Are There “Guaranteed Approval” Credit Cards for Bad Credit?

Are there such things as "guaranteed approval" credit cards for people with bad credit? Doesn't it sound a little like a pink unicorn?

Well, believe it or not, guaranteed approval credit cards not only exist, but they're designed for people with bad credit!

But before you think you've found the answer to all your credit dilemmas, you should know that even a guaranteed approval credit card has a few qualification requirements. They may be minimal, but they're still there.

There are two basic requirements issuers want to see even for a guaranteed approval credit card:

• An active checking account
• Proof of income

And while these types of cards are intended to help people with bad credit, just how bad can someone's credit be before they don't qualify for one of these cards? FICO considers a score between 300 and 600 as a bad credit score, while VantageScore uses the language of "poor" to indicate a bad credit score. Any number between 500 and 600 is considered a poor credit score, and a number between 300 and 499 is considered "very poor."

Knowing which companies will help "subprime borrowers" is extremely important, as applying for a credit card and getting rejected causes your credit score to drop again.

Your Credit Report and Credit Score

Along with knowing which companies can provide you with a credit card, even if you have "bad" credit, you need to know your credit score. Now is not the time to stick your head in the sand and hope for the best.

Through 2023, you can request a free copy of your credit report at www.annualcreditreport.com. It takes three easy steps to request credit reports from Equifax, Experian or TransUnion (or all three simultaneously).

You'll be asked a few questions to which only you should know the answer. They're meant to be challenging to help protect you from identity theft. Once you answer the questions, you can download and print your credit report.

On Annual Credit Report's site, they disclaimed,

"Your free annual credit report does not include credit scores."

The primary reason it's important to check your credit report is to make sure all the information on the report that determines your score is accurate.

That's on you. No one will check your report to verify that your identifying information is correct and up-to-date or if a company inputs the wrong information or claims that you owe them money when you really don't.

You can use dispute processes to correct any errors and should do so as soon as you are aware of the mistakes:

• For example, credit dispute letters like a 609 dispute letter or a 611 dispute letter can help you work with the credit bureau to ensure all the information on your report is accurate.
• In addition, helpful tools like writing a debt verification letter can clear up any confusion on your report.
• Credit Karma will let you get your credit score for free. As they say on their site, "It's always 100% free. Period." You can check your credit with them, which will not affect your score. Credit Karma works with Equifax and TransUnion to give you access to your free credit scores and free credit reports.
• Both Equifax and TransUnion use the VantageScore 3.0 scoring model, which was created in collaboration with all three major credit bureaus (including Experian). They don't offer FICO scores as FICO is a separate organization with its own scoring models.

It's normal for the two credit scoring models to produce different numbers. Lenders understand this and look beyond the number to what it represents — good, bad, fair, excellent.

Secured Versus Unsecured Credit Cards

There's a major difference between secured and unsecured credit cards.

Investopedia defines a secured credit card as a "type of credit card that is backed by a cash deposit from the cardholder." With a secured credit card, you pay a cash deposit upfront to guarantee your credit line if you default on any payments.

An unsecured credit card doesn't require collateral as a security deposit to secure it. They're a common type of credit card, but not one that someone with poor credit will likely qualify for.

Once the deposit is in place, a secured credit card acts like any other credit card, although they usually have lower credit limits and more fees than unsecured credit cards do.

In a sense, secured credit cards act like debit or ATM cards, so why are they better than using a debit card or getting cash from an ATM? Technically speaking, a secured credit card still uses credit from the issuer — they just have access to a cash reserve if the user doesn't pay their credit card bill.

A secured card is worth getting because it is a way to build your credit score, whether you have bad credit or no credit due to your age or life circumstances. As long as you continue to pay at least the minimum owing on your card, you'll improve your credit score and may look forward to qualifying for an unsecured credit card without needing to tie up collateral or a cash deposit.

"Guaranteed Approved" Credit Cards

While nothing is truly guaranteed, these are the easiest credit cards to get approved for. Bad credit or no credit is not, on its own, a barrier to getting one of these 12 credit cards.

1. OpenSky Secured Visa Credit Card

Secured rating: 4.5
Average approval rate: 85% for the past five years
Credit needed: Poor
Requires: U.S. mailing address, proof of identity, some income
Doesn't require: Credit history, credit check
Annual fee: $35
Regular APR: 20.39% variable

2. Surge Secured Mastercard

Secured rating: 4.6
Average approval rate: N/A
Credit needed: All scores welcome to apply
Requires: $300 initial refundable deposit (sets your credit limit)
Annual fee: $69
Regular APR: 19.99% variable

3. Capital One Platinum Secured Credit Card

Secured rating: 4.7
Average approval rate: N/A
Credit needed: Limited or bad
Requires: A deposit amount that's less than the credit limit you'll be given, credit check with all three credit bureaus
Doesn't require: Credit score
Annual fee: None
Regular APR: 28.49% variable

4. Capital One Quicksilver Secured Cash Rewards Credit Card

Secured rating: 4.8
Credit needed: Limited, bad
Requires: U.S. mailing address, have a valid SSN, disclosure of total annual income, access to authorized bank account, refundable $200 security deposit to get a $200 initial credit line
Annual fee: None
Regular APR: 28.49% variable

5. Discover it Secured Credit Card

Secured rating: 4.7
Average approval rate: N/A
Credit needed: New or rebuilding
Requires: 10.99% intro APR for six months, minimum refundable $200 security deposit to get a $200 initial credit line
Doesn't require: Credit score
Annual fee: None
Regular APR: 25.99% variable

6. Bank of America Customized Cash Rewards Secured Credit Card

Secured rating: 4.6
Average approval rate: N/A
Credit needed: Bad or limited
Requires: A minimum refundable security deposit of $200 (maximum of $5,000)
Doesn't require: Credit check
Annual fee: None
Regular APR: 25.49% variable

7. Citi Secured Credit Card

Secured rating: 4.5
Average approval rate: N/A
Credit needed: Limited history, no credit, new to credit
Requires: Minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 25.49%

8. Savings Secured Platinum Rewards Credit Card

Secured rating: 4.5
Average approval rate: N/A
Credit needed: N/A
Requires: Minimum refundable $250 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 14.99%

9. nRewards Secured Credit Card

Secured rating: 4.5
Average approval rate: None, poor
Credit needed: N/A
Requires: Must be a member of Navy Federal Credit Union, minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 18%

10. PREMIER Bankcard Secured Credit Card

Secured rating: 4.5
Average approval rate: N/A
Credit needed: Bad, limited, no credit
Requires: Minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: None
Regular APR: 18%

11. Indigo Unsecured Mastercard

Bad credit rating: 4.3
Average approval rate: N/A
Credit needed: Fair, good or previous bankruptcy
Requires: Minimum refundable $200 security deposit
Doesn't require: Credit check
Annual fee: $0 - $99
Regular APR: 24.9%

12. Reflex Mastercard

Bad credit rating: 4.4
Average approval rate: N/A
Credit needed: Bad, fair, or no credit
Requires: See terms
Doesn't require: Credit check
Annual fee: See terms
Regular APR: 24.99 - 29.99% variable

13. FIT Mastercard

Bad credit rating: 4.3
Average approval rate: N/A
Credit needed: Bad, poor, fair
Requires: See terms
Doesn't require: Credit check
Annual fee: See terms
Regular APR: 29.99%

What's Better — Bad Credit or No Credit?

In general, no credit is better than having bad credit. But when it comes to qualifying for loans or a credit card, these issues put you in a difficult position. If you find a loan or credit card company that will lend you money, you'll likely have a higher interest rate with less attractive borrowing terms.

Even with these similarities, bad credit and no credit are two different problems, requiring different strategies to overcome them.

Bad credit is usually defined by one or more of these behaviors: late payments, collection accounts, bankruptcies, charge-offs, or other damaging items. Bad credit behavior is reflected in bad credit scores of less than 600 for FICO and VantageScore.

According to FICO Score, the average credit score is currently 716, and 15.5% of Americans have a score below 600.

No credit is when someone has never applied for a loan, credit card, or financing before and has zero credit history. It's hard to develop a credit score when one is "credit invisible" and doesn't meet the minimum requirements for a FICO or VantageScore credit score.

• The minimum requirement for FICO's credit scoring model is to have at least one account with a minimum of six months' history plus one account that has been reported to the credit bureaus within the previous six months.
• The minimum requirement for VantageScore's credit scoring model is slightly easier. You need at least one account, but no minimum age requirement is set.

In the eyes of lenders, bad credit is seen as worse than no credit. No credit means you're an unknown quantity, while bad credit means you're a known quantity with a history of credit management mistakes.

Ways to Fix Bad Credit

We've alluded to some ways to fix bad credit above, but let's be clear about four ways you can fix bad credit and turn a low credit score into a higher one that will give you more opportunity to borrow money with fewer penalties.

Here are the four ways you can fix bad credit:

1. Review your three credit reports. One way to check your credit score for free is to sign up for an introductory scoring service. You can sign up for a limited time (usually one week) and check your score for free. Just remember to make a note in your calendar to cancel your subscription before the trial period ends. If you don't, the service will start billing your credit card.
2. Check your reports for any errors. The Federal Trade Commission released a report stating that 25% of all consumers found mistakes on their credit reports. Don't assume that credit bureaus will provide you with an error-free report. Be diligent in checking your reports and follow up with the credit bureaus to get them removed.
3. Build new credit. Along with using secured and unsecured credit cards, become an authorized user, acquire a credit builder loan, get a student loan (if you actually need one), and use Experian's credit boost. If you can show that you've paid bills like your cell phone, utilities, or streaming services consistently and on time, Experian can "pull data" from your bank account and use the information to help create a credit history. This only works with Experian, but it's a way to start.
4. Develop good credit habits. It's never too early or late to develop good credit habits. Pay your bills on time and consistently. Don't spend money you don't have.

So, while you can get a credit card even with bad credit, we'll keep encouraging you to move forward by repeating the last bit of advice: develop good credit habits. Do the work to pay your bills on time, every time.

You'll not only improve your credit score, but you'll also sleep better. And the world will offer you more opportunities to expand your horizons.

Do you have any questions about any of these listed credit cards or anything else credit-related? If so, be sure to drop us a comment down below, and we'll get to answering any of your potential questions as soon as possible!

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