Bad credit cards help people with poor credit history to regain their credit scores. Although many financial institutions are adamant to give credit cards to people with poor credit history, some financial institutions such as Credit One Bank and Applied Bank have guaranteed approval of unsecured credit cards for bad credit when you apply. I will discuss the seven best-unsecured credit cards you can apply for later in this article.
If you find yourself in a bad credit situation, the best question you can ask yourself is how you got there. There are various reasons as to why you can have a bad credit situation. The most common scenario that leads to bad credit is late payments of debts or not paying at all. Your credit card issuer reports you to the credit bureaus after making fruitless attempts to make you pay the debt.
Unsecured credit cards have no security deposit and that is why they have the name unsecured. This is contrary to the secured credit cards that require you to deposit some money for security. For unsecured credit cards for bad credit with no deposit, the issuer assumes that you will pay without failing since at this time; you are struggling to redeem yourself.
What leads to bad credit history?
Several issues lead to bad credit situations. First of all, as I had mentioned earlier, delayed payments or not paying off your debt can adversely affect your credit scores. It shows how irresponsible you are.
Secondly, spending too much of your credit limit can affect your credit scores negatively. You are supposed to spend below 30% of your credit limit. If you have a credit limit of $3000, then you should spend 30% of $3,000 which is $900.
In addition, having dormant credit cards also lowers your credit scores. If you are not able to use several credit cards, it is better not to apply for them. Having one or two credit cards may serve you better. However, if you use all the credit cards well, you will have wonderful credit records.
Also, hard inquiries by financial institutions when you apply for a loan or a line of credit lower your credit scores. However, this is normally temporary and your scores bounce back to normal within a short time. However, it is good to limit the number of inquiries since all issuers of unsecured credit cards with bad credit must inquire about your credit history from the credit bureaus.
What are credit bureaus?
Credit bureaus are bodies entrusted by the US federal government to keep records of credit users. Every financial institution that issues credit card reports to all the credit bureaus every month.
Three main credit bureaus operate in the US. These include Equifax, Experian, and Equifax. They update their database periodically to incorporate any new data. You are entitled to a free credit report every year. Banks pay some fee to inquire about your credit scores to decide the line of credit to give you.
That is if you are applying for an instant credit card approval for bad credit no deposit since the issuing financial institution must determine your ability to repay a certain amount of debt.
Do all the credit bureaus work the same?
All three credit bureaus use the FICO score guideline and thus use the same criteria to determine your credit scores. FICO scores range from 300 – 850 whereby 300 is very poor and 850 is excellent.
Despite that, there might be a slight difference that might occur to your scores in each bureau that may result from errors of reporting and thus you should compare keenly and contact the customer care of each credit bureau to inquire about any issue.
The FICO score calculation considers your payment history, the amount of debt owed, length of credit history, any new credit, and the type of credit used. In terms of percentage, each factor contributes as follows.
- Payment history (35%)
- The amount owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Type of credit used (10%)
Do loans affect my credit scores?
You might be thinking that only credit card usage affects your scores. Well, if this is the case, then you are wrong. Loans also affect your credit scores since they are forms of credits. If you have been getting personal loans from a credit union, then all your repayment details are with the credit bureaus. You may be having good credit scores if you have been making timely payments or are having bad credit scores if you have been paying late.
Which are the seven best unsecured credit cards for bad credit?
Having considered various factors such as lines of credit, interest rates, and rewards, I have come up with the following seven best-unsecured credit cards that you can apply for. Have a look.
1) Credit One Bank® Unsecured Visa® with Cash Back Rewards
Pre-Qualifying for this card is very fast and easy. Furthermore, the process is secure from online threats and your data is safe. You will be able to get 1% cash back rewards on all the eligible purchases you make with the card.
Interestingly, the rewards appear automatically in your account each month and you can use them according to the terms and conditions. You also benefit from periodic automatic reviews for a credit line increase. It means that if you use your card well, you can qualify for a better card with friendly terms.
The card has $0 Fraud Liability, and thus you won’t be responsible for any unauthorized usage of the card. This may be the best rewards credit card with no annual fee and very beneficial once you get it. Apply here.
2) Fingerhut Credit Account
If you have poor credit, then this card is yours. It is easy to apply and you can get a decision within minutes. The card reports to all the major credit bureaus and it is a good option to build your credit scores. It has $0 annual fees and you will find it economical to use.
Once you get the card, you can use it to shop items from brands such as DeWalt, Samsung, and KitchenAid. If you do not qualify for the card, the company can issue you with the Fingerhut’s Fresh Start Installment Loan and then give you the card on a future date. Apply here.
3) First Access Visa® Card
Apply for the card and get a $300 credit limit that is subject to the available credit. You don’t need a perfect credit at all to apply for this card. Just like other credit cards, you will have to open a checking account to get it. Furthermore, a credit card is very easy to apply for. 60 seconds are enough to get a response.
Your data is also secure from any online threat. You will have a chance to increase your credit scores since the card issuer reports to the credit bureaus every month. Being a Visa card, it can be accepted in many places across the country. Apply here.
4) Total Visa® Card
Apply for the Total Visa® Card and get a response in a few seconds. You first need a checking account before getting it. You will have an easy time using the card since it is accepted countrywide. This is a good opportunity to improve your credit scores using the card since the card issuer reports to the main credit bureaus.
Upon a successful application, you can get a credit limit of up to $300. Both fair and bad credit holders can get this card. Besides, the card has manageable monthly payments so that you do not strain your pockets. You will pay a program fee of $89 to open your account and access your credit. Use the card to transfer money using the routing number and account number to cards of other banks with ease. Apply here.
5) Milestone® Mastercard®
The card pre-qualification does not impact your credit scores. Furthermore, the application is fast and you will get the feedback within a short time. You will be able to access your mobile account anytime using your smartphone. If your card is stolen, you will not be liable for any unauthorized usage of the card.
In addition, the regular APR is 24.9%. You will also be paying an annual fee of between $35 – $99. Cash advances, late payments, over-limit spending, foreign transactions, and returned payments will attract some fees. Apply here.
6) Surge Mastercard®
Apply with any type of credit score. The application does not impact your credit score. Upon getting the card, you will have free access to your Vantage 3.0 score from TransUnion if you sign up for e-statements. Most importantly, you will be able to improve your credit scores since the company reports credit card usage to the credit bureaus.
You will have 24-hour access to your credit card account using your mobile phone. The regular APR ranges from 25.90% – 29.99%. The initial credit limits range from $300 to $750. You will also benefit from fraud protection. Apply here.
7) Indigo® Unsecured Mastercard®
Are you looking for a second chance credit card with no security deposit? If you have a prior bankruptcy, then this card is for you. The prequalification process will not affect your credit scores. It is easy to access your account using your mobile phone. Furthermore, you are protected from any form of fraud in case the card is lost.
The annual fee is $0 – $99 while the regular APR is 24.9%. Improve your credit scores with this card since it reports to the credit bureaus. Again, you will have an opportunity to choose your card design. Apply here.
Unsecured credit cards are good options to improve your credit scores. Also, you get an opportunity to buy goods and services conveniently and receive rewards where possible. Unlike debit cards, credit cards have fraud protection so that when your card is lost, you are not charged. You should choose a card with fewer fees to ensure that you do not incur a lot of usage costs.