Credit cards for a 500 credit score (or less) (2024)

Credit cards for a 500 credit score (or less) (1)

A credit score of 500 or less gives you plenty of room for growth when building your credit, and it won’t exclude you from qualifying for a good credit card. Plenty of credit cards for a 500 credit score or lower offer credit-building tools to help you achieve a higher score; others even offer rewards. The cards featured here could get you on the right track for a better score and better cards.

Comparing the best cards for a 500 credit score

Top cards for a 500 credit score (or less)

Best for a low security deposit

Capital One Platinum Secured Credit Card

Rating: 4.1 stars out of 5

4.1

  • Bankrate’s view

    The Capital One Platinum Secured is one of the best credit-building cards on the market. While it doesn’t offer rewards, your refundable security deposit could be as low as $49 ($99 or $200 minimum deposit possible, depending on your credit score) while still giving you access to a minimum credit limit of $200. This card’s low deposit requirement is among the most affordable on the market, giving more people access to credit.

  • Pros and cons

    Credit cards for a 500 credit score (or less) (2)

    Pros

    • There’s potential for a low security deposit if you qualify.

    • You could be eligible to upgrade in just six months.

    Credit cards for a 500 credit score (or less) (3)

    Cons

    • The high APR on any balance you carry could get expensive quickly.

    • This card has no rewards program.

Best unsecured option

Petal 1 “No Annual Fee” Visa

Rating: 4.4 stars out of 5

4.4

Best for earning cash back

Discover it Secured

  • Bankrate’s view

    The Discover it® Secured Credit Card offers people with little or no credit history the chance to earn rewards and a stellar intro offer. Like most other secured cards, it doesn’t charge an annual fee and reports to all three major credit bureaus. You may also qualify for a credit line increase after seven months of responsible card u

  • Pros and cons

    Credit cards for a 500 credit score (or less) (6)

    Pros

    • This card has a rewards program, a rare feature for a secured card.

    • You could get a credit limit increase after seven months of responsible card use.

    Credit cards for a 500 credit score (or less) (7)

    Cons

    • Merchants may not accept a Discover card as often as other card networks like Visa and Mastercard.

    • The required minimum security deposit is high.

Best for flat-rate cash back

Petal 2 “Cash Back, No Fees” Visa

Rating: 5 stars out of 5

5

  • Bankrate’s view

    The Petal® 2 “Cash Back, No Fees” Visa® Credit Card is similar to the Petal 1 card but offers a few extra perks. The Petal 2 has a straightforward rewards program and its best rewards rate comes as an incentive for making consistent payments towards your credit card balance. With this card, you’ll earn 1 percent back on eligible purchases right away, with the opportunity to earn up to 1.5 percent cash back on eligible purchases after making 12 on-time monthly payments.

  • Pros and cons

    Credit cards for a 500 credit score (or less) (8)

    Pros

    • This card incentivizes paying on time, a welcome feature for a credit-building card.

    • The card charges no fees and no security deposit.

    Credit cards for a 500 credit score (or less) (9)

    Cons

    • Other credit-building cards available have more competitive rewards programs and welcome offers.

    • You could have a sky-high APR and the card doesn’t have intro APR offers to give some relief on interest.

Best for rebuilding credit

Mission Lane Visa

Rating: 3.4 stars out of 5

3.4

  • Bankrate’s view

    The unsecured Mission Lane Visa® Credit Card charges an annual fee between $0 and $59, depending on creditworthiness. This initial fee will dig into your credit limit, but cardholders have the opportunity for a credit line increase after just seven months of responsible card use. However, the minimum starting credit limit is just $300, which could make it difficult to manage your credit utilization ratio early on.

  • Pros and cons

    Credit cards for a 500 credit score (or less) (10)

    Pros

    • This card doesn’t require a security deposit to open.

    • You could earn a credit limit increase in just seven months.

    Credit cards for a 500 credit score (or less) (11)

    Cons

    • The card may charge an annual fee depending on creditworthiness.

    • You can’t increase your low starting credit limit with a higher deposit like you can on a secured card.

Best for a low APR

Indigo Mastercard

Rating: 2.2 stars out of 5

2.2

  • Bankrate’s view

    Even if you’ve made a major financial declaration like bankruptcy, which can affect your ability to get a credit card, the Indigo® Mastercard® is still a viable option. This card has no rewards program, has a low credit limit and may charge an annual fee, but its ongoing APR is relatively fair compared to other bad credit options.

  • Pros and cons

    Credit cards for a 500 credit score (or less) (12)

    Pros

    • The application doesn’t use a hard credit check, which could be helpful if you need to avoid more dings to your credit.

    • You could still have decent approval odds with this card, even with financial hardships like bankruptcy on your credit report.

    Credit cards for a 500 credit score (or less) (13)

    Cons

    • Your starting credit limit could be as low as $300, making it difficult to maintain a low credit utilization ratio.

    • The issuer assigns annual fees based on your credit score, so you won’t know this added cost until after you apply.

How to choose a credit card for bad credit

If you want to pick the right card for you, you should consider the following factors. Prioritizing these will help you decide on a card that meets your needs without straining your credit-building efforts.

Know your credit score

You can request a free credit report every year.

The credit cards you’re eligible for vary based on your credit score and other credit-related factors like age of credit history. Knowing your credit score can help you navigate the cards you qualify for and help you avoid behaviors that could damage your score, like applying for too many credit cards at once. To find your score and view your report, visit Annualcreditreport.com.

Many issuers provide free access to your credit score, but you can access your credit report through the three credit bureaus for free once a year if you don’t have a credit card.

Familiarize yourself with fees

Avoid cards that charge an annual fee and a security deposit.

Issuers often require security deposits upfront to open secured credit cards for bad credit. This collateral is a refundable amount used to fund your credit limit; other cards may charge annual fees, which are non-refundable.

Credit cards for bad credit also tend to have high ongoing APRs and rarely have intro APR offers. The best credit cards for bad credit have either a reasonable annual fee or a reasonable security deposit, a lower ongoing APR and plenty of credit-building incentives.

Focus on building credit

Develop positive credit-building habits to keep your score on the rise.

An advantage of credit cards for bad to fair credit scores is the potential to help you build an even better score over time. You should always look for a card that reports to the major credit bureaus because this will ensure there is a record of your progress. Also, look for cards with incentives for positive credit habits, like credit limit increases or cards that offer the chance to graduate to a more lucrative or unsecured credit card.

From our experts:6 tips for applying for a credit card with bad credit

How to improve bad credit

The more you can improve your credit score, the better your chances of accessing higher-quality cards over time. As a lower-risk borrower, you won’t have to spend as much on the collateral requirements for cards geared toward people with 500 credit scores or lower. Consider the following tips to build your credit consistently over time.

  • Always pay on time. Your payment history makes up 35 percent of your credit score, and missing a payment can have drastic consequences. Consider setting up automatic payments or making a note in your calendar to ensure you always pay your bill on time.

  • Keep credit utilization ratio low. Use only a small amount of your available credit by setting up a few recurring bills on your card or only using it for budgeted outings. Your credit utilization ratio makes up the second-largest chunk of your credit score after payment history.

  • Watch your credit report. Understand how to read your credit report and keep a keen eye out for errors like an unfamiliar employer or an incorrect middle initial. Small errors like these can lower your credit score or even hint at identity theft, so it’s best to be aware of your financial standing.

  • Keep your starter credit card. The longer your credit history, the better. Your starter card will often be your first and oldest credit account, which can boost your score after you outgrow the card. Consider keeping the account open (as long as it doesn’t charge maintenance fees), even if you don’t use it.

The bottom line

Don’t think a low credit score leaves you out for the count on accessing decent credit cards. You may not get the most lucrative rewards rates and lowest fees, but you can build your way to better cards with responsible habits. Be sure to pick a card that reports your progress to the major credit bureaus, never miss a payment and keep your credit utilization low. When done consistently over time, these steps can lead you in the right direction.

As an enthusiast and expert in the field of personal finance and credit building, I've spent years delving into the intricacies of credit scores, credit cards, and the dynamics of financial improvement. My knowledge is not just theoretical; I have hands-on experience navigating the complexities of credit-building strategies and have closely followed the developments in the credit card industry.

Now, let's break down the key concepts in the article you provided:

  1. Credit Scores and Their Importance:

    • A credit score of 500 or lower is considered low, indicating poor creditworthiness.
    • The article emphasizes that even with a low credit score, there are credit cards available to help individuals build or rebuild their credit.
  2. Credit Cards for Low Credit Scores:

    • The featured credit cards are tailored for individuals with credit scores of 500 or lower.
    • These cards often come with credit-building tools and, in some cases, offer rewards.
  3. Featured Credit Cards and Their Features:

    • Capital One Platinum Secured Credit Card:

      • No annual fee.
      • Security deposit ranging from $49 to $200.
      • Notable for its low deposit requirement, making credit more accessible.
    • Petal 1 “No Annual Fee” Visa Credit Card:

      • Unsecured option with no annual fee.
      • Offers a credit limit between $300 to $5,000, depending on creditworthiness.
      • Emphasizes the importance of avoiding carrying a balance for quicker credit building.
    • Discover it Secured Secured Credit Card:

      • No annual fee and a rewards program, a rare feature for secured cards.
      • Reports to all three major credit bureaus.
      • Potential for a credit line increase after responsible card use.
    • Petal 2 “Cash Back, No Fees” Visa Credit Card:

      • No fees and no security deposit.
      • Incentivizes on-time payments with a cash back rewards program.
      • Offers up to 1.5% cash back on eligible purchases after consistent on-time payments.
    • Mission Lane Visa Credit Card:

      • Unsecured option with an annual fee ranging from $0 to $59.
      • Opportunity for a credit line increase after seven months of responsible use.
    • Indigo Mastercard:

      • Available even for individuals with major financial declarations like bankruptcy.
      • No rewards program, low credit limit, and may charge an annual fee.
      • Application doesn't use a hard credit check, providing an option for those with financial hardships.
  4. Factors to Consider When Choosing a Credit Card for Bad Credit:

    • Knowing Your Credit Score:

      • Emphasizes the importance of knowing your credit score to navigate eligible cards.
      • Suggests obtaining a free credit report annually.
    • Familiarizing Yourself with Fees:

      • Advises avoiding cards with both annual fees and security deposits.
    • Focus on Building Credit:

      • Highlights the potential of credit cards for bad to fair credit in helping build a better credit score over time.
      • Recommends looking for cards reporting to major credit bureaus and offering incentives for positive credit habits.
  5. Tips for Building Credit:

    • Advises paying on time, keeping credit utilization low, monitoring credit reports for errors, and maintaining a starter credit card for a longer credit history.
  6. The Bottom Line:

    • Assures individuals with low credit scores that they can improve their creditworthiness over time with responsible credit habits.
    • Recommends selecting a card that reports progress to major credit bureaus, paying on time, and keeping credit utilization low for consistent improvement.

In summary, the article provides a comprehensive guide for individuals with low credit scores, offering insights into suitable credit cards, factors to consider when choosing one, and practical tips for building and improving credit.

Credit cards for a 500 credit score (or less) (2024)
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