Yes, you can get a credit card with bad credit, but your options are limited and the terms will be less favorable than cards for people with good credit
Banks and credit card companies use your credit score to decide whether to issue you a card and what interest rate to charge. A low credit score signals to them that you have missed payments, carried high balances, or had accounts sent to collections in the past. That history makes you a higher risk, so they either decline you or offer you a card with a higher interest rate, lower credit limit, and annual fees.
The most realistic path forward is a secured credit card, which requires you to put down a cash deposit that becomes your credit limit. You use the card like any other card, but the deposit sits in a bank account as collateral. After you make on-time payments for six to eighteen months, many issuers will convert your account to a regular unsecured card and return your deposit. Secured cards are designed specifically for people rebuilding credit and are much easier to get approved for than traditional cards.
A second option is a credit-builder card, which works differently: you make a monthly payment to the card issuer, and they report that payment to the credit bureaus. You do not get a line of credit to spend against. Instead, you are paying to build a record of on-time payments. These cards charge fees but can move your score faster than a secured card if you make every payment on time.
Key Takeaways
- Secured credit cards require a cash deposit but are the most common way to rebuild credit from a low score.
- Your deposit becomes your credit limit, and after consistent on-time payments, many issuers will convert the account to a regular card and return your money.
- Credit-builder cards charge you to make payments that get reported to credit bureaus, rather than giving you a line of credit to spend.
- Traditional credit cards for bad credit exist but charge much higher interest rates and annual fees than secured alternatives.
- Any card you open will appear on your credit report; making on-time payments is the single most important factor in raising your score.
How secured credit cards work and what they cost
When you open a secured card, you deposit money into a savings account held by the card issuer. That deposit amount becomes your credit limit. If you deposit $500, your limit is $500. You then use the card to make purchases, pay the bill each month, and build a payment history.
The card issuer reports your account activity to Equifax, Experian, and TransUnion — the three major credit bureaus. On-time payments help your score. Late payments hurt it, just as they would with any other card. After you have made twelve to eighteen months of on-time payments, the issuer reviews your account. If your credit score has improved and you have used the card responsibly, they often convert your account to a regular unsecured card and return your deposit.
Secured cards typically charge an annual fee ranging from $0 to $95, depending on the issuer. Interest rates are higher than standard cards — often 18% to 24% APR. If you carry a balance, you will pay significant interest charges. The best strategy is to charge small purchases you can pay off in full each month, so you build payment history without paying interest.
Some secured cards offer rewards on purchases, though the rewards rate is usually lower than cards for people with good credit. A few issuers charge no annual fee, which makes them a better starting point if you are choosing between options.
Traditional credit cards marketed to people with bad credit
Some card companies offer unsecured cards to people with low credit scores without requiring a deposit. These cards are easier to get approved for than standard cards, but they come with steep costs. Annual fees often run $75 to $99, and interest rates typically exceed 25% APR. Some charge additional fees for going over your limit or paying late.
The math works against you quickly. If you carry a $500 balance on a card charging 25% APR and a $95 annual fee, you will pay roughly $220 in interest and fees over a year — nearly 44% of your balance. A secured card with the same balance and a lower annual fee is almost always the better choice.
These unsecured cards do report to the credit bureaus, so on-time payments will help your score. But the high fees make them expensive tools for rebuilding credit. Read the terms carefully before you explore, because some of these cards have terms that make them worse than secured alternatives.
Credit-builder cards and credit-builder loans
A credit-builder card works like a subscription to credit repair. You pay a monthly fee — typically $10 to $50 — and the card issuer reports your payment to the credit bureaus. You do not receive a line of credit to spend. Instead, you are paying to create a record of on-time payments.
Credit-builder loans work on the same principle. You borrow money from a credit union or online lender, but the money sits in a locked savings account. You make monthly payments on the loan, and those payments get reported to the credit bureaus. Once you have paid off the loan, you get access to the money. You are essentially paying interest to build credit history.
These products can raise your score faster than a secured card because you are making regular monthly payments that get reported. However, they cost money upfront and do not give you access to credit to use. They work best if you have the cash to spare and want to rebuild quickly, or if you cannot get approved for a secured card.
What happens to your credit score when you open a new card
Opening any new credit card will temporarily lower your credit score by a few points. This happens because the card issuer runs a hard inquiry on your credit report, and new accounts lower your average age of credit. These dips are normal and temporary.
The score will recover and then improve as you make on-time payments. Payment history is the single largest factor in your credit score — it accounts for 35% of your FICO score. If you have missed payments in the past, consistent on-time payments on a new card will gradually offset that damage.
Keep your credit utilization low. If your limit is $500, try to keep your balance below $50 to $100. High utilization signals financial stress and hurts your score, even if you pay on time. Using only 10% to 30% of your available credit is ideal.
Comparing secured cards, credit-builder products, and bad-credit cards
| Card Type | Deposit Required | Annual Fee | Interest Rate | Best For |
|---|---|---|---|---|
| Secured card | Yes, $200–$2,500 | $0–$95 | 18%–24% | Building credit while having access to a line of credit |
| Credit-builder card | No | $10–$50/month | N/A | Fast credit building if you have cash to spare |
| Credit-builder loan | No | Varies | 6%–36% | Building credit and saving money at the same time |
| Bad-credit unsecured card | No | $75–$99 | 25%+ | Only if you cannot get a secured card and need when ready credit access |
Steps to take before you open a new card
Check your credit report before you explore. You can view your report for free once per year from each of the three bureaus at annualcreditreport.com. Look for errors — accounts you do not recognize, incorrect payment statuses, or duplicate entries. If you find errors, dispute them with the bureau. Removing errors can raise your score without opening a new card.
Pay down existing balances if you can. If you have credit cards or loans with balances, lowering those balances will improve your credit utilization and boost your score before you explore for a new card. Even a small reduction helps.
Make all your payments on time for at least two to three months before you explore. Lenders look at recent payment history, so a short streak of on-time payments improves your chances of approval and may get you better terms.
Research issuers carefully. Not all secured cards are the same. Some convert to unsecured cards automatically after a set period; others require you to request conversion. Some have no annual fee; others charge $95. Read the terms and compare at least two or three options before you explore.
Frequently Asked Questions
Will explore for a credit card hurt my credit score?
Yes, but only slightly and temporarily. The hard inquiry and new account will lower your score by a few points. The damage is small compared to the benefit of on-time payments over the following months. One process is worth the short-term dip if you plan to use the card responsibly.
How long does it take to rebuild credit with a secured card?
Most people see meaningful improvement within six to twelve months of on-time payments. Your score will continue to rise as long as you pay on time and keep your balance low. The longer your payment history, the more it helps. Some issuers convert secured accounts to unsecured after twelve to eighteen months.
Can I use a secured card just like a regular credit card?
Yes. You swipe it, make purchases, and pay a bill each month. The only difference is that your deposit acts as collateral. The card issuer can keep the deposit if you stop paying, but they report your account to the credit bureaus just like any other card.
What if I cannot afford a deposit for a secured card?
Some secured cards allow deposits as low as $200 to $300. If that is still too much, a credit-builder card or credit-builder loan may be a better fit. You can also wait a few months, save money, and explore later. There is no rush to open a card if you cannot afford the deposit.
Should I explore for multiple cards at once?
No. Each process triggers a hard inquiry and lowers your score. explore for one card, use it responsibly for several months, and then consider a second card if you need one. Multiple applications in a short time signal financial desperation to lenders and will hurt your chances of approval.