How to get a credit card with bad credit
You can get a credit card with bad credit, but your options are narrower and the terms will be less favorable than cards offered to people with good credit. The most direct path is a secured credit card, which requires a cash deposit that becomes your credit limit. You put down $500 to $2,500, the card issuer holds that money in a savings account, and you use the card like any other — the deposit protects the issuer if you stop paying. After 12 to 24 months of on-time payments, many issuers convert the card to an unsecured card and return your deposit. Unsecured cards for bad credit exist but carry higher interest rates and annual fees; they are harder to find and usually require you to apply in person at a bank branch rather than online.
The second path is becoming an authorized user on someone else's account with good payment history. The primary cardholder's account appears on your credit report, and if that account has a long history of on-time payments and low balances, it can raise your score within weeks. You do not need to use the card or even receive one in the mail — some people add you just to help your credit. This works only if the primary cardholder's bank reports authorized user activity to the credit bureaus, which most do but not all.
A third option is a credit-builder loan from a credit union or online lender. You borrow a small amount ($300 to $1,000), the lender holds the money in a savings account, and you make monthly payments to yourself while building payment history. These loans are designed specifically to raise credit scores and carry lower interest rates than credit cards for bad credit.
Key Takeaways
- Secured cards require a cash deposit equal to your credit limit and are the easiest path to approval with bad credit, though the deposit is returned after consistent on-time payments.
- Unsecured cards for bad credit exist but carry annual fees of $25 to $100 and interest rates of 20% to 36%, and are usually available only through in-person bank applications.
- Becoming an authorized user on a card with good payment history can raise your score within weeks if the issuer reports to credit bureaus, without requiring you to use the card.
- Credit-builder loans from credit unions charge lower interest than bad-credit credit cards and are designed to build payment history without the revolving debt structure of a card.
- Your first payment must be on time — even one late payment on a new account with bad credit will damage your score further and may trigger account closure.
Secured cards: deposit requirements and timeline to conversion
A secured card works because the cash deposit removes the issuer's risk. You deposit $500 to $2,500 (the amount varies by issuer), that money sits in a savings account owned by the card company, and you receive a card with a credit limit equal to your deposit. Interest accrues on the card balance just as it does on any other card — the deposit is not your credit limit, it is collateral. If you stop paying, the issuer takes the deposit to cover what you owe.
The deposit itself earns little to no interest while held. Some issuers pay 0.01% annual percentage yield; others pay nothing. You cannot touch the deposit while the account is open and in good standing. If you close the account or default, you lose access to it.
Conversion to an unsecured card usually happens after 12 to 24 months of on-time payments. The issuer reviews your account, and if you have paid every bill on time and kept your balance low (under 30% of your limit), they return your deposit and convert the card to a standard unsecured card with a higher limit. Some issuers do this automatically; others require you to request it. A few secured cards never convert — read the terms before you apply to confirm conversion is possible.
The interest rate on a secured card ranges from 18% to 24%, which is higher than cards for people with good credit but lower than unsecured bad-credit cards. Annual fees are usually $0 to $50. Some secured cards charge a one-time processing fee of $25 to $75 when you open the account.
Unsecured cards for bad credit: where to find them and what they cost
Unsecured cards for bad credit do not require a deposit, but they are harder to find and carry steeper costs. Interest rates run 20% to 36% annual percentage rate, and annual fees are typically $25 to $100. Some charge both an annual fee and a one-time processing fee. A few charge monthly maintenance fees on top of that.
Most unsecured bad-credit cards are not available through online applications. You have to visit a bank branch in person, speak to a loan officer, and apply face-to-face. This is because the issuer wants to verify your identity and assess your situation directly — online fraud is higher in this market. Banks that offer them include some regional and community banks; national banks rarely do. Credit unions sometimes offer unsecured cards to members with bad credit at lower rates than commercial banks.
The advantage of an unsecured card is that you do not tie up cash as a deposit. The disadvantage is the cost: a $1,000 balance at 28% interest costs $280 per year in interest alone, plus the annual fee. If you carry a balance, a secured card is almost always cheaper, even though it requires a deposit upfront.
Becoming an authorized user on someone else's account
When you become an authorized user, the primary cardholder's account history appears on your credit report. If that account has been open for years, has never missed a payment, and keeps the balance below 30% of the limit, it can raise your score by 50 to 100 points within 30 to 45 days. This is one of the fastest ways to improve a bad credit score.
The primary cardholder does not have to give you a physical card, and you do not have to use the account. Some people add you to their account specifically to help your credit, with no expectation that you will charge anything. The account just needs to exist and report to the credit bureaus — most major issuers do this automatically for authorized users.
Not every issuer reports authorized user accounts to all three credit bureaus (Equifax, Experian, TransUnion). Before you ask someone to add you, confirm that their card issuer reports to all three. Call the issuer's customer service line and ask: "Does this card report authorized user accounts to Equifax, Experian, and TransUnion?" If the answer is no or unclear, the boost to your credit will be incomplete or nonexistent.
The risk is that if the primary cardholder misses a payment or runs up a high balance, your credit score drops along with theirs. You have no control over the account, so you are trusting someone else's financial behavior. If the relationship ends badly, they can remove you from the account, and the positive history disappears from your report within 30 to 60 days.
Credit-builder loans as an alternative to bad-credit cards
A credit-builder loan is a small loan designed specifically to build credit history. You borrow $300 to $1,000, the lender deposits that money into a savings account in your name, and you make monthly payments (usually 12 to 24 months) to repay the loan. Once you finish paying, you get the money back.
The interest rate on a credit-builder loan is typically 6% to 12% annual percentage rate, which is much lower than bad-credit credit cards. There are usually no annual fees. The lender reports your payments to all three credit bureaus, so every on-time payment builds your history.
The main difference from a credit card is that you do not have revolving credit — you borrow a fixed amount, make fixed payments, and the loan ends. This does not teach you how to manage a credit card balance, but it does prove you can make payments on time. After six months of on-time payments on a credit-builder loan, you may be able to get a secured card with better terms, or even an unsecured card.
Credit unions are the most common source of credit-builder loans, and they often offer them to members with no credit history or very bad credit. Online lenders like Self and Kikoff also offer them, though they charge slightly higher interest rates and may charge origination fees of $10 to $20.
What happens to your credit score when you open a new account
Opening any new credit account — secured card, unsecured card, or credit-builder loan — causes a small, temporary drop in your credit score. This is called a hard inquiry or hard pull. The inquiry itself costs 5 to 10 points and stays on your report for 12 months, though it stops affecting your score after about three months.
A new account also lowers your average account age. If you have one old account and open a new one, the average age drops, which lowers your score by another 5 to 15 points. This effect fades as the new account ages.
The benefit comes from on-time payments. After your first on-time payment, your score begins to recover. After three to six months of on-time payments, the score boost from payment history usually exceeds the damage from the hard inquiry and new account. After 12 months, the hard inquiry stops affecting your score at all.
Do not open multiple new accounts in a short time. Each hard inquiry and new account lowers your score. If you apply for a secured card, wait at least three months before applying for anything else. If you are shopping for the best secured card, do all your applications within two weeks — credit scoring models treat multiple inquiries for the same type of credit (like multiple card applications) as a single inquiry if they happen close together.
How to use a new account to rebuild credit without going into debt
The goal of a bad-credit card is to build payment history, not to borrow money. Keep your balance as low as possible. Make a small purchase each month — $10 to $25 — and pay it off in full before the due date. This shows the issuer you can manage the account and shows the credit bureaus you are making on-time payments.
Do not carry a balance to build credit faster. Carrying a balance costs you money in interest and does not build credit any faster than paying in full. A $100 balance at 20% interest costs you $20 per year. Paying it off immediately costs you nothing and builds credit just as well.
Keep your balance below 30% of your credit limit at all times. If your limit is $500, do not let the balance go above $150. This ratio, called credit utilization, is one of the largest factors in your credit score. High utilization signals financial stress, even if you pay on time. Low utilization signals control.
Set up automatic payments for at least the minimum due, and pay the full balance if you can. Missing even one payment on a new account with bad credit can trigger account closure and damage your score further. The issuer is watching closely in the first 12 months.
Frequently Asked Questions
How long does it take to improve my credit score with a secured card?
Your score begins to improve after your first on-time payment, usually within 30 to 45 days of opening the account. After three to six months of on-time payments, you should see a meaningful improvement — often 50 to 100 points. The longer you keep the account open and pay on time, the more your score improves. After 12 to 24 months, you may be ready to convert to an unsecured card or open other accounts.
Can I use a secured card and a credit-builder loan at the same time?
Yes. Using both can speed up your credit recovery because you are building two separate payment histories. However, opening both accounts at the same time causes two hard inquiries, which lowers your score more than opening one account. Consider opening the secured card first, waiting three months, then opening the credit-builder loan. This spreads out the damage and lets you see how you manage the card before taking on a loan.
What if I miss a payment on my secured card?
One late payment on a new account with bad credit can trigger account closure and significantly damage your score. The issuer may freeze your card, demand immediate payment of the full balance, and report the late payment to the credit bureaus. Your score may drop 50 to 100 points. If you are struggling to make a payment, contact the issuer immediately and ask about a payment plan or hardship program before the payment is due.
Do I get my deposit back if I close the secured card?
Yes, but only if your account is in good standing — no late payments and no outstanding balance. If you close the account, the issuer returns your deposit within 5 to 10 business days. If you have a balance, the issuer may apply the deposit to that balance first. If you default, the issuer keeps the deposit to cover what you owe.
Is a secured card better than an unsecured bad-credit card?
For most people, yes. A secured card costs less in interest and annual fees, requires no credit history to open, and converts to an unsecured card after you prove yourself. An unsecured bad-credit card costs more and is harder to find. The only advantage of an unsecured card is that you do not tie up a deposit, but that advantage is usually outweighed by the higher cost.