Credit cards for people with bad credit

What is a “bad credit score?”

A "bad credit score" typically means a score of 580 or below on the FICO scale, making it challenging to get loans or credit cards. This low score often results from missed payments, high credit card balances, or other financial issues and can lead to fewer approvals and higher interest rates. However, some credit cards are better suited for those with bad credit. Secured credit cards are especially useful for rebuilding credit because they are easier to obtain and may come with benefits like attractive rewards and/or no annual fees.

What’s a secured credit card?

A secured credit card is a type of credit card that requires a refundable cash security deposit, which directly sets the card's credit limit. Unlike traditional credit cards, where the limit depends on creditworthiness and income, a secured card's credit limit is usually the same amount as the cash security deposit. For instance, a $100 deposit will give you a $100 credit limit.

Why is a secured card a good choice for people with bad credit?

Secured credit cards are designed for people looking to establish or rebuild their credit. This often means they don't require a credit check or a specific credit score for approval. So, if you've had credit struggles in the past, don't worry—you can still pay for expenses that require a credit card, like renting a car or booking a hotel. Many secured cards even offer upgrade paths to unsecured cards, making them a solid choice for individuals who may not qualify for traditional credit.

How to apply for a secured card

If a secured credit card seems like a good fit for you, here’s how you can apply:

Step 1: Determine your budget

Secured credit cards require an upfront cash deposit, so determining how much you can afford is crucial. If you need help deciding how much to put down, consider starting with a smaller amount, like $100. As your credit improves, you can always increase your deposit to raise your credit limit.

Step 2: Research different cards

Look into various secured credit cards to find one that suits your needs. Compare deposit requirements, fees, interest rates (APRs), and rewards or benefits. If you have a lower score, try checking out cards that don't require credit checks.

Step 3: Choose a secured card

If you're deciding between a few cards, select the one that best fits your needs and personal budget. We recommend choosing a card that reports to all three major credit bureaus (Equifax, Experian, and TransUnion) to ensure your credit history is accurate and up-to-date. That way, you'll never have to wonder what lenders will see when you start applying for different types of credit down the line.

If you’d like to apply for a secured credit card with opensky, all three of our options feature an 89% approval rate¹. Plus, there’s no credit check required.

Step 4: Submit your credit application

You can apply for a secured credit card online through the card issuer's website. When filling out your application, you’ll likely need to have this information on hand:

• Full legal name
• Social security number (SSN) or individual taxpayer identification number (ITIN)
• Street address
• Phone number
• Employment status
• Annual income before taxes
• Monthly housing expense (rent or mortgage)

Step 5: Fund your card

Once you've been approved for a secured card, fund it with your cash security deposit. Keep in mind that you may need to pay additional fees, such as application, processing, or annual fees, to open your account. The good news is that you can pay these with a debit card, so all you have to do is ensure you have enough funds to cover the initial amount.

How to build credit with your secured credit card

Using your secured card responsibly can boost your credit score and help you achieve better credit options and rates for future loans, such as car or home financing. Here are the actions you can take to set yourself up for success.

1. Make small purchases regularly

Using your secured card regularly and paying off the balance on time is critical to building your credit. To establish good habits, try starting with small purchases, such as paying for a monthly streaming service subscription.

2. Keep your credit utilization low

Your credit utilization ratio is the percentage of available credit you currently use. Aim to use 30% of your available credit limit at most. This shows lenders that you can stay on top of your spending, which can help raise your credit score.

3. Pay on time

Always pay your credit card bill on or before the due date to avoid late fees and negative marks on your credit report.

4. Try to pay your balance in full

Carrying a balance on your card can increase your credit utilization ratio, which might lower your credit score. If you can't pay your bill in full each month, try to make the minimum monthly payment and pay down the balance as quickly as possible.

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¹ Based on the last 6 months, opensky Secured Visa® Credit Card average approval rate is 89.01%. Individual approval results may vary.