There’s no doubt that having bad credit can be intimidating when applying for credit cards, especially if you’ve been turned down before for an unsecured credit card. It hurts me to say this but “re-establishing” credit is just as hard to do as “establishing” credit, because creditors will think it’s risky to give you credit based on your scores.
This shouldn’t stop you from trying to rebuild your credit though, as there are multiple credit card companies out there that are willing to hand you bad credit credit cards, for a deposit. The best part about this, is that it’s always a guaranteed approval.
Which cards will most likely approve me with bad credit?
We’ve put a list together of the best credit cards with guaranteed approval, please note that there is a small chance these credit card companies might not approve you if you have too many bad credit card collections on your report.
|Capital One® Secured Mastercard®||Minimum deposit: $49, $99, or $200, based on credit.|
Annual fee: None
|Citi® Secured Mastercard®||Minimum deposit: $200|
Annual fee: None
|Discover it® Secured||Minimum deposit: $200|
Annual fee: None
|USAA® Secured Card American Express® Card||Minimum deposit: $250|
Annual fee: $35
Although these credit cards are great for you if you’re trying to rebuild your credit, they usually come with a higher interest rate than usual. Read our section below about what to do after you’ve had this card for a year.
After getting approved for a secured credit card
Getting approved for one of these secured credit cards is very easy, but the tricky part is keeping up with your payments as well as your credit utilization. Just because you have a shiny new credit card, doesn’t mean that you have to go out and spend 100% of your available credit.
This is an oversight that people often make, which ultimately hurts their credit. Keeping your credit utilization low helps show the creditors that you don’t need credit, which in turn gets you more offers and an increase in your credit score.
Remember that 30% of your credit score comes from your credit utilization ratio. If you have a credit card with a $300 credit limit and have used up $200-$300 out of your credit limit, it shows that you’ve been using up all of your available credit. This can really make your credit take a plunge, so one rule of thumb is, never spend more than 10-15% of your available credit overall.
What should I do with a new secured credit card?
Since most of the secured credit cards come with high interest rates, we recommend that you use no more than 10% of the available credit limit on the card, and pay it off in full each month before the billing cycle hits. This will show that you’ve used the card, and have been paying it in full.
Your creditor will take this into consideration once they start automatically checking your account each month to see if they should graduate you to an unsecured card. Low usage will keep your credit utilization low, which shows that you aren’t dependent on credit.
When will my credit card graduate to an unsecured credit card?
This can happen as soon as the 7 month mark. Usually creditors will start automatically checking your credit profile each month, after you’ve had the card for 7 months. If the system determines that you are worthy of a graduation to an unsecured credit card, they will usually send you a refund check in the amount of your security deposit. Some credit cards such as the capital one secured credit card will post a credit to your account in the amount of the security deposit.