Updated: Aug 31, 2023

How to Choose the Right Credit Card for Bad Credit

The first step you must take to choose the right credit card for bad credit is to figure out exactly where your credit stands. It's not easy but we are here to help.
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Bad Credit Score

The first step you must take to choose the right credit card for bad credit is to figure out exactly where your credit stands.

Can you open a credit card account at all? Or is it just hard for you to open a credit card with a low interest rate? This is important; this score will determine which type of credit card account you should open.

You can view a copy of your credit score and history for free, online. Everyone is entitled to one free copy of their credit score each year.

Once you have a copy of your score (you can visit AnnualCreditReport.com to obtain a copy) take a look at where it stands. This will determine the next course of action.

Credit score range and meaning

  • 850-750: Excellent
  • 749-700: Very Good
  • 699-650: Good
  • 649-600: Average
  • 599-550: Poor
  • 549-300: Very poor

A poor credit score means you failed to make a decent amount of your payments on time.

The good news is, you can probably get it back to average standing in about a year or two, as long as you are diligent about raising your credit score.

Of course it depends on what your credit score is. If it is very poor, you will need to give it a longer period of time before you can see changes in your score.

A bad credit score tells lenders you did to make the majority of your monthly payments on time. A low score greatly limits your options to open a new credit card, but that does not mean you cannot open one entirely.

If you have received offers for credit cards in the mail, be weary, as the terms of opening a new credit card might come with things like annual fees and a high interest rate.

Choosing a credit card

The purpose of opening a new credit card is to help you reestablish your credit score so that it is in good standing.

By opening a new line of credit and paying your monthly bills and debt on time, you can slowly work your way to an average or better credit standing.

There are two types of credit card options for those with bad credit -- with the first type being a secured credit card. The second is a balance transfer credit card. Both come with unique features that can help a person rebuild his or her credit.

In the process of reestablishing your credit, a balance transfer card should be considered when trying to get your credit into as good standing as possible. If your credit is not too bad, you may still be able to open a balance transfer credit card account.

Benefits of a balance transfer credit card

Most transfer cards offer zero interest for a specified amount of time -- usually the first four months to a year after opening the line of credit. These credit cards are not as easy to obtain as a secured credit card, but offer more benefits.

The biggest upside to a balance transfer card is that you can pay down your debt faster than with a secured credit card. Instead of paying high interest on your debt, you can put more money towards your actual balance.

While there are some balance transfer credit cards that don't charge a fee for transferring your balance, most companies charge a fee anywhere from one to four percent of the balance.

While a secured credit card can help you rebuild your credit, balance transfer cards help solidify the transition by giving you more breathing room to pay down even more debt.

When to apply

Based on balance transfer credit cards available on our website, the lowest credit score needed to open a balance transfer credit card is 634.

This is for one that provides instant value after being opened. You may be able to open a balance transfer credit card with a lower credit score elsewhere, but the interest rate and transfer fee may be moderately high.

Pay close attention to the terms and conditions of a new balance transfer credit card before you apply for one.

You should start looking into balance transfer credit cards when your credit score goes above 600. You want to open an account with a card that offers the best balance transfer fee and interest rate.

Contact credit card companies directly with the latest copy of your credit score in hand and ask a representative if you are eligible to open an account based on your credit score and recent history.

This is a good way to learn if you are ready for a balance transfer credit card, while at the same time preventing unnecessary credit inquiries on your credit history.

Consider a Secured Credit Card

If you are struggling with bad credit, you can do some research on a secured credit card. In order to open a secured credit card, you must make an initial down payment against the card's credit limit.

Read Capital One Platinum Secured Editor's Review

Read OpenSky Secured Visa Credit Card Editor's Review

Read Citi Secured Mastercard Card Editor's Review

What does a secured credit card entail?

Your credit limit will usually be a percentage of your security deposit or it may be the same as your deposit.

Many banks will place your deposit into an interest-bearing savings account or CD until you close your account, are able to upgrade to an unsecured credit card or default on your credit card balance.

Secured credit cards are used just like regular credit cards.

Purchases reduce your available credit and you're required to make monthly payments on your balance.

You can avoid paying finance charges by paying your balance in full each month if your card doesn't have a grace period. Just like regular credit cards, late payments and over-the-limit transactions are penalized with a fee.

Most people with bad credit use this type of credit card to build it back into good standing. Just make sure you pay your bills on time and use the card responsibly.

Ideally, you want to open a secured credit card where the down payment collects interest.

Why secured credit cards may be your only option

Lenders do not like opening new accounts for people who have a history of failing to pay their bills on time.

Secured credit cards offer a solution for people who cannot open a credit card elsewhere.

A lender feels safe opening a credit card account for you when a down payment is made.

If you fail to make payments on your secured credit card, the lender will simply take the money you used as a down payment to pay the balance.