What are the Best Unsecured Credit Cards for Bad Credit?
With a bad credit record, getting a credit card can be very difficult but it isn’t impossible. Some lenders in the market are usually willing to offer credit cards to people with FICO scores as low as 580. The requirements from such lenders are normally a bit low and they even have data tools that scan lots of details to determine one’s creditworthiness. Sadly, most of these cards are usually offered with lots of strict terms. The cards are also associated with quite a lot of fees. All these are measures that the lenders take to minimize the chances of incurring losses in case one fails to pay back. This can be very disappointing but since people with bad credit don’t have lots of options, they are usually forced to go ahead and take the cards anyway.
The good news is that if you choose the lender wisely, the card will help you rebuild your credit score thus improving your qualifications for much better credit cards.
The most common credit cards for people with bad poor credit are usually secured. This is because the lenders understand that the risk of default is higher when dealing with such people. There is, however, a couple of companies that are still willing to provide unsecured credit cards. These are cards that you are issued without having to make a security deposit. Acquiring these credit cards is hence more affordable in case you qualify.
The problem, however, is that unsecured credit cards are usually accompanied with high-interest rates and steep penalties in case you delay the payments. Some of these cards also have a high maintenance cost and other fees. In the end, therefore, acquiring unsecured cards may be cheaper but the long-term cost of owning one can become very expensive.
Don’t give up though. In this article, we will discuss a few credit card companies that offer unsecured credit cards with fair terms.
Top 3 Bad Credit Unsecured Credit Cards
1. Credit One Bank Unsecured Visa
Credit One Bank not only gives you an unsecured credit card but also provides you with rewards when using the card. Not often do you come across a lender ready to offer such incentives to people with bad credit record. With this lender, you can get 1% cash back on your daily purchases of groceries, gas, internet services, cable, mobile phone services, dining, satellite TV among others.
This company also understands that some customers usually want to readjust their due dates for different reasons. The lender is considerate enough to provide you with the option of doing just that after your initial billing period. You can contact their customer service and have the date adjusted to six days after or before the current date.
Credit One Bank Unsecured Visa is also one of the few cards that have a pre-qualified option. With this tool, you can check whether you meet the qualifications without placing an actual request and hence if you don’t qualify the process won’t affect your credit score.
Make sure that you pay on time and you’ll stand a chance of earning the cash back rewards while boosting your credit report.
2. Capital One Platinum Credit Card
The Capital One Platinum Credit Card is one of the best-unsecured cards in the market. This card doesn’t require any annual fees and offers its users a chance to higher credit lines within a very short time. If you make your first five payments on time, Capital One Platinum Credit Card will give you access to the higher credit line. Over time, this credit card will help you rebuild your credit report a lot faster thus boosting your qualifications to much better cards with improved terms and more rewards.
Capital One Platinum Credit Card will also give you access to Transunion VantageScore 3.0 credit score. Capital One also gives its customers extended warranty coverage, travel accident insurance, rental insurance, price protection and 24-hour travel and roadside assistance.
3. Total Visa Unsecured Credit Card
Total visa Unsecured Credit Card is one of the best options to everyone who wants to improve their financial discipline. This card has an initial credit limit of around $300 after all fees have been deducted. With such a low limit, chances of overspending are very low yet paying the monthly bill is likely to be a lot easier. You will hence see an improvement in your discipline of dealing with credit and even when you finally qualify and get approved for a better credit card you are likely to use it more appropriately.
Total Visa Unsecured Credit Card has an annual fee and late penalty fee. Make sure that you pay on time to avoid these penalties.
The low limit of this card, such as bad credit credit cards, also makes it a decent choice to people who are still afraid of handling cards with bigger credit limit but they still want to improve their credit record.
How to Use the Above Cards to Improve Your Credit Score?
Qualifying and getting approved for the above credit cards is a big step towards improving your score but there is still a lot that needs to be done. Remember that these cards have a lower credit limit, a lot of penalties, maintenance fees, and higher interest rates. Therefore, owning these cards to buy a car, shouldn’t be a long-term thing. These credit cards are best used for rebuilding credit scores after which one can apply for cards with improved terms and rewards. The following tips should help you utilize these cards in a way that will enhance your credit card within a short time:
- Apply for your credit report
You can only improve your credit score if you know where it lies and the things that are pulling it down. Having and scanning through a copy of your credit report from all the three bureaus should help you in pinpointing the factors that you need to improve.
- Dispute Inaccuracies in your Credit Report
Cases of people finding inaccurate details on their credit reports are quite common. You may also clear your outstanding debts with different lenders but their failure to update the data may damage your credit score. This is more reason why you need to get your credit report and read through it to ensure that everything is as it should be. In case of any inaccuracies, you can contact the credit reporting agency and the lender responsible for providing the data to have the information cleared out.
- Pay Outstanding Credit Card Debt before applying for new cards
If you already had a credit card with outstanding debt, it’s advisable to pay it off before applying for a new line of credit. Once you have cleared the payment, you can avoid closing it even if you are applying for a new different card. A long credit history boosts credit scores.
- Use Reminder Systems
A lot of people end up making their monthly payments late not because they didn’t have the cash but because they forgot about the due date. To avoid this, take advantage of financial tracking software, reminder alerts or even have calendar notifications that will alert you on the due date. You can even customize these reminders to help you make the payments whether it is once or twice per month or once every week. Ideally, you should clear the full balance or the minimum balance on time every month to avoid unnecessary penalties and hurting your credit score.
The only way to improve your credit score is through using the credit card and making the monthly payments in time. Get your ideal card from the ones highlighted above and use them regularly while ensuring that you remain on top of all the necessary payments. This should see your credit scores improve at a much faster rate.
Check your credit score regularly and apply for your credit report once every year to monitor your progress. With discipline, persistence, and patience, your credit report should get better over some time.