Getting a Credit Card When Your Credit History Is Poor

Yes, you can get a credit card with bad credit, but your options are limited and the terms will be less favorable

Banks and credit card companies do issue cards to people with poor credit histories, but they treat the risk differently. Instead of a standard rewards card with a low interest rate, you will likely be offered a secured credit card — one that requires you to put down a cash deposit that becomes your credit limit. You might also find unsecured cards designed for bad credit, though these come with higher interest rates and annual fees. The catch is that neither type helps you immediately; both are tools for rebuilding, not for getting approved and spending freely.

Your credit history matters because it shows lenders whether you have paid past debts on time. A poor history means missed payments, high balances, collections accounts, or bankruptcy on your record. Lenders see this as a sign you might not pay them back, so they protect themselves by either refusing you outright or offering you a card with stricter terms and higher costs.

Key Takeaways

• Secured credit cards require a cash deposit (usually $200 to $2,500) that becomes your credit limit, and most issuers report your payments to the credit bureaus to help rebuild your history.
• Unsecured cards for bad credit exist but typically charge annual fees of $25 to $100 and interest rates of 25% to 36%, making them expensive to carry a balance on.
• Your credit limit with either type of card will be low — often equal to your deposit or a few hundred dollars — because the issuer is managing risk.
• Payments are reported to credit bureaus only if the card issuer reports to them, so confirm this before opening an account, since rebuilding requires that reporting.
• Using the card responsibly (paying in full or nearly in full each month) is the actual path to better credit, not simply having the card.

How secured credit cards work

A secured credit card is the most common option for people with bad credit. You deposit money into a savings account held by the card issuer — typically between $200 and $2,500 — and that amount becomes your credit limit. You then use the card like any other credit card: you make purchases, receive a monthly bill, and pay it back. The deposit sits in the background as collateral; the issuer keeps it if you stop paying.

The deposit is not a fee — it is your own money held in reserve. You can eventually close the account and get the deposit back, or the issuer may convert it to a regular unsecured card after you demonstrate responsible use (usually 6 to 18 months of on-time payments). Some issuers automatically increase your credit limit over time without requiring an additional deposit.

The real value of a secured card is that the issuer reports your payment history to the three major credit bureaus: Equifax, Experian, and TransUnion. Each on-time payment builds a record of reliability. This is how your credit score improves — not from having the card, but from using it and paying it back consistently. If the issuer does not report to the bureaus, the card will not help your credit, so always confirm this before opening an account.

Unsecured cards for bad credit and what they cost

Some card issuers offer unsecured cards for bad credit — cards that do not require a deposit. These sound better at first, but the trade-off is steep. Interest rates typically range from 25% to 36%, compared to 15% to 25% for standard cards. Many also charge annual fees of $25 to $100, and some charge additional fees for things like paying by phone or requesting a credit limit increase.

The math matters here. If you carry a $500 balance on a card with a 30% interest rate and a $75 annual fee, you are paying roughly $225 per year in interest alone, plus the fee. That is nearly 60% of the balance in costs. For this reason, unsecured bad-credit cards are most useful if you can pay off your balance in full each month — the interest rate does not matter if you owe nothing at the end of the billing cycle.

Unsecured cards do report to the credit bureaus (again, confirm this first), so they can help rebuild your credit just as a secured card does. The difference is that a secured card forces you to think carefully about how much you spend, because your limit is capped at your deposit. An unsecured card lets you spend more, which can be dangerous if you are trying to rebuild.

Where to find cards you can actually get approved for

Not every bank will issue a card to someone with bad credit. Your best options are credit unions, online banks, and card issuers that specialize in bad-credit products. Credit unions often have more flexible approval standards than large national banks, especially if you are a member. Online banks like Chime, LendingClub, and Self have secured card programs. Capital One, Discover, and OpenSky are national issuers known for approving people with poor credit histories.

Before you apply, check whether the issuer reports to all three credit bureaus. This information is usually in the card's terms and conditions or on the issuer's website. Applying for a card triggers a hard inquiry on your credit report, which temporarily lowers your score by a few points. Multiple applications in a short time can hurt more, so research first and apply only to cards you are likely to be approved for.

You can also ask your current bank or credit union whether they offer a secured card program. If you already have a checking or savings account there, they may have more information about your financial habits and be more willing to work with you.

What happens to your credit limit and interest rate over time

Your starting credit limit will be low — usually equal to your deposit or a few hundred dollars. This is intentional. The issuer is managing risk, and a low limit means you cannot rack up a large debt if you stop paying. As you make on-time payments, some issuers will raise your limit without asking, or they will offer to raise it if you request.

Interest rates on bad-credit cards are also unlikely to drop just because you pay on time. The rate you are offered at approval is typically the rate you will keep, even after a year of perfect payments. However, after 6 to 18 months of responsible use, some issuers will convert your secured card to an unsecured card with a lower interest rate and return your deposit. This is the real win — you get your money back and your rate improves.

Your credit score itself will improve as you use the card responsibly. Payment history makes up 35% of your credit score, so consistent on-time payments are the most powerful tool you have. After 6 to 12 months of good behavior, you may see your score rise by 50 to 100 points, depending on how bad it was to start.

The difference between a hard inquiry and a soft inquiry

When you apply for a credit card, the issuer pulls your credit report to decide whether to approve you. This is called a hard inquiry, and it shows up on your credit report for about two years. Multiple hard inquiries in a short time can lower your score by several points, and lenders see them as a sign that you are desperately seeking credit.

Before you apply, some issuers let you check whether you are likely to be approved using a soft inquiry, which does not affect your credit score and does not show up on your report. This is sometimes called a "pre-qualification" check. If an issuer offers this, use it. It lets you see your odds without the penalty of a hard inquiry.

Mistakes to avoid when rebuilding with a credit card

The most common mistake is carrying a balance and paying interest. If you are rebuilding credit, your goal is to show that you can pay back what you borrow. Paying interest does not prove this — it just costs you money. Instead, use the card for small purchases you can afford to pay off in full each month. A $50 purchase paid in full looks just as good to credit bureaus as a $500 purchase paid in full.

Another mistake is maxing out your credit limit. Credit utilization — the percentage of your available credit that you are using — makes up 30% of your credit score. If your limit is $500 and you spend $450, your utilization is 90%, which hurts your score. Aim to use no more than 30% of your limit, ideally less. This is another reason a secured card can help: the low limit forces you to spend less.

Do not close the account after your credit improves. Closing an old account removes it from your credit history and can lower your score. Instead, keep the card open and use it occasionally, paying it off in full. The longer your account history, the better it looks to lenders.

Frequently Asked Questions

Will getting a bad-credit card hurt my credit score?

The application itself will cause a small, temporary drop (usually 5 to 10 points) from the hard inquiry. However, if you use the card responsibly and make on-time payments, your score will recover and then improve over the following months. The long-term benefit outweighs the short-term dip.

Can I use a secured card to build credit if I have no credit history?

Yes. Secured cards are designed for people with no credit history as well as those with bad credit. The issuer is not judging your past; they are managing the risk of your future. A deposit protects them either way, so approval is usually straightforward if you have a valid ID and a bank account.

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

Some issuers offer secured cards with deposits as low as $200. If that is still out of reach, look into becoming an authorized user on someone else's credit card — their payment history will be added to your credit report. Alternatively, a credit-builder loan from a credit union works similarly to a secured card and may have lower minimum amounts.

How long does it take to improve my credit score with a credit card?

You may see improvement within 3 to 6 months of on-time payments, but significant improvement (50+ points) typically takes 6 to 12 months. Credit scores are built over time, and there is no shortcut. Consistent, responsible use is what matters.

Should I apply for multiple bad-credit cards at once?

No. Each application triggers a hard inquiry, and multiple inquiries in a short time lower your score and signal to lenders that you are desperate for credit. Apply to one card, use it responsibly for a few months, and then consider a second card if you need a higher credit limit.