Table Of Contents
I have covered the best tradelines for bad credit before, now its time to cover the best credit cards for bad credit. It’s so unfortunate that once you are deemed as “not credit worthy” by the banks that you really don’t have that many options and it becomes a race to either improve your score as fast as possible or simply give up and forget about credit. You see both mindsets all around you, those that often say things like “I don’t want credit”, “debt is bad”, “cash is king” have horror stories about their credit and probably have average or bad credit scores right now and then those who tend to have a positive look at credit tend to have good/great credit scores.
Credit scores, like many other things in life boil down to education and this isn’t something that is taught in school, just like other important topics like managing a check book and business basics. When it comes to credit card options for those with bad credit, up until this point you have very few ok -good options and a whole lot of predatory banks that offer really bad credit cards with high APRs, yearly fees, low credit limits and impossible credit terms.
Well, Fintech has helped completely disrupt this area over the last year or so with a ton of fresh new solutions that don’t just look at credit score but your income and set terms that help you succeed. Things like direct deposit and banking history (beyond your Chex system) is becoming insanely important for those with bad/fair credit because many of these new Fintech solutions are using a service called Plaid which allows them to look at your banking history.
If your bank account has regular over draft fees then you may want to setup a new account (establishing at a credit union and starting to build that relationship would be a great idea if this is you) and getting your direct deposit moved over to the new account. Let that build up over a month or two and then you would be in position. If you want to look at more data points like what credit score each bank is looking for then check out the Master Credit Card Lender List.
What is a Credit Builder Account?
There is a lot of cards to cover here and a lot of them you will notice are called “credit builder” accounts where you essentially get zero access to the money you pay in, it merely acts as a savings account/cd that reports to credit bureaus as a line of credit and you don’t get any credit card or virtual credit card. We highlighted Self inc before which is a savings account/cd, Upgrade has a loan builder/credit card as well that we will only softly cover here, expect a full breakdown soon and the rest have various other banking products they offer.
I created the table below so you could quickly look through all the options and compare for yourself based on variables I figured would be the most important. Scroll down below the table to get additional notes I added on each Institution in the table.
Also keep an eye on this page, just all pages on this site we will continue to refine the content and display for best view results for you.
What is Considered a Bad Credit Score?
There are two major credit scoring models that currently exist, one being the VantageScore model (mostly used for store credit cards and CLIs) and then the FICO scoring model which is by far the most popular being used by most major banks to score worthiness on credit cards, personal loans, mortgages and car loans.
According to the FICO scoring model a bad credit score is the following credit score ranges…
Fair credit: 580-669
Poor credit: 300-579
What Makes up Your Credit Score?
Here are the five parts that make up your FICO credit score and how they calculate them…
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- New credit: 10%
- Credit diversity: 10%
Estimated APR by FICO Score Range
|Class||Credit Score||% of people here||Estimated APR|
20 Credit Cards For Bad Credit Or No Credit (non-store cards)
I just want to note that I only cover a few generic secured credit cards, I will do a top list for secured credit cards in a separate post, didn’t think this was the best list for that when there are so many great hybrids to cover. Also I have kept off the store credit cards, that will get its own post.
|Cashback||Credit Card||Deposit/Credit Limit||AutoPay?||Report To All 3?|
|Deserve EDU |
|Self Inc Visa||No||24.99%||0||No||Yes||$100 Min|
|Upgrade||Yes||8.99% – 29.99%||0||1.5%||Yes*||$500-$25,000||No||Yes|
|Jasper||Yes||15.49% – 24.99%||0||1%-6%||Yes*||up to $15,000||Yes||Yes|
|VaroMoney||No||0%||0||No||Yes*||up to $10,000||Yes||Yes|
|Grain||No||12%-15.99||0||No||No*||Up to $1,000||Yes||Yes|
*If the Institution doesn’t pull Hard Inquiry assume they cater to those with low to no credit, some of them will even allow out of US residents that are working on becoming US citizens.
*CapitalOne: This is by far the most widely known credit card company for those with bad credit, so much so that they now offer 3 different credit cards for bad credit besides their secured card. I have seen scores down in the 560s getting accepted to the Platinum card. You can pre-qual for the Quicksilver Rewards, SavorOne Rewards, Venture Rewards, Platinum Mastercard®, QuicksilverOne Rewards, and Secured Mastercard®. Keep in mind that if you accept offer on the pre-qual page they will do a hard inquiry which will hit all 3 bureaus. This is the only card I know of that literally pulls all 3 reports, which is pretty awful.
APRs are usually quite high 22.99% with lower scores and limits can be as low as $200. All the credit builder cards have a program built in where after you make 5 on time payments you get a CLI, which will take most cards up to $500-$600. The other thing to keep in mind is it seems CapOne cards are easy to get sandboxed- that has been my personal experience anyway, after the initial bump ups on the new account, CLIs have been non-existent now across 4 cards. They also have yearly fees ranging from $39 for QS1 to $95 for Venture Rewards.
Upside is that many of these cards do have a 1%-1.5% cashback
OpenSky: This is a very well known secured credit card, nothing fancy no earnings but also no credit check and APR is 17.39%. There is an annual fee of $35, foreign transaction fee of 3% and credit limit is based on how much you deposit which in this case you don’t even need a checking account to open up an Open Sky secured credit card, they accept a check, money order or Western Union. This card will never graduate into unsecured.
DiscoverIT Secured: This is a secured credit card, which you can see if you pre-qualify for the regular DiscoverIT card here, this has a min deposit of $200 (unsure of any cap) and you can earn rewards up to 2%. Cash back rewards – Discover: 2% at gas stations and restaurants on up to $1,000 in combined purchases each quarter. 1% on all other purchases. This card does graduate as well, they start to look around 8 months of you using the card to see if you qualify for an unsecured credit card. They hard pull Experian and I have two data points, both a 640 score requirement and others who had 559 in 2020.
*Petal: Petal currently offers 2 different credit cards the Petal 1 and Petal 2, both with different APRs, cashback and credit limits. They are backed by Webbank so keep that in mind if you have already been turned down by Webbank (they do Paypal loan builder programs and many others) you probably will not be pre-approved for this one. They offer a free pre-qualification and then if you like the offer you can accept it. They look at both your credit history (if you have it) and what they call your Cash Score, so you will need to link up one of your bank accounts to show. Keep in mind if you have previously applied or already have a petal card you can’t apply again, and if you have a BK on your credit file in the last 48 months you cannot either.
Petal 1: 2%-10% cash back at select merchants, $500-$5,000 limits, 19.99-29.49% APRs, no annual fees and path to a credit limit increase
Petal 2: 1%-1.5% cash back and more offers, $500-$10,000 limits, 12.99%-26.99% APRs, no annual fees.
Deserve: This is backed by Celtic bank, and they offer both an EDU card and a Pro card, you can pre-qualify for the EDU card only. There is a hard inquiry on your credit, I am not sure who they pull through. They currently only report to Transunion and Experian, not to Equifax. They also may ask you to link up your bank account or provide bank statements in their secure portal before approving but after hard inquiry. They do accept international students who don’t have SSN or green card yet and just require Passport and I-20 or similar.
Lastly they offer a Digital First Card which is a digital card you can apply for in the app and its meant to be used with your Apple Pay. I am not sure of the terms with this card.
Avant Bank: This is backed by Webbank, 0 hidden fee, yearly fee could be up to $59 and APR is pretty high at 23.99%-25.99% and limits are $300-$1000, this card is geared at those looking to build credit.
*Self Inc: You have to start with a loan builder program of theirs and after 3 months you will be offered to apply for the Self Inc secured credit card, min of $100 deposit, but you can select as much of your current deposit in the loan builder account and apply it towards the credit card. There is a one time fee of $5 (think it was $9 when I got the card) and the interest rate on the loan builder is 14.14% which is similar to the Credit Strong accounts just lower terms (pay off in 12-24 months) and lower overall reported loans. This does report as an installment loan, then once you get the secured credit card it will report as its own credit card on your profile as well so you will have 2 credit products reporting on your profile.
*Tomo: This is a credit builder with a spin as its actually a credit card that is usable, just not that much. Its based on your current checking account management so they will require you to link up one of your bank accounts (use one with low-no NSF fees is my suggestion) for them to look at and they base your credit limit on that. They do this with a 3rd party service called Plaid. Keep in mind they can CLI you up to $10,000 (on time payments and linking multiple bank accounts). You cannot carry a balance so if you carry a balance beyond the weekly auto-pay they will freeze the card till its paid off. Tomo makes money off taking a % of the fee from merchants on every purchase you make.
You may qualify without a SSN and without being a US citizen.
*Grow Credit: This is a simple credit builder that allows you to build credit through monthly subscriptions you are probably already paying for. You link up your bank account and they offer 3 different plans, you are simply moving over your auto-payment from your bank account to your Grow credit account for each subscription that qualifies.
Grow Credit offers three plans.
- Our FREE plan gives you a monthly spending limit of $17 per month
- Our first premium plan is $4.99 (up to $50/monthly spending limit)
- Our top-tier premium plan is $9.99 (up to $150/monthly spending limit).
*Upgrade: I don’t consider this to be a credit builder account, because you are getting an actual credit card that has a full balance you can access right away, even though this does report as an installment loan on your credit report. Keep in mind that after Upgrade gives you your rate and you provide all documentation (similar to personal loan or paypal loan builder) they will then run a hard inquiry on your credit. You cannot use this card at an ATM but the full balance is available to use immediately.
Earn unlimited 1.5% cash back on all purchases when you pay them back. Your cash back will typically be applied to your balance after your next scheduled monthly payment. Cash back rewards applied to your balance will not satisfy or reduce your regular monthly payments. Payments on non-purchase transactions, such as sending funds electronically to your bank account, are not eligible to earn rewards. Certain limitations apply.
*Jasper: Like many others on the list you will notice that they also require verification of your bank account through a 3rd party service called Plaid. No foreign transaction fees. There big selling point is the up to 6% rewards you can earn from referring others to get a Jasper card. So rewards are 1-6%, you get 1% on qualified purchases and for every person you refer who becomes a Jasper card holder, you will earn an additional 1% cash back for one year up to 6%. Cash back does not expire. Card issued by Webbank.
*Chime: This is an actual secured credit card, so the credit limit is based on how much you deposit onto the card from your Chime Spending Account. The benefit here is obviously no fees of any kind and no credit checks you can get started right away as long as you have at least $200 in qualifying direct deposits over the last 365 days and they don’t report a credit limit so you don’t have to worry about it showing a high utilization rate on the card if you are using the full amount.
*VaroMoney: This is an online bank account that now offers a credit builder credit card. The credit limit is based on your past history of direct deposits in your Varo Money account (they are looking for min of 2 direct deposits of at least $1k or more in last 90 days) and no negatives on your bank account for last 90 days. Your credit limit can’t exceed your Varo Bank account balance, up to $2,500 for purchases and $1,000 cash advances per day, totaling no more than $10,000 total per billing cycle.
*Go2Bank: This is another online bank account that offers a credit builder secured credit card which is based on eligible direct deposits, limits can start as low as $100. You must have ASAP Direct Deposit setup on your GO2bank account, which means you need a Go2bank account setup first as well. Must make an initial refundable security deposit of $100 to set your credit limit.
The GO2bank Secured Credit Card is available only to existing GO2bank accountholders with direct deposits totaling at least $100 in the past 30 days, who are at least 18 years of age. Eligibility criteria applies. No fee to apply. This is a Greendot company, those prepaid cards they sell at gas stations and CVS.
*Seedfi: This fintech offers 3 different options from a loan to savings account to the credit builder account which is a savings account that is capped at $500, and has a fee upwards of $1 per month. Keep in mind that once you open this account up and make the first payment, you can’t cancel it so you are committed till the end of the loan when you get your money back. The upside is they are putting this money aside in a SeedFi savings account. This is reported as an installment loan on your credit report.
If your loan payments are due monthly, the plan fee is $1 per payment, for as long as your loan is open.
If your loan payments are due twice a month, the plan fee is $0.50 per payment, for as long as your loan is open.
If your loan payments are due every other week, the plan fee is $0.46 per payment, for as long as your loan is open.
In all cases, the plan fee is paid first. In other words, payments are first applied to the plan fee, as specified in your loan agreement.
*Sable Card: They offer an online bank account with debit card like a few others above and they offer a credit building secured credit card with rewards. I am also hearing that even though this doesn’t graduate that they are working on that product offering and intend to offer it so getting a secured card now would improve your chances (due to building a relationship with them) of getting the unsecured when they offer it.
This card is also kind of rare as you get rewards! Get 2% Cashback on all eligible credit card purchases at Amazon, Netflix, Hulu, Uber, Uber Eats, Spotify, and Whole Foods + Get 1% Cashback on every other eligible credit card purchase. You select the amount to deposit into your secured credit card and Sable will take it out of your account and add it into a Sable Secured Deposit Account to act as a security deposit. Sable will begin reporting your credit history the month after you start using your card.
*OneFinance: They offer an online bank account with overdraft protection like several others above with a unique spin. First, they offer a way to organize goals and expenses through a feature called Pockets which you can also share with other OneFinance users if you like. Next, they have an auto-save program where you earn 3% APR on round ups, you can setup auto-save on your paycheck up to $1,000/month and earn 3% on that. Direct deposit customers can finance a purchase over time or cover bills between paychecks with a credit line at 1% per month. Lastly they have the credit builder pocket which makes automatic on-time payments every month. No new card or new account required to start using.
Adding money to your Credit Builder Pocket does not impact your used balance but does impact your available balance. As an example, if you have $100 available and $50 used, adding an additional $200 will update your available balance to $300 and keep your used balance at $50 until it is automatically repaid on the 25th or a manual payment is made.
Transfer only what you want to use, as the funds cannot be transfered back out and can only be spent by assigning your One debit card to the Credit Builder Pocket or using a created Pocket Virtual card, nor can Credit Builder Pockets be shared.
Also, utilization is not reported so you can use up to your limit (aka the amount you deposited) with no impact to your credit, and since this product is in beta, it may not report to all 3 bureaus for right now.
*Grain: This one is pretty interesting as they have you link up your primary bank account and then based on your regular spending and cash flow they offer you revolving lines of credit. This product is almost completely app based unlike others above that do in fact offer an app and a web login/site as well, Grain is 99% app. This app is currently only available on iOS as well, there is a waiting list for Android currently. When Grain gives you one of these credit lines, they do so by depositing into your bank account and each time they do this there is a 1% finance charge, so you are only charged on the credit you use.
After a grace period of 21 days, interest accrues daily at 12% APR (Annual Percentage Rate) with Auto-Pay on, and 15.99% APR with Auto-Pay off. Late payments incur late fees (5% of minimum payment due or $5, whichever is less).
They do require a security deposit of some amount based on the total they extend you in the credit line, their docs don’t seem to mention how much.
All customers are automatically enrolled in Auto-Pay. Our Auto-Pay works a little different than most! We analyze your cash flow and trigger your Minimum Payment at the best time for you any time during your billing cycle, before your due date. It is designed to kick in only if the available balance in your account is more than the amount to be deducted.
In regards to a CLI
Around 6 months from when you sign up for Grain, the system can re-evaluate your credit offer. Several factors can qualify you for an increase including on-time consecutive payments with Grain, low credit utilization with Grain, as well as ensuring your linked checking account is in good health by avoiding overdrafts and displaying income.
Credit Strong: This is your typical credit builder account where you pick the amount of loan and pay a monthly payment, all funds go into a savings account and you get 0 access to the funds until you finish the terms or cancel and close the account. This reports as an installment loan on your credit profile which again is great for loan diversity. What I find really annoying is no where and I mean no where on their site do they mention interest rates, at first I thought this was just because its amortized schedule and they didn’t want to include it for some reason by upon further investigation I see their interest rates are kind of crazy for some of the offers.
Let’s take the $10,000- 10 year loan for example, in your first year you are paying $560 in interest out of $1320 in total payments that year, that is about 42% interest that first year. Similar to a mortgage it does get better after the first 3-5 years, overall you will pay back $13,200 or $3,200 in interest over the course of 10 years on money you cannot touch, this is roughly 5.7% APR.
SoFi: This is the latest offering from a whole suite of banking and investing offers from SoFi, this new credit card allows unlimited 2% cash back (so no cap) on all eligible purchases and you can redeem it straight into crypto with your SoFi active invest account. If you make 12 on time minimum payments they will drop your APR by 1%. This credit card is issued by The Bank of Missouri or TBOM. No foreign transaction fees. They use FICO for credit card applications. I would say to get into their ecosystem first and then see what kind of offers you are given vs straight up applying for the credit card.
Worst Credit Cards For Bad Credit
Now that we covered the huge list of great credit cards for those with no credit or looking to rebuild their credit, lets now cover the worst cards that are stuffed with fees, hidden terms and for the most part are just bad deals.
Many of you will probably know these cards very well if you’re rebuilding credit because you will see them everytime you login to Experian or CreditKarma under the “my recommendations” sections.
I bet you didn’t know that Indigo, Milestone Gold and the Destiny Mastercard are all backed by Genesis FS Card Services inc and are just about all the same offer (all start you off at $300 credit limit, similar APRs and terms). Imagine someone not knowing that and wasting 3 inquiries to find out the hard way.
|Yes||17.99%-23.99%||$75 year 1|
|Mission Lane||Yes||29.99%||$59||No||3% FTF|
|Indigo||Yes||24.90%||$75 year 1|
|Milestone Gold||Yes||24.99%||$75 year 1|
|Destiny Mastercard||Yes||24.9%||$75 year 1|
*CreditOne: Earn 1% cash back rewards on eligible gas, grocery purchases and mobile phone, internet, cable and satellite TV services, terms apply. They have all kinds of fees and terms baked into all of their cards to please be sure you understand it before you get the card. I have heard they take the annual fee out as a monthly $8.75 per month after year one, make sure you know that otherwise you can get hit with a late fee and derog on your credit. They also have a $10 fee just to pay your bill with a debit card. Backed by Credit One Bank.
I am basing this off the Platinum Visa which is geared at those rebuilding credit, they do have quite a few credit cards and co-branded cards, the yearly fees and APRs would all be similar if you are in fair-average credit score range.
Mission Lane: This is actually the cleanest offer on the list in terms of fees etc, the issue here is their website doesn’t give you very much info nor does Credit Karma or Wallethub etc so there is a lot you don’t know until you apply which on the site the only way they allow you to apply is by responding to a mail offer, so you will need to go through one of the credit tracking sites I mentioned above to get to the application page. Make 6 on time payments and get a higher credit limit. You can’t have BKs on your credit file otherwise you will not be approved.
Indigo: 24.9% APR, $0 CAF during your first year, then $5 or 5% of the amount of each transaction not exeeding $100. $75 annual fee during first year then $99 per year after that billed monthly, up to $40 late payment fee, up to $40 over the limit fee, up to $40 returned payment fee. This card starts off at $300 limit. Backed by Genesis FS Card Services inc. So literally same card as Milestone Gold.
Milestone Gold: Issues by The Bank of Missouri, they offer a pre-qualification process or you can straight apply through the site. They will pull a hard inquiry on your report after pre-qual if you decide to move forward and accept the offer. It appears they are related or have some sort of cross-promotions with First Progress as that can sometimes be suggested on the pre-qual page if you don’t qualify for their card. They have 29.9% cash advance fee, up to $40 Late fee, up to $40 over the limit fee and up to $40 returned payment fee. These cards start off at $300 limit. Backed by Genesis FS Card Services inc.
First Progress: They offer several secured credit card options and the names should be a dead giveaway as to their actual quality. There is the First Progress Platinum Elite Mastercard, the First Progress Platinum Prestige Mastercard and the First Progress Platinum Select Mastercard, each one has got around a 2 star rating on Creditkarma. There is a $200 refundable deposit as they are all secured credit cards, the APR seems to be around 9.99% for each card, no hard inquiry to apply and 9.99%- 19.99% APR and $29-$49 annual fee.
Destiny Mastercard: 24.9% APR, $0 CAF during your first year, then $5 or 5% of the amount of each transaction not exeeding $100. $75 annual fee during first year then $99 per year after that billed monthly, up to $40 late payment fee, up to $40 over the limit fee, up to $40 returned payment fee. This card starts off at $300 limit. Backed by Genesis FS Card Services inc. So literally same card as Milestone Gold.
Frequently Asked Questions
What Is Bad Credit
Bad credit refers to individuals who have a “fair” ranking or worse on their FICO/Vantage credit scores, they have derogatory marks like a bankruptcy, late payments, write offs, repositions etc. The credit rating systems see these individuals as high risk and are less likely to extend fresh credit to them.
How do I improve my credit?
Pay on time, keep utilization below 30% (ideally 10% or less), clean up any derogatory marks on your profile. Follow the guides on Its Dumb Money.
What is a credit builder?
This is an account that typically is built and designed to help improve your credit. Sometimes this is a secured credit card, other times its a hybrid of a savings account where you make monthly payments towards the overall loan and its reported as an installment loan.
What is a secured credit card?
This is a credit card where the credit limit is based on how much you deposit on the card. Usually these cards don’t have rewards and still have an APR you have to pay. If you are rebuilding your credit this is a great place to start, focus on either no hard inquiry cards or cards that graduate into unsecured.