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The best credit cards for bad credit — updated for August 2020

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This article is brought to you by the Personal Finance Insider team. It has not been reviewed, approved, or otherwise endorsed by any of the issuers listed. Some of the offers you see on this page are from our partners, like Citi and American Express, but our coverage is always independent.

Having a low credit score makes it harder to get approved for a new credit card and other types of loans, and it means that when you do get approved for, say, a mortgage, you’ll generally get less-favorable terms like the highest variable interest rates.

A bad credit score is defined as anything below 580, according to the FICO scoring model, and anything below 601 according to VantageScore. If you currently find yourself in this credit score range, you probably won’t get approved for popular rewards cards like the Chase Sapphire Preferred® Card, but you do have some credit card options. Secured credit cards are particularly easy to get approved for, because you put up a cash deposit as collateral to get started, and there are also non-secured cards tailored to those looking to repair or build their credit.

Using a card responsibly will help boost your credit over time, since keeping your credit utilization low and making on-time payments are the two biggest factors that determine your credit score. Once you have your finances on track and your credit score keeps climbing, it’s only a matter of time before you can get a rewards credit card offering bonus points and other enticing perks. 

The best credit cards for bad credit

  • Best secured card with rewards: Discover it® Secured
  • Best secured card with purchase and travel protection: Capital One® Secured Mastercard®
  • If you can qualify for a non-secured credit card: Capital One® Platinum Credit Card
  • Best for building credit: Petal Visa
  • For students building credit: Discover it® Student Cash Back
  • A secured credit card for businesses: Wells Fargo Business Secured Credit Card
  • Details
  • Pros & Cons

    • – No Annual Fee, earn cash back, and build your credit with responsible use.
    • – It’s a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can’t help you build a credit history.
    • – Establish your credit line with your tax return by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
    • – Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
    • – Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
    • – Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
    • – Intro Offer: We automatically match all the cash back you’ve earned at the end of your first year.
    • – Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
    Pros
    • Offers cash-back rewards, which isn’t a given for secured credit cards
    • Discover matches cash back after your first account year
    Cons
    • Other secured cards let you start with lower minimum security deposits

    Best secured card with rewards: Discover it® Secured

    The Discover it® Secured is easily the top secured credit card on the market today, because not only is there no annual fee, but you also get the opportunity to earn rewards. You’ll need to put down a cash deposit to get started, and you’ll secure a line of credit equal to that amount that you can use to begin building a responsible credit history. If you use your card responsibly, you can also get your deposit back when you close or upgrade your account in good standing.

    In terms of rewards, the Discover it® Secured lets you rack up 2% cash back on up to $1,000 spent at gas stations and restaurants each quarter you activate (then 1%), plus 1% back on all other purchases. Even better, Discover will double all the rewards you earn after the first year.

    The Discover it® Secured also gives you a free FICO score on your monthly credit card bill, and you can use this information to monitor your score as you improve your credit over time.

    Regular APR

    26.99% variable APR

  • Details
  • Pros & Cons

    • Offers you an opportunity to build or rebuild your credit with responsible use
    • $49, $99 or $200 refundable minimum security deposit
    • Make the minimum required security deposit and you’ll get an initial credit line of $200
    • Get access to a higher credit line after making your first 5 monthly payments on time
    • Pick your own monthly due date and payment method
    • Add an authorized user to your account, and track spending by user
    Pros
    • Minimum deposit ($49) is lower than with some other secured cards
    • You can access a higher credit line after making your first five monthly payments on time
    Cons

    Secured card with purchase and travel protection: Capital One Secured Mastercard

    The Capital One Secured Mastercard is another popular secured credit card that doesn’t charge an annual fee. This card starts you out with a low line of credit (possibly as low as $200) when you make the minimum deposit amount of $49, $99, or $200 depending on your application details.

    From there, you can begin building good credit by using the card for small purchases and paying your bill on time each month. Capital One will consider you for a higher line of credit after you’ve paid your credit card bill early or on time for six consecutive months.

    You can pick your payment due date with the Capital One Secured Mastercard, and you won’t pay foreign transaction fees if you use it for purchases made outside the United States. This card also comes with travel accident insurance and extended warranties on eligible items that already come with a manufacturer’s warranty.

    Regular APR

    26.99% variable APR

  • Details
  • Pros & Cons

    • Access to a higher credit line with Credit Steps after making your first 5 monthly payments on time
    • Unlimited access to your credit score and tools to help you monitor your credit profile with CreditWise from Capital One®
    • Add an authorized user to your account, and track spending by user
    • Personalized email or text reminders to help you stay on top of your account
    Pros
    • Access to a higher credit line after you make your first five monthly payments on time
    • No annual fee
    Cons
    • No extra benefits and no rewards

    If your credit’s on the higher side of low: Capital One Platinum Card

    Unlike most other card issuers, Capital One indicates what type of credit score you need to get approved for each of its cards. The Capital One Platinum Card is for “average credit,” which Capital One defines as having defaulted on a loan in the past five years or “limited credit history” (defined as having a credit card or other credit for less than three years).

    This card doesn’t offer any rewards, but it is an unsecured credit card, meaning you don’t have to put down a cash deposit as collateral. There’s also no annual fee, no foreign transaction fees, travel accident insurance, and extended warranties. 

    You may have to start out with a relatively low line of credit, but Capital One promises to reevaluate your credit line after you’ve made six on-time monthly payments.

    Intro APR

    0% intro APR for 6 months from date of account opening

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Details
  • Pros & Cons

    • The information related to the Discover it® Student Cash Back has been collected by Business Insider and has not been reviewed by the issuer.
    • Discover will match all the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched.
    • Earn 5% cash back on everyday purchases at different places each quarter like grocery stores, restaurants, gas stations, select rideshares and online shopping, up to the quarterly maximum when you activate. 1% after that.
    • $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years.
    • Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
    • Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
    • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.
    Pros
    • Earns 5% cash back on rotating bonus categories
    • $20 statement credit each year your GPA is 3.0 or higher
    • Discover matches your cash back after the first year
    Cons
    • Not the most rewarding cash-back card for non-bonus purchases

    For students building credit: Discover it® Student Cash Back

    The Discover it® Student Cash Back is specifically geared to students with limited credit history, so it may be considerably easier to qualify for when compared to other unsecured credit cards. You won’t pay an annual fee for this card, and you won’t pay a late fee on your first late payment.

    You can also earn rewards with the Discover it® Student Cash Back by enrolling each quarter to earn 5% back on up to $1,500 spent in quarterly rotating bonus categories (then 1%), and 1% back on all other purchases. Like with its other cash-back credit cards, Discover will also match all the rewards you earn the first year.

    As a bonus, you can qualify for a $20 statement credit each year you maintain a GPA of 3.0 or higher (for up to five years).

    Regular APR

    12.99% – 29.49% variable APR

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Details
  • Pros & Cons

  • Pros
    • No fees
    • Earn 1% cash back on every purchase, and 1.5% cash back after 12 on-time monthly payments
    • Helps you build or repair credit
    Cons
    • Currently only available to those with an offer code

    Best for building credit: Petal Visa

    Unfortunately, this card is currently only available to those with an offer code, but you can add your name to the list here to be notified when you’re able to apply.

    The Petal Visa was designed for consumers with limited credit histories who need help building credit from scratch. This credit card comes with no annual fee and no hidden fees, yet it’s a Visa credit card that can be used anywhere Visa is accepted worldwide. Not only that, but you may be able to qualify for a credit limit up to $10,000, and you’ll earn rewards on your spending.

    Cash back is initially offered at 1%, but you’ll graduate to earning 1.25% back after six on-time payments then 1.5% back once you’ve made 12 on-time payments on your card. This credit card also works in conjunction with a handy app that helps you track your spending and set a budget for the month, and usage of the app is also free.

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Details
  • Pros & Cons

  • Pros
    • Earns 1.5% cash back on every dollar you spend, or choose to earn rewards points instead
    • If you choose to earn points instead of cash back, you can earn 1,000 bonus rewards points when you spend $1,000 or more in a billing period
    • You can get up to a $25,000 credit line
    Cons
    • Unlike many other secured cards, it has an annual fee (of $25)

    A secured credit card for businesses: Wells Fargo Business Secured Credit Card

    Business owners who want to improve bad credit may need to get started with a secured credit card for business, and the Wells Fargo Business Secured Credit Card is a good option. This option only requires a $25 annual fee per card, yet you can qualify for a line of credit between $500 and $25,000.

    You’ll also earn 1.5% cash back for each dollar you spend, or you can decide to earn rewards “points” instead and redeem them for gift cards, merchandise, and flights. You’ll earn 1 point on every dollar spent and receive 1,000 bonus points when your company spends $1,000 or more during a monthly billing period. Cash back is received automatically as a deposit into an eligible checking or savings account each quarter.

    This card won’t charge any foreign transaction fees, and you can log in for business spending reports from Wells Fargo. 

    Frequently asked questions

    If your credit is in poor shape, picking up a credit card can help if you use it to your advantage. These questions and answers can help you get approved for a credit card for bad credit, then use it to boost your credit score over time.

    How do I know if I have bad credit?

    According to myFICO.com, poor credit is typically considered any FICO score below 580. Meanwhile, “fair credit” is considered any FICO score between 580 and 669.

    The best way to find out if you have bad credit is to check your credit score for free online. Fortunately, a variety of platforms let you get a free look at your credit score, including Credit Sesame and Credit Karma.

    How can a credit card help me build credit?

    Credit cards help you build credit by reporting your credit movements to the three credit bureaus. To build credit with a credit card, all you have to do is use your card for purchases you can afford to pay off. From there, pay your credit card bill early or on time each month. Over time, your positive credit usage will help boost your score.

    What is a secured credit card?

    A secured credit card is a type of credit card that requires a cash deposit as collateral. The cash deposit you put down is typically equal or close to the line of credit you qualify for, meaning you’ll get a $500 line of credit if you put down $500 in cash to get started. While putting down collateral may not seem ideal, secured credit cards are considerably easier to get approved for when you have bad credit or a limited credit history.

    How do I avoid credit card interest?

    To avoid paying interest on purchases made with a credit card, you need to pay your credit card statement balance in full each month. You’ll only be charged interest on balances you carry from one month to the next, so you should strive to avoid this.

    Which credit card fees should I watch out for?

    Try to pick a credit card that doesn’t charge an annual fee. Other credit card fees to watch out for include application fees, late fees, balance transfer fees, cash advance fees, and over-the-limit fees.

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    Bad Credit

    Possible Raises Series B and Moves Fully Remote | State

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    SEATLLE, Oct. 20, 2020 /PRNewswire/ — Possible raises $11 million in new equity funding to expand the team and to provide additional products for its customers. Union Square Ventures led the round, with participation from existing investors Canvas Ventures, Unlock Venture Partners, Columbia Pacific Advisors, Union Bay Partners, Tom Williams, and FJ Labs. The company has also secured $80 million in new debt financing from Park Cities Advisors.

    Furthermore, the company is now fully remote and recently onboarded software engineers from across the US and the globe. Possible is committed to distributed work and actively recruiting for a number of other remote roles.

    Possible provides friendly access to capital and a simple way to build credit for people who otherwise would get a payday loan or get hit with a bank overdraft fee. The company uses real-time financial data, rather than a credit score, to qualify customers and provide funds instantly through its iTunes and Android apps. Unlike payday loans or overdraft fees, Possible loans are paid back in small installments over multiple pay periods to allow customers to catch their breath. By reporting on-time payments to the credit bureaus, Possible enables its customers to build credit history and eventually qualify for cheaper, longer term financial products. On average, customers with low credit scores see their scores increase by 70 points within 4 months.

    Tony Huang, Possible’s CEO explains, “So many people who live paycheck to paycheck can’t afford to build credit history. We’re helping them do it for the first time while providing them with a friendlier and more affordable small-dollar loan.”

    Since launching in June 2018, Possible’s given out loans to hundreds of thousands of customers, helping meet short-term cash needs while building credit history or establishing credit for the first time. These customers, often with bad credit or no credit history, are underserved by traditional banks. Possible fills that gap and provides financial access to those who need it most while giving them the means to climb their way out.

    Gillian Munson, Partner at Union Square Ventures, explains the thesis behind their new investment, “Through tech innovation, data-driven insights, and a focus on the customer, Possible is well on its way to winning the hearts and minds of both consumers and regulators alike, and building a trusted brand that endures.”

    A 2019 Experian study shows 34.8% of consumers are subprime and can’t access money when they need it. They pay $106 billion in punitive fees each year to the existing financial system for short-term credit products. These consumers are trapped in predatory debt cycles of payday loans and overdraft fees without the means to rebuild their credit or improve their financial health. While there has been a number of new tech-enabled products in this space, most lead to similar debt cycles and don’t address the harder issue of improving long-term financial health. That’s where Possible comes in.

    Since the company is now fully remote, Possible is actively hiring talent across the globe. Tyler, Possible’s CTO, explains, “Being fully distributed allows us to access the talent pool of the entire world. Our success so far is a reflection of the quality of our people, and we believe hiring globally will allow us to find exceptional people to join us in achieving our mission.”

    About Possible

    Possible is a fintech company based in Seattle, Washington. The company provides a friendlier and easier way for customers to access capital while also building credit history and improving long-term financial health.

    About Union Square Ventures

    Union Square Ventures is a thesis-driven venture capital firm based in New York City. USV manages over $1 billion in capital across seven funds and focuses investments in portfolio companies with the potential to transform important markets.

    About Park Cities Advisors LLC

    Park Cities Advisors LLC (“PCA”) is a privately held, SEC-registered alternative credit manager based in Dallas, Texas. PCA is focused on private lending across the specialty finance and FinTech sectors and provides debt capital to companies across a variety of industries through asset-based financing transactions.

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    Bad Credit

    Possible Raises Series B and Moves Fully Remote | State News

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    SEATLLE, Oct. 20, 2020 /PRNewswire/ — Possible raises $11 million in new equity funding to expand the team and to provide additional products for its customers. Union Square Ventures led the round, with participation from existing investors Canvas Ventures, Unlock Venture Partners, Columbia Pacific Advisors, Union Bay Partners, Tom Williams, and FJ Labs. The company has also secured $80 million in new debt financing from Park Cities Advisors.

    Furthermore, the company is now fully remote and recently onboarded software engineers from across the US and the globe. Possible is committed to distributed work and actively recruiting for a number of other remote roles.

    Possible provides friendly access to capital and a simple way to build credit for people who otherwise would get a payday loan or get hit with a bank overdraft fee. The company uses real-time financial data, rather than a credit score, to qualify customers and provide funds instantly through its iTunes and Android apps. Unlike payday loans or overdraft fees, Possible loans are paid back in small installments over multiple pay periods to allow customers to catch their breath. By reporting on-time payments to the credit bureaus, Possible enables its customers to build credit history and eventually qualify for cheaper, longer term financial products. On average, customers with low credit scores see their scores increase by 70 points within 4 months.

    Tony Huang, Possible’s CEO explains, “So many people who live paycheck to paycheck can’t afford to build credit history. We’re helping them do it for the first time while providing them with a friendlier and more affordable small-dollar loan.”

    Since launching in June 2018, Possible’s given out loans to hundreds of thousands of customers, helping meet short-term cash needs while building credit history or establishing credit for the first time. These customers, often with bad credit or no credit history, are underserved by traditional banks. Possible fills that gap and provides financial access to those who need it most while giving them the means to climb their way out.

    Gillian Munson, Partner at Union Square Ventures, explains the thesis behind their new investment, “Through tech innovation, data-driven insights, and a focus on the customer, Possible is well on its way to winning the hearts and minds of both consumers and regulators alike, and building a trusted brand that endures.”

    A 2019 Experian study shows 34.8% of consumers are subprime and can’t access money when they need it. They pay $106 billion in punitive fees each year to the existing financial system for short-term credit products. These consumers are trapped in predatory debt cycles of payday loans and overdraft fees without the means to rebuild their credit or improve their financial health. While there has been a number of new tech-enabled products in this space, most lead to similar debt cycles and don’t address the harder issue of improving long-term financial health. That’s where Possible comes in.

    Since the company is now fully remote, Possible is actively hiring talent across the globe. Tyler, Possible’s CTO, explains, “Being fully distributed allows us to access the talent pool of the entire world. Our success so far is a reflection of the quality of our people, and we believe hiring globally will allow us to find exceptional people to join us in achieving our mission.”

    About Possible

    Possible is a fintech company based in Seattle, Washington. The company provides a friendlier and easier way for customers to access capital while also building credit history and improving long-term financial health.

    About Union Square Ventures

    Union Square Ventures is a thesis-driven venture capital firm based in New York City. USV manages over $1 billion in capital across seven funds and focuses investments in portfolio companies with the potential to transform important markets.

    About Park Cities Advisors LLC

    Park Cities Advisors LLC (“PCA”) is a privately held, SEC-registered alternative credit manager based in Dallas, Texas. PCA is focused on private lending across the specialty finance and FinTech sectors and provides debt capital to companies across a variety of industries through asset-based financing transactions.



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    Business Loans – Make The Right Choice!

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    Your business needs funding and there’s no denying that! ‘You need money to make money’ and this is most applicable in the business world! While it is fairly easy to start with an awesome idea, to make a business profitable, you need to invest a good chunk of capital.

    Whether to buy equipment or hire the right minds, you need capital! And the best way to go about it is to search for the ‘right’ business loan solution. Finding the ‘right’ one amongst the plethora of available options is a tricky decision.

    You’ll be under stress to match the repayment frequency. And thus, your business will suffer. Hence, finalizing the right business financing solution after analyzing your business structure, repayment terms, cash-flow, and urgency is the best practice.

    Here’s a detailed breakdown of which business financing solution or small business loan will help your business better!

    1. For Real Estate – SBA

    SBA loan is one of the most popular loans for small business owners. This is pretty straightforward to understand but involves extensive paperwork. If you need a place to kickstart your business, this is most suited for you.

    It is issued by a private lending party or a bank. But the interesting part is that this loan can be guaranteed up to 85% by the federal agency—Small Business Administration (SBA). Hence, lending institutions are free and content to give the loan.

    The best things about this loan are the lowest down payments and low-interest rates. If you wish to pay in the very long term, you can do so. An SBA loan involves a lot of flexibility. The condition being you should have the right financial service provider to guide you.

    2. For An Equipment Or Any One-Off Loan – Equipment Financing, Term Loan

    Do you need a new computer, or a tablet for your employee, or maybe a vehicle for your business’ delivery needs? Equipment financing is best suited for such kinds of needs. You can also get up to 100% financing solutions.

    But there is one drawback that you should be aware of. As long as the repayments are done on time, you’ll continue to have access to the equipment. But the moment you fail short of your commitment, the lending institution has completed control over ceasing it.

    A business term loan is another solution for this kind of requirement. Term loans are based on the ‘term’ that can be anywhere from 1 to 5 years. So, the repayment has to be made in that time-frame. If you’re looking for business loans in Edgewater, NJ, this will be just about right for you!

    3. Need To Balance Cash Flow – Business Line of Credit

    Business Line of Credit is the best financing solution that can help you with balancing your cash flow or handling any emergencies.

    You get access to a limited amount of funds for a set period of time that you need to pay with interest and as soon as you pay it back, your specific balance sheet is turned back to ‘0’. This indicates that you’re again eligible for using that fund.

    You can do it repetitively. There is no drawback to this mechanism. So every time you have an emergency fund need, you can look towards the business line of credit.

    The only shortcoming of this system is that the interest rate is high and may require collaterals for approval. However, it is one of the most appealing choices if you need capital and have a bad credit score!

    4. Credit Card Based Businesses – Merchant Cash Advance

    Do you own a business that involves payments via credit cards? If yes, then the merchant cash advance is the right solution for you.

    A business like retail or food chain that makes use of credit card transactions the most, can utilize merchant cash advance to boost its business. The way this financing system works is, the lender will enquire about your daily credit card transactions to the terminal provider and get your exact details. Then, he will compare it with the asked amount. If both are in accordance, you’ll become eligible for the advance.

    The repayment term is interesting for this financing solution. Instead of getting a fixed rate, the advance provider will give you the figure in percentage. So every day if you make $1000 and the decided percentage is 5, then $50 will be ‘withheld’.

    A merchant cash advance acts more like an investment than a loan!

    5. Have No Collateral – Invoice Financing, Equipment Financing

    Not all businesses have the luxury of putting collateral on the line and getting access to the desired fund. If you fall into the same category, you do not need to worry! Invoice financing can help you out even in this crunch situation.

    Your account receivables serve as collateral in this financing solution and can help you get a loan up to 85% of its worth.

    The only downside is the interest rate that is marginally higher than the traditional solutions.

    Bonus: For A Small Duration – Short Term Loan

    What if you need a loan just for 18 months? You have some debt or need to manage the cash flow, but your requirement is small. Which loan is right for you?

    Well, you can opt for a short term loan. This loan gives you instant access to a lump sum of money that should be paid within the next 18 months.

    The best part about this loan is that bad credit doesn’t bother the process!

    This can also support businesses that need temporary loans to manage or settle a few things. Businesses that do not need some loan that lasts for years!

    But just like all other financing solutions, this loan as well comes with a few drawbacks.

    The first one being the annual cost will be slightly towards the higher side and the second being that a few businesses may find it hard to cope-up with the weekly payments.

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