Unsecured credit cards can be a smart, practical way to build credit or boost your credit score. But not everybody qualifies for traditional cards.
That’s why some cards are specially built for users with credit scores of 640 or below. They often come with higher interest rates and lower credit limits. But most offer opportunities to raise your credit limit and lower your interest rate, based on responsible use. These credit-building cards can be especially helpful in emergencies, providing access to spending when other credit lines aren’t available.
Some offer only bare-bones reward programs, where you can typically earn about 1% cash back on some everyday purchases. But most offer monthly reporting to credit bureaus and automatically review your account every six months to see if you’re eligible for a higher limit.
Unsecured cards designed for rebuilding credit can be a game-changer. Just be sure to compare terms, credit limits, annual fees and APRs.
What are the Best Unsecured Credit Cards for Bad Credit?
Here are five popular unsecured cards for users looking to build their credit:
1. Capital One Platinum Visa for Rebuilding Credit
2. Milestone Mastercard
3. Surge Mastercard
4. Indigo Mastercard Unsecured Credit Card
5. Revvi Visa Card
1. Capital One Platinum Visa for Rebuilding Credit
Here’s a credit-building card with a $300 initial spending limit – with no security deposit required. Minimum credit scores vary between Capital One credit cards, and while they don’t promote a score for this one, you can check to see if you qualify without damage to your credit score. There’s an annual of $75 the first year and $99 each year after.
2. Milestone Mastercard
The Milestone Mastercard also offers an initial $300 credit limit with no security deposit, and its first-year annual fee ranges from $35 to $75, a little lower than Capital One. You can also pre-qualify without damaging your credit score.
3. Surge Mastercard
Surge offers a higher initial credit limit than others, ranging from $300 – $1,000, depending on your score. Like the others, you can check if you qualify without damaging your score, and while no minimum score is promoted, “all credit types are welcome to apply.”
4. Indigo Mastercard Unsecured Credit Card
Indigo offers similar terms and rates, with a comparable $300 initial credit limit, but they’re more accepting of troubled credit history, even if you’ve filed for bankruptcy before. Like other cards targeting credit-builders, it’s another way to build an on-time payment history, which can help build your score month after month.
5. Revvi Visa Card
Revvi’s APRs can be much higher than others, but the card offers 1% cash-back rewards (with restrictions). Like others, the initial credit limit is $300, and you can prequalify without dinging your score. However, the chance to request a higher limit is a little less frequent, available every twelve months (instead of six) with a fee charged.
What is an unsecured card?
Unsecured credit cards come in all shapes and sizes, with different credit scores and qualifying terms. But an upfront deposit is not required (unlike secured cards) and your credit limit is “revolving,” which means you don’t have to use it all at once, and it’s always available to you, even if you don’t use it every month.
From credit-building cards, such as the ones on our list, to the most luxurious travel rewards cards, unsecured credit cards cover various needs. You may get a lot of spending power and even save money with these cards, but use them responsibly to avoid incurring high-interest charges.
Secured Cards vs. Unsecured Cards
Secured credit cards are defined by a security deposit, which you’ll use to open the account, with your card issuer providing a credit limit equal to the same amount. Many, like the Bright Money App, allow you to deposit additional money over time in order to boost your credit limit, and when you close the account and pay off the outstanding balance, you’ll get the deposit returned in full.
In contrast, an unsecured card doesn’t require a deposit up front, and your income and credit history determines your credit limit. Secured credit cards are often issued regardless of your creditworthiness and based only on the size of your security deposit.
Why Bright Money?
Bright Money offers a suite of innovative financial products designed to assist individuals in rebuilding their credit and achieving financial wellness. Bright Plan is at the forefront of these offerings, a comprehensive financial planning tool that empowers users to create personalized budgets, track spending habits, and set achievable financial goals. Bright Plan helps users make informed decisions to improve their credit standing by providing actionable insights and recommendations based on individual financial circumstances.
Bright Builder, another flagship product, is specifically tailored to help users establish and build their credit history. Through responsible use of Bright Builder, individuals can gradually build positive credit activity, leading to improved credit scores over time. Moreover, Bright Money offers educational resources and personalized coaching to support users' credit-building journey. By combining cutting-edge technology with expert guidance, Bright Money provides a holistic approach to financial wellness, empowering individuals to take control of their finances and build a brighter future.
In addition to Bright Plan and Bright Builder, Bright Money offers Bright Credit, an innovative tool designed to further enhance users' credit-building efforts. Bright Credit provides personalized strategies and insights to help users optimize their credit utilization, manage credit inquiries, and strategically improve their credit score over time. With Bright Credit, users can take proactive steps towards achieving their financial goals and securing a brighter financial future.
Conclusion
In summary, unsecured credit cards tailored for individuals with credit scores of 640 or below offer a practical solution for those looking to build or repair their credit. Despite potentially higher interest rates and lower credit limits, these cards provide opportunities for credit limit increases and interest rate reductions through responsible use. They serve as a lifeline in emergencies, providing access to funds when other credit options are unavailable. While some cards may offer minimal rewards, the focus is on monthly reporting to credit bureaus and periodic account reviews for credit limit adjustments. It's essential to compare terms, fees, and APRs to choose the card that best fits your financial needs and goals.
FAQs
1. What is the difference between secured and unsecured credit cards?
Secured credit cards require an upfront security deposit, which determines the credit limit, while unsecured credit cards do not require a deposit and offer credit limits based on income and credit history.
2. How do unsecured credit cards help in building credit?
Unsecured credit cards report monthly to credit bureaus, allowing users to demonstrate responsible credit use and establish a positive credit history over time, which can lead to an improved credit score.
3. Why choose Bright Money for credit building?
Bright Money offers innovative financial products like Bright Plan and Bright Builder, designed to assist individuals in rebuilding their credit and achieving financial wellness. These tools provide personalized guidance and insights to help users make informed decisions and gradually improve their credit standing.
Recommended Readings
The 5 best credit cards to build your credit score in 2022
5 tips for paying off credit card debt before interest rates start rising in 2022
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