Bad Credit Credit Cards

Best Bad Credit Credit Cards 2019 That Help Rebuild Your Credit Score

Bad Credit Credit Cards

In most cases, secured cards are ideal for people with bad credit since they require a cash deposit that acts as collateral. Find out how bad credit credit cards can help you rebuild your credit score.

When you have a bad credit score, it means that you just began to build your credit as a young person, or you have defaulted to pay bills. A bad credit score is based on a FICO score that comprises rating which ranges from 300 to 850.

The good news is that you can still get credit cards with bad credit. Bad credit credit cards play a vital role in helping you to rebuild your credit. However, it requires careful monitoring and budgeting to ensure you don’t get trapped into bad debt.

The negative impact of Bad Credit

A bad credit shows that you are a risky borrower. A loan will help you purchase a car, buy a house or even get a credit card. In most cases, a credit rating will range from 300 to 850. When you have a bad credit rating which is below 649, it will be hard to get a line of credit. Even if you manage to get credit, it will be expensive.

This will create an endless cycle of debt since you will high-interest rates, and it will take you a long duration to repay the debt if you had allowed it to accumulate.

Getting a loan with bad credit is not easy since most lending companies require a minimum of credit rating of 620 for almost all loan products. Most individuals who attempt to secure a mortgage with a credit rating of less than 580 will get a subprime loan. This loan products gas heavy down payment and extremely high rates.

Creditors will check your credit history and how frequently you skip paying your mortgage to know if you are eligible for a loan.

How to work on bad credit

When checking your credit rating, you need to include the aspects that affect your credit both in a positive and negative way. Ensuring you know this factor is essential since the info will help you build your credit the way you want.

For you to have good credit, make sure you pay all the bills within the specified timeline and keep your balance at a minimum.

Secured and unsecured credit cards

The two primary types of credit card options include a secured and unsecured card. To get a secured credit card, you need to deposit a certain amount of cash into your savings account.

The credit limit will depend on the percentage of the total amount deposited. The deposit will serve as security, and the money cannot make regular payments. This is very different from a prepaid card that draws the deposit and is not reported to three major credit bureaus. Most credit cards are available as unsecured credit cards and are the most preferred cards.

This is because you don’t need a deposit to get the card and it is a revolving line of credit that has a limit that can be borrowed against.

Things to consider when looking for a bad credit credit cards

Having bad credit limits you from the credit product options you can get. Because of this, you need to strive and get bad credit credit cards that can help you rebuild your credit. However, there are some cards you need to avoid:

  • Secured credit cards
    This is one of the best equipment that can help you in building your credit. Card providers are required to report the credit record to the three major credit bureaus for you to achieve your mission.

In most cases, the insurers will ask for the lowest security deposit while others will redirect your deposit into an account that bears some interest. Secured credit card insurers will not need any credit report or have the minimum credit rating to approve your application.

  • Fees
    Most card providers for both secured and unsecured cards might or might not ask for annual fees. Other might even ask for monthly service charges apart from the annual fees. You need to pay close attention to the various fees so that you can understand the total expenses.

You also need to look at other expenses such as maintenance charges, application fees, transaction charges, and penalty fees. The provider might also charge extra fees for optional services like expenses for misplaced cards.

  • Rates
    Rates tend to differ, and they are available in two forms which include variable or fixed. Make sure you pay your balance in full every month for you to avoid interest and assist you to maximize on rewards in case they are offered.

Many card providers will impose penalties for skipped payments and others will increase the interest rate dramatically.

Types of cards to avoid if you have bad credit

Having bad credit limits you from the credit product options you can get. Because of this, you need to strive and get bad credit credit cards that can help you rebuild your credit. However, there are some cards you need to avoid:

  • Balance transfer cards
    If you are unable to pay your bills completely, a balance transfer card cannot save you. In most cases, it will only aggravate the problem.

Instead, monitor your budget, make sure your monthly payments exceed the minimum and avoid adding debt to your card.

  • Cards that have high annual fees
    No matter how enticing it may be, do not take up cards that come with high annual fees. Since you will have a limited cash output, you will not benefit from features of the card.

Focus on rebuilding your credit with a simple card.

  • Cards that need a high credit rating
    It does not make sense when you apply for a card that needs a high credit rating if your rating is pathetic. The only thing you can accomplish from this is a ding on your credit rating by offering your personal details.

Factors that credit bureaus look at that can help you repair your credit score

Bear in mind that no credit bureau will assess the worthiness of your credit since this is the work of credit score. Your credit history is the collection of credit habit in the last 7-10 years. A credit rating is a measurement of the info from the credit history.

Once the creditors receive your credit information, they transfer it to three major credit bureaus which is TransUnion, Equifax, and Experian. Every bureau then creates its own report that comprises personal details like your name, past address, your accounts and if you paid the bills within the scheduled timeline.

Bad Credit Credit Cards

The best credit cards for those individuals with poor credit score are secured cards. The bad credit credit cards must have a deposit which will act as collateral. Note that the deposit will be equivalent to your credit line.

Using a secured credit card frequently and responsibly will assist you to repair your credit and get the eligibility to apply for a regular unsecured card. If you decide to close a secured card or change it to an unsecured card, the card provider will refund your collateral deposit.

Here are some of the best credit cards for poor credit rating.

  • Capital One Secured MasterCard

You will not be required for the annual fee, and you will have to use the card responsibly to build your credit. Different from a prepaid card, it repairs your credit if used responsibly and it sends frequent reports to the three major credit bureaus. Once you make a collateral deposit of $49, $99 or $200, you will receive an initial $200 credit line.

However, the credit line you get will be based on the worthiness of your credit. Once you make the first five monthly payments on time, you get access to a high credit line that does not require another deposit. You can easily manage your account at any time with the help of online access, using a mobile app.

The card is accepted at numerous locations across the globe. If you have slightly bad credit, Capital One Secured Mastercard is the best card that can help you rebuild it.

Downside
Individuals with sternly damaged credit like bankruptcy on their credit history may not be eligible. You need to have a savings account.

  • OpenSky Secured Visa Credit Card

The insurer will not look at your credit because they believe in offering the opportunity to every person. The refundable deposit you give will be your credit line limit on your card.

Therefore, you have a chance to decide your limit from as low as $200. The card can assist you to rebuild your credit fast as they send reports to the three major credit bureaus.

Since the card does not need a credit check, even those individuals with severely damaged credit might be eligible. The other thing that sets this card from other secured cards is that a bank account is not a requirement. You can deposit your cash and pay bills using a debit card, wire transfer or money order.

Downside
Cannot be upgraded to an unsecured card

  • Discover it secured

This is one of the best cards for rebuilding bad credit since it does not have an annual fee, cash back on any purchase. It can help you repair your credit if you use it responsibly.

This credit card needs a refundable deposit of at least $200 which will be used as your credit line. You need to give out your bank details when presenting your collateral deposit. It has a variable APR 24.49%, so you can strive to spend less on this card every month.

This will let you pay the bills in full and avoid interest. You will also have a chance to repair your credit and earn additional cash rewards.

  • Credit One Bank Platinum Visa for Building Credit

This is one of the best cash-back credit cards that will assist you to build your credit with its 1% cash back on almost all purchases.

On top of that, it has free access to your Experian credit score online that lets you track your progress on building the credit rating. Its annual fee is $0 to $99, and a variable APR is 19.4%-25.49%.

  • Merrick Bank Secured Visa Card

Even though this card does not give any rewards, it offers a low annual fee of $36 and a variable APR of 18.95%. Since it is a secured card, all your payments will be reported to the three major credit bureaus.

You allow you to check your monthly FICO score once every month for free. After using the secured card for one year, the issuer will review your account and increase your unsecured credit line without asking for any extra deposit.

  • Total VISA Unsecured Credit Card

Even though the card does not come with upfront annual fee or APR, any individual with a bad or slightly fair credit can apply and know if they were accepted.

You need a checking account and pay a processing fee for you to obtain this card. The issuer reports your payment behavior to the credit bureaus and the card is used in any location where VISA cards are accepted.

  • Platinum Prestige Mastercard Secured Credit Card

The card features a variable APR of 9.99% and an annual fee of $49 through the preliminary progress. There is no credit report or minimum credit rating required for your application to get approval.

Your credit line will be secured by a collateral deposit of $200-$2000 that is refundable. Card providers will report your payment habits to the three credit bureaus every month to assist you to build your credit report.

Other ways to build or repair your credit score

You may have realized that most of the credit card optioned on this list are secured. This means that if you don’t have any credit, you can start establishing your credit rating by obtaining a secured credit card.

The card will also help you repair your credit if you have poor credit. This card allows you to deposit a certain amount, with a credit limit depending on the amount deposited. Once you skip a payment, it will be deducted from your deposit.

However, if you pay your bills on time, you will have a chance to repair your credit report.

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