alternative measure of your creditworthiness based on factors such as income, savings and spending history.
And unlike many competitors, it offers fairly high limits between $500 and $5,000, depending on your credit history. It also offers 2% – 10% cash back at select merchants. And while it has no annual fee or foreign transaction fees, there are fees for late payments and returned payments.
Credit One Bank® Platinum Visa®: Best for Getting Prequalified OnlineReports to the three credit bureausGet prequalified online and without a hard inquiry on your credit reportEarn 1% back on eligible purchasesAnnual fee from $75 the first year, then $99 after
The Credit One Bank® Platinum Visa® is an unsecured credit card, meaning you don’t have to put down a cash deposit to get started. This card does charge an annual fee up to $99 ($75 the first year), but you’ll earn 1% back on eligible purchases and you can qualify for automatic credit line increases based on responsible credit use.
The Credit One Bank Platinum Visa is a popular card with consumers because it offers the ability to get prequalified online without a hard inquiry on your credit report. You can also qualify with just average or poor credit.
A credit repair company could improve your chances of getting approved. Credit Repair companies, like Credit Saint, specialize in finding and helping you remove mistakes on your report to help you improve your credit.
Frequently asked questions about the best credit cards for bad credit
Q. Can you use credit cards to improve your credit? A credit card designed specifically for those with bad credit can be a great option to help improve your credit and get you back on track financially. The fact is, you can be approved for a credit card designed for people with bad credit when others won’t, giving you a chance to prove you can use credit responsibly as well as pay your bills on time.
Q. Do credit cards for bad credit offer terms that are competitive with other cards? While these credit cards don’t offer the best rates and terms, keep in mind that you don’t have to use these kinds of credit cards forever. The whole point of applying for a credit card created for applicants with poor credit is to give yourself the chance to improve your credit score so you can switch to a card with better rates and rewards later on. With enough time and responsible credit use under your belt, you could even upgrade to a cash back or travel rewards credit card.
Q. What is bad credit? If your FICO credit score is in the poor range at 579 or lower, or even if your score is considered “fair” at 580 to 669, you might consider utilizing a “bad” credit credit card to turn your situation around. For the purpose of this guide, we took the time to compare all the best credit cards for bad credit to see how they stack up.
Q. What is a secured credit card? Credit cards for people with bad credit are often secured credit cards. With a secured credit card, you’ll need to put down a refundable cash deposit as collateral in order to secure a small line of credit. Keep in mind, however, that you’ll get your security deposit back when you close your account or upgrade your card in good standing.
Q. Should I expect to earn rewards from a credit card for people with bad credit? Some credit cards for people with bad credit offer rewards on your spending, but most don’t. While earning cash back is a major plus, keep in mind that rewards are only beneficial if you don’t wind up overspending and never incur interest charges by carrying a balance.
Q. What does it mean to be prequalified? Note that some credit cards for people with bad credit will prequalified you online without a hard inquiry on your credit report. Instead, prequalifying will leave you with just a “soft” inquiry on your credit report, which will not impact your credit score in the same way a hard inquiry can.
How We Found the Best Credit Cards for Bad Credit
There are all kinds of credit cards for bad credit available to consumers today, but they’re not all created equal. Some cards have higher than average interest rates and many charge annual fees on top of aBest Bad Credit Credit Cardspplication fees. Here are all the factors we considered when coming up with our list of top cards for bad credit this year:
Monthly Credit Reporting
The most important factor we considered for cards in this category was monthly credit reporting. To make a credit card for bad credit work in your favor, all your monthly payments and balance details need to be reported to the three credit bureaus each month. When this happens, you have the best chance at improving your score over time when used responsibly.
While rewards may not be the most important factor you look for in a credit card for bad credit, we still gave precedence to cards in this category that offer cash back. After all, earning 1% or more back on all your purchases can help you rack up rewards in a hurry. Plus, cash back can help make up for annual fees and any security deposits you had to put down. Keep in mind, however, that rewards are only useful if you pay your credit card bill in full each month and never carry a balance.
While credit cards for bad credit are more likely to charge more fees than credit cards geared towards people with good or great credit, we still looked for cards that kept their fees at a minimum. We also considered the interest rates credit cards charge on balances carried over, keeping in mind that it may not always be possible to pay your balance in full each month.
Summary: Best Credit Cards for Bad Credit of 2022Best Credit Cards for Bad Credit of 2022 Best For Total Visa Credit Card Best Unsecured Credit Card for Bad Credit Discover it Secured Best Secured Card for Rewards Capital One QuicksilverOne Cash Rewards Credit Card Best for Rewards Overall Capital One Secured Mastercard Best for Those with No Credit Petal 1 Visa Credit Card Best Credit Card with a High Limit Credit One Bank Platinum Visa Best for Getting Prequalified Online
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Credit Card Piggybacking Can Help You Build Your Credit, But You Need To Be Careful
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Credit card piggybacking is another term for becoming an authorized user on someone’s credit account, with the goal of building credit. But there are a few different ways to piggyback off someone else’s credit, and some are safer than others.
Most commonly when you are “piggybacking” to build credit, you’ll become an authorized user on a trusted friend or family member’s card account. Choose someone with responsible credit habits, and you can benefit from their good credit as you build your credit report.
But if you don’t have a friend or loved one who will trust you to become an authorized user, you can also pay for the service. It’s much more risky, but some credit repair companies will connect you with a stranger’s card for the same credit-building purpose, for a fee.
While experts don’t recommend you pay a credit repair company to build credit, you might gain from becoming an authorized user on someone’s card if you do it carefully. Here’s what to keep in mind. What Is Piggybacking?
Piggybacking means becoming an authorized user on someone else’s card to help establish or raise your credit score.
“If you don’t have any credit, or have very little, then this will give you additional content for your credit report,” says Summer Red, AFC®, education senior manager at Association for Financial Counseling and Planning Education.
When you’re an authorized user, you’ll have access to a credit card linked to the primary user’s account, and you can charge purchases and use the card like you would any other credit card account. But while you may have a payment agreement with the primary account holder, they’re the only one responsible for making monthly payments. “Assuming that you’re an authorized user to somebody with a positive credit history and payments, that would be a plus for your credit score,” says Red.
Another way to become an authorized user is by paying a credit repair company to connect you with a stranger and benefit from their positive payment history as an authorized user, though this can be ineffective, unsafe, and expensive. In fact, credit repair company BoostMyScore settled with the Federal Trade Commission in 2020 after the agency accused the company of misleading customers with promises to “drastically and immediately” improve their credit and even qualify for mortgages, while charging thousands of dollars.
For most people, building credit through piggybacking is much safer and affordable if you do so with the help of friends and family, not credit repair companies.How Does Piggybacking Work?
If you’re looking to build your credit via a family member or friend, you want to make sure their credit is in good standing and they already use their card responsibly. Then you can discuss the terms such as whether you’ll actually use the card or just attach your name to it for the credit-building. You’ll also want to make sure the card issuer reports authorized user information to the three credit bureaus — if the payment history isn’t reported, you won’t see any improvement to your credit.
The card holder gives their issuer any relevant information about you, and then you start building a credit history from the primary card holder’s usage on that card, without any legal requirement to pay bills.
“Becoming an authorized user is one of the traditional ways to establish credit for the first time for a lot of people, particularly young adults,” says Rod Griffin, senior director of public education and advocacy for Experian.
The card appears on your credit report and shows you as an authorized user. If the primary account holder falls behind on payments and the account is negative, your credit can consequently be negatively affected as an authorized user. In this case, Experian will remove the account from your history, says Griffin.
The most impactful way being an authorized user helps your credit is through positive payment history, but it can affect other factors that influence your score too. Specifics vary, but you should see an improvement in your credit utilization ratio, meaning how much of your credit allowance you’re using.
Talk to the primary card holder so you know how much credit they use monthly. “Your goal is to try to keep your credit utilization below 30%, and ideally below 10%,” says Red.What Are the Risks of Piggybacking Off Family or Friends?
Family and friends are a better choice than strangers if you’re looking to hop onto someone else’s credit history, but keep in mind that relationships could suffer if things don’t go well.
“It’s that old axiom, ‘Be careful about doing business with friends and family, because things can happen,’” says Griffin. “Wouldn’t be of much benefit if they aren’t paying that bill on time, or have large amounts of debt on that account or a high utilization rate,” says Griffin.
In this way, it can get a bit messy, says Red. “It’s one of the reasons why I would never want to recommend anybody give somebody a credit card that they are not required to pay. It’s like co-signing but worse.”Credit Repair Companies
Paying a credit repair company to connect you with someone who lets you attach yourself to their credit history in exchange for a fee is a risk experts don’t recommend.
“There’s some shady companies out there who are hooking up complete strangers, which I find a terrible idea on multiple levels,” says Red. “There are companies who will just say, ‘If you give us all your personal information, we will put you on a complete stranger’s card, and this complete stranger will help build your credit.’”
Not only are you opening yourself up to possible identity theft, but the practice also carries a high cost. “You could probably use the hundreds of dollars you’re spending for this so-called service to pay down the debt you owe,” says Griffin.
Plus being an authorized user still wouldn’t really balance you if you have huge amounts of debt or delinquencies, says Griffin. “It’s a minimal impact in a positive direction, if any at all.”Pro Tip
Before you try credit card piggybacking, you can explore other ways to build your credit report.Should You Try Credit Piggybacking?
Becoming an authorized user with a trusted friend or family member can be a solid way to build your own credit. Over time, you’ll build your score and become eligible for your own card accounts, then use those to maintain responsible credit habits.
“A person would build credit with other accounts and have their own history established by the time that authorized user account is removed,” says Griffin. “That new history would offset and kind of overtake that authorized user account,” he says.
It can take about six months to get your first credit score, so you might have at least six months to a year of staying on the authorized user account.
You can also build your credit via new tools designed to help you get started. “Once a person has a credit history, it’s a foot in the door to help break cycles of predatory lending,” says Griffin.
For example, Experian Boost and TransUnion’s eCredable Lift help you add up to two years of payment history for your utilities and other regular bills, and FICO’s UltraFICO Score takes banking history and more alternative information into account, all of which can increase your credit score.
Note that different credit bureaus calculate your score differently, especially when you use these programs. Your lender might use information from a different credit bureau that has different scoring than the ones these methods affect.
You could also become a primary card holder, which counts for more on your credit score, with a secured credit card. “You can get a secured credit card where you basically give a security deposit to a bank or credit card and they put it into a bank account,” says Red.
The issuer uses the deposit as collateral in case you don’t pay your balance, and you’ll typically get it back when you close your account in good standing or upgrade to an unsecured credit card once your score improves.
The important thing is to start building your credit before you’ll need it, says Red.
“One of the big challenges I encounter is people who realize they need credit before they start building it. Since you can’t get a time machine and go back and build your credit, you have to start building before you really need it.”
3 Ways To Help ‘Invisible Credit Score’ Buyers
45M adults have thin or nonexistent credit scores. For many it’s because they don’t buy things using credit. To secure a mortgage, they should create a paper trail.
NEW YORK – Not having a credit history, often referred to as being “credit invisible,” can make it harder to buy a home or car, finance an education, and secure banking products and other services.
Today, over 45 million adults in America have no credit score, according to Freddie Mac. If that describes you, don’t panic. Freddie Mac is offering three strategies to take you from invisible to visible, and help you start building a credit history.
1. Report rent payments. Millions of Americans’ largest monthly payment is rent. However, less than 10% of renters currently see their on-time rental payments reflected in their credit scores, putting them at a significant disadvantage to homeowners.
On-time rent payments can be used to build credit with all three major credit bureaus. If you are paying your rent on time, ask if your landlord is reporting your payments. If not, find out if they can. Although you can report rent payments yourself by paying through a rent reporting service, many such services charge fees, so it’s best if your landlord reports on-time payments on your behalf.
Unfortunately, the most common way rents are reported to credit bureaus today is when there’s a missed payment that’s gone to a collection agency. A new initiative by Freddie Mac is flipping the script by incentivizing property owners to report their tenants’ on-time rental payments.
Freddie Mac is providing closing cost credits on multifamily loans for owners of rental properties who agree to report payments through Esusu, a data processing and storage platform whose technology securely delivers rental payment data from property management software to credit bureaus. The program automatically unenrolls renters if they miss a payment, and it allows renters to monitor their payment data and credit score through its website and mobile app.
Finally, the Esusu platform ensures compliance with industry standards, eliminating an administrative burden that represents the single largest hurdle to reporting rental data.
“Making rent count will help solve one of the most persistent challenges facing renters who want to build credit,” says Lauren Garren, vice president and chief business officer, Multifamily, Freddie Mac. “This effort helps level the playing field for renters who prioritize making their rental payments on time.”
2. Consider secured credit cards. A secured credit card, designed for people with limited or damaged credit, requires you to pay a security deposit. The bank extends a credit line matching the amount of the security deposit, and it holds onto your deposit as collateral for as long as you have the card. For this reason, secured credit cards don’t charge the same high fees as unsecured credit cards.
Many secured cards include a graduation feature, allowing you to move to a traditional credit card after establishing a pattern of consistent payments. Some card issuers may automatically review your account to see if you can upgrade, but you may have to ask your card issuer whether you’re eligible. By transitioning to an unsecured card in this way, you’ll get your deposit back without negatively affecting your credit by closing an account.
3. Consider store credit cards. From retail chains to gas stations, many stores offer credit cards that tend to be easier to qualify for and usually have low credit limits, making them a good option if you’re credit invisible. However, they often have high interest rates. By making periodic purchases with your store credit card and paying them off immediately, you can build a credit record and get used to managing a credit card.
For additional credit-building strategies, use CreditSmart, Freddie Mac’s suite of financial capability resources.
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