Best Secured Credit Card for Bad Credit | Payday Champion
One of these best secured credit card for people with bad credit may be the answer to your problem. It doesn’t matter if you have bad credit history or past mistakes. Finding the right card is the key. Here are our top picks for credit cards for people with bad credit.
Payday Champion’s top credit cards for people with bad credit:
- Low security deposit and building credit: Explore it(r) Secured Card
- Cash back: Discover it(r) Student Cash Back
- Low Security Deposit: Capital One Secured Credit Card
- Cashback: Petal(r), 2 “Cash back, No Fees” Visa(r), Credit Card
- Petal(r), 1 “No Annual Fee Visa(r) Credit Card
- Secured Visa(r), Credit Card No Credit Check
- Secured credit card with reward: Bank of America (r) Customized Cash Rewards Secured Card
- Secured credit limit high: U.S. Bank Secured Visa(r), Card
- Low ongoing APR: First Progress Platinum Prestige Secured Card
Bad credit can have a devastating and expensive impact on your life. Your credit can be used by landlords to decide whether they will rent to you. It can also be used by employers to make hiring decisions.
Your credit score can be used to determine the cost of your car insurance in most states. Bad credit scores can lead to higher interest rates for loans and more expensive car insurance.
Anyone can improve their credit score. However, to do this, you will need to first understand the causes of bad credit and how to improve your credit score.
What’s considered a poor credit score?
Bad credit scores can range from 300 to 579 with the FICO system to 300 to 600 with the VantageScore. FICO is the most commonly used scoring system. VantageScore comes in second. It’s important to know that credit scores can be derived from more than one system. Your credit score is a range of 300-850.
Bad credit scores will limit your credit card and loan options. Bad credit applicants will likely not be eligible for loans and credit cards.
Fair credit is available after bad credit. It’s a FICO (r) Score between 580-669 and a VantageScore of 601-660. Fair credit can be approved for more financial products, but you will still have a smaller selection than those with excellent or good credit.
What is the impact of bad credit?
Bad credit can lead to a lot of rejections, especially if you have to apply for credit-related applications. Examples include:
- Credit cards
- Auto loans
- Rental applications for homes
Even if you are approved, terms for poor credit will be much worse than those who have excellent or good credit. A credit card may be granted, but there won’t be many benefits or rewards. If you pay a higher security deposit, a landlord may rent your home to you.
It’s best to give an example when it comes to loans. This is how much a $25,000 60-month auto loan would cost based on national APR averages. Creditworthiness will vary.
A good credit score will save you $155 per month and $9,256 over the life of your loan.
These are not the only adverse effects of poor credit. These are just a few of the additional problems you might face.
- Existing customers with poor credit may be required to pay security deposits.
- Car insurance companies in most states can charge higher premiums for drivers with lower credit scores.
- Before offering you a job, employers can do a credit check.
Can you erase a bad credit history?
A bad credit history can’t be erased overnight. However, there are a few options available to address specific concerns.
You can dispute credit reports that contain inaccurate information if it harms your credit. To file an official dispute, you can contact each of the credit bureaus. You can download a sample letter from the Federal Trade Commission. You can send your letter via mail. This will allow you to track it and keep a record.
If there is a late payment on your credit report, and you are a loyal customer of the creditor, it might be worth reaching out to them to request a goodwill adjustment.
You may be able to have the late payment removed, which could improve your credit score. Although you can call them to make a request, it is better to send a letter. You can explain why your payment was late in a note.
If you want to have a lousy mark removed, you can negotiate with your creditor. If you have any outstanding debts with your creditor, you might ask them if they will remove the poor marks if the balance is paid immediately.
These are just a few of the ways you can erase bad credit. If none of these options are effective, you will need to improve your credit score by making wise financial decisions.
What should you look for in a credit line for people with bad credit
You should first check the fees of a credit card for poor credit. However, you should also examine its APR, minimum and maximum security deposit requirements, and what credit limit you can expect. Below is a description of each item.
While most credit cards charge fees, you do not want to pay unavoidable charges. You don’t need to be scared of costs for balance transfers or cash advances.
Annual fees, maintenance fees, and any other fees that the card issuer charges should be a cause for concern. These fees are unnecessary, especially if you have a card with few benefits.
In ideal circumstances, you will pay the entire balance of your statement and not incur interest. It’s nice to have a credit line that doesn’t charge you Landlords can use your credit employers can also use it as this is for any compensation. This calculator will calculate your interest payments.
Minimum/maximum security deposits
Secured credit cards require you to check the minimum and maximum security deposits amounts. You can decide which one is more important depending on how much you have saved to secure a security deposit.
You will need to make sure you have enough money to pay the minimum deposit amount. A card with a high maximum deposit is best for you if you have a lot of savings.
You should always research the credit limits of any card you are considering. You can usually get this information with secured credit cards, but it is sometimes possible to obtain it for an unsecured card.
There is no need to have a lot of credit. However, if you have a credit limit that is too low, it may be challenging to keep a low credit utilization ratio. This can impact your credit score.
How to get credit cards for people with poor credit
You can apply for prequalification if you have bad credit to be eligible for a credit card. This will ensure that you qualify for a card and not harm your credit score by running credit checks.
It all depends on the issuer of your card, but most major credit card companies have prequalification web pages on their websites that allow you to check the offers that you are likely to be approved for.
You will only need basic information to find out if your prequalification is possible. Most card issuers require at least some of these:
- Full name
- Date of birth
- The last four digits are your Social Security number
After you submit the necessary information, you will see any cards you are likely to qualify for with the card issuer. This does not guarantee that your application will get approved.
It’s a brilliant idea to improve your credit score if you cannot be prequalified for a credit line for poor credit.
How to improve credit
With time and effort, you can raise your credit score. There is no quick fix. Building credit quickly is not possible, but it can be built up over time. Understanding the components that make up your credit score is key to achieving this. Each of these elements can help you improve your credit and increase your credit score.
These are the five factors that go into calculating your FICO(r), Score, and how to get high marks for each of them:
History of payments (35%)
On-time payments are essential to excellent credit. You can reverse past late payments, but you can make sure you avoid them in the future. This is the most important habit to improve your credit score.
Credit utilization (30%)
Your credit usage is the sum of all your credit balances divided by your combined credit limit. If you have a credit card with a $200 balance and a $500 limit, your credit utilization would be 40%. This number should be kept as low as possible. Your credit utilization should be below 30%. This is a good goal. You should work to pay off any debt if your credit utilization is higher.
Credit history (15%):
Creditors consider a borrower with a credit history of more than 20 years less risky than someone who has used credit for only three months. This is the best way to improve your credit score.
Credit mix (10%):
You have a slight credit score edge if you have both revolving and installment credit on your credit file. However, this will have a minimal impact on your credit score, so you should not take out a loan to improve your credit. Even if you don’t use credit cards, you can still achieve excellent credit.
Credit inquiries (0%):
A company may look at your credit reports to decide your credit. This inquiry will be reported on your credit file for two years. However, credit inquiries do not affect your FICO(r), Score for one year. You shouldn’t close an account because it has a negligible impact on your credit score. However, you shouldn’t open multiple accounts at once.
Is it possible to get a credit card with no bank account?
A bank account is not required to apply for a credit card. You may need to have a bank account to be approved for certain credit cards. However, the requirements of credit card companies can differ.
Although a bank account doesn’t necessarily mean you can get a credit card, it makes your credit card payments easier. If you have a bank account, almost all credit card companies allow you to pay online.
Online payments can be made that count towards your bill the same day. This means you don’t have to wait until the last minute. You can also set up autopay.
You will need an alternative payment method if you don’t have access to a bank account. There are many other payment options. You could also pay by post using a money order or cash if your credit card company is a branch.
Online payments are much more convenient than mail. It’s a brilliant idea to open a bank account to simplify your costs and protect your savings.
Which credit card is best for people with poor credit?
A card that targets people with poor credit is the most accessible credit card to obtain if you have bad credit. These cards do not have strict criteria for applicants. If you have poor credit, a low credit score, or limited credit, your chances of getting approved for a bad credit card are higher.
Some cards with bad credit have higher approval chances than others. Here’s one:
Secured Visa(r), Credit Card:
This card is a secured credit card that will require you to deposit to use it. However, the annual fee is low and makes this card an excellent choice for those trying to rebuild their credit or have limited credit. It is easy to apply for and does not require a credit check.
This card may be a better and more accessible option for those who have failed to qualify for other secured cards without an annual fee or credit cards for people with bad credit.
Alternatives for credit cards for poor credit
There are other options if a credit card with bad credit is not for you.
However, when you pledge something of value (such as a home or car) as collateral, you can get a secured loan. A secured loan can be an option for those who have difficulty qualifying for personal loans. You must remember that the lender can sell your collateral to repay the loan if payments are not made on time. Check out the best personal loan for bad credit.
Subprime Credit Card:
You may be offered a subprime card by the mail. Subprime credit cards often have high fees, which can end up costing you a lot. For example, take the First Access VISA(r), Credit Card.
To open the card, there is a $95 fee. The first year, you pay $75 annually. This drops to $48 per year from there. However, in the second year, you will also be paying a $6.25 monthly service fee totaling $75.
Check the disclosure for any card you are considering to avoid paying extra fees. It’s unlikely that the prices are necessary to keep your card open.
My Name is Jay has and I have a passion for financial writing. I am the chief writer on this blog. I do my best to verify all the information but if there is anything amiss please let me know and I will do my best to correct it.