Credit cards for people with low credit scores exist, but they work differently than standard cards

You can get a credit card with a low credit score. Banks and card issuers do offer products specifically for people whose scores are below 580 or who have recent missed payments, collections, or bankruptcy. These cards typically come with a higher interest rate, a lower credit limit, and an annual fee — sometimes all three. The trade-off is that using one responsibly can help rebuild your credit over time.

The main types are secured credit cards (which require a cash deposit) and unsecured cards for bad credit (which do not). A secured card is usually easier to get approved for because the deposit protects the bank. An unsecured card for bad credit skips the deposit but charges a higher interest rate to offset the risk to the lender.

The process is straightforward: you find a card that matches your situation, submit an application online or in person, and the issuer makes a decision based on your credit report and income. Most decisions come back within days. What matters most is understanding what each type costs you and what happens after you open the account.

Key Takeaways

  • Secured cards require a cash deposit (usually $200 to $2,500) that becomes your credit limit, and they are easier to get approved for than unsecured cards.
  • Unsecured cards for bad credit do not require a deposit but charge higher interest rates and annual fees to compensate for lending to people with low scores.
  • Your credit score, recent payment history, and current income are the main factors issuers look at; they do not require a perfect history.
  • Using the card responsibly — keeping your balance low and paying on time — reports to the credit bureaus and can raise your score over months, not weeks.
  • Some cards offer a path to upgrade from secured to unsecured after you demonstrate on-time payments, which returns your deposit.

Secured credit cards: how the deposit works

A secured credit card requires you to put money into a savings account held by the bank. That deposit becomes your credit limit. If you deposit $500, your card limit is $500. You then use the card like any other card — you make purchases, receive a monthly statement, and pay a bill. The deposit sits untouched unless you stop paying your bill; then the bank can use it to cover what you owe.

The deposit is not a fee. It is your own money held in reserve. When you close the account or upgrade to an unsecured card, the bank returns it to you (minus any unpaid balance on the card). The interest rate on secured cards is usually between 18% and 24%, and many charge an annual fee of $25 to $95.

Secured cards are offered by major banks (Capital One, Discover, U.S. Bank) and smaller lenders. The approval process is faster because your deposit removes most of the lender's risk. You can often get approved within a few days, even with a credit score below 500 or a recent bankruptcy on your report.

Unsecured cards for bad credit: no deposit required

An unsecured card for bad credit does not require a deposit. You apply, the issuer reviews your credit report and income, and if approved, you receive a card and a credit limit — typically $300 to $1,000 to start. The bank takes on the risk directly, which is why the interest rate is higher than on secured cards: usually 24% to 36% or more.

Annual fees on unsecured bad-credit cards often run $75 to $150, and some charge monthly maintenance fees of $5 to $10. A few also charge fees for going over your limit or paying late. Before you apply, read the fee schedule carefully — a card with a $99 annual fee and a $39 late fee can cost you hundreds of dollars a year if you are not careful.

Approval is harder than with a secured card because the issuer has no deposit to fall back on. They look more closely at your income, employment history, and the reason your credit score is low. If you were recently laid off or had a medical emergency that caused missed payments, mention that in your application. Some issuers have a "second chance" program that considers your circumstances, not just your score.

What issuers look at when you apply

Credit card issuers pull your credit report from one or more of the three major bureaus (Equifax, Experian, TransUnion) and review your payment history, outstanding debt, and any collections or bankruptcies. They also ask for your income and employment status. A low credit score does not automatically disqualify you — issuers know that people rebuild credit, and they have products designed for that.

What matters more than your score is the reason it is low. A score of 550 caused by one missed payment two years ago looks better to an issuer than a score of 550 with three missed payments in the past six months. Similarly, a recent bankruptcy does not disqualify you from getting a secured card, but it does make unsecured approval harder. Be honest on your application about what happened — if you had a job loss or medical emergency, say so.

Your income and employment also factor in. Issuers want to see that you have money coming in and can pay your bill each month. If you are unemployed or your income is very low, you may still get approved for a secured card (since your deposit is the real security), but unsecured approval becomes less likely. Some issuers have a minimum income requirement, though it varies widely.

How to choose between secured and unsecured

If you have $200 to $500 available to deposit and want the easiest path to approval, a secured card is usually the better choice. Approval is faster, the interest rate is lower, and you are more likely to be approved even with a very recent negative mark on your credit. The downside is that your money is tied up in the deposit for as long as you hold the card.

If you do not have money to deposit, or if you want to avoid locking up cash, an unsecured card for bad credit is your option — but approval is not may provide, and the interest rate and fees are higher. Some people apply for both and see which one approves first, then close the other account. That is a reasonable strategy, though each application creates a small, temporary dip in your credit score.

Compare the interest rate and all fees side by side. A secured card at 20% APR with a $50 annual fee may cost you less than an unsecured card at 28% APR with a $99 annual fee, especially if you carry a balance. Use an online calculator to estimate the cost of carrying a $500 balance for a year on each card you are considering.

Using the card to rebuild your credit

Opening a credit card does not rebuild your credit by itself. What rebuilds it is using the card responsibly and having that behavior reported to the credit bureaus. Every month, your card issuer reports your payment status, credit limit, and balance to Equifax, Experian, and TransUnion. If you pay on time and keep your balance low, those bureaus update your credit report, and your score rises over time.

The most important factor is on-time payment. Missing even one payment can drop your score and defeat the purpose of the card. Set up automatic payments for at least the minimum due, or set a phone reminder a few days before the due date. Paying the full balance each month is ideal, but if you cannot, aim to keep your balance below 30% of your credit limit — a $500 limit with a $150 balance, for example.

Do not close the card once your score improves. Closing it removes available credit from your report, which can actually lower your score. Instead, keep it open and use it occasionally for a small purchase, then pay it off. This keeps the account active and shows ongoing responsible use.

What happens after approval

Once you receive your card, your first statement will arrive 20 to 30 days later. It will show your credit limit, any purchases you made, the interest rate, the annual fee (if any), and the minimum payment due. Read it carefully to make sure there are no unexpected fees.

If you have a secured card, your deposit is now in a savings account at the bank. You cannot touch it while the account is open, but the bank will pay you interest on it — usually a very small amount, 0.01% to 0.5% depending on the bank. If you have an unsecured card, there is no deposit; you simply owe whatever you charge.

Some card issuers offer a path to upgrade from secured to unsecured after you make on-time payments for 6 to 18 months. When you upgrade, the bank returns your deposit and converts your account to a standard unsecured card, often with a lower interest rate. Not all issuers offer this, so ask before you apply.

Common mistakes to avoid

The biggest mistake is charging more than you can pay back. A credit card for bad credit is not assistance programs — it is a loan at a high interest rate. If you charge $500 and pay only the minimum each month, you will pay hundreds of dollars in interest before the balance is gone. Use the card for small, necessary purchases that you know you can pay off quickly.

Another mistake is missing a payment. One late payment can raise your interest rate further, add a late fee, and damage your credit score just when you are trying to rebuild it. If you know you will have trouble making a payment, call the card issuer before the due date and ask about a hardship program or payment plan. Many issuers have options for people facing temporary financial difficulty.

Do not apply for multiple cards at once hoping one will approve. Each application creates a hard inquiry on your credit report, and multiple inquiries in a short time can lower your score and make issuers think you are desperate for credit. Apply for one card, wait to hear back, and then decide your next step.

Frequently Asked Questions

Can I get a credit card if I have been denied before?

Yes. A denial does not mean you cannot get approved elsewhere. Different issuers have different standards. If you were denied for an unsecured card, try a secured card instead. If you were denied by one bank, try another. Wait at least a few weeks between applications so your credit report has time to stabilize.

What if I cannot afford the deposit for a secured card?

You can apply for an unsecured card for bad credit instead, though approval is less certain. Some credit unions also offer secured cards with lower deposit minimums ($100 to $300 instead of $200 to $500). Check with credit unions in your area or online credit unions that serve your state.

How long does it take to rebuild my credit score?

Credit scores move slowly. You may see a small improvement within three to six months of on-time payments, but meaningful improvement usually takes 12 to 24 months. Negative marks like missed payments stay on your report for seven years, but their impact fades over time as you add positive payment history.

Will getting a credit card hurt my credit score?

The application itself causes a small, temporary dip (usually 5 to 10 points) because the issuer makes a hard inquiry. Once the account is open, your score may dip slightly again because you have a new account with a zero payment history. But within a few months of on-time payments, the positive impact outweighs the initial dip.

Can I use a credit card to pay off other debts?

You can use it to make purchases, but most credit cards do not allow you to transfer a balance from another card or take a cash advance without paying a high fee (usually 3% to 5% of the amount). It is usually not worth it. Instead, focus on using the card for small purchases and paying them off on time to rebuild your credit.