If your FICO credit score is under 600, trying to borrow money can feel like a hopeless situation. After all, a low credit score can affect your ability to obtain a standard credit card, car loan, or mortgage.
It doesn’t make those things unattainable; however, it will limit your options when it comes to the type of credit card or loan you may be trying to get. The higher your credit score, the better the rates and rewards will be.
The good news is that there are credit cards available even if you struggle with poor credit.
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Best Credit Cards for a 500 Credit Score
Each of the cards listed below is designed for people looking to improve their credit score. Some credit card issuers, like Discover, DCU, and Capital One, can even switch you to a traditional credit card after you spend some time with a secured or credit builder card.
Petal 1 Visa Credit Card
The Petal 2 Visa Credit Card is recommended for people with credit scores between 600 and 699. But if your credit score is lower than 600, you’ll likely have better luck with the Petal 1 Visa Credit Card.
While some credit cards qualify you based on credit score alone, Petal 1 considers other financial behaviors, such as income and bill payment history. You may be required to connect your checking account to Petal so your account activity can be reviewed for the previous three months. Petal can make an approval decision based on that activity if you don’t already have a credit score.
Petal 1 Leap Program
Petal’s Leap program enables you to earn a credit line increase in as little as six months by making on-time payments.
Petal® 1 “No Annual Fee” Visa® Credit Card is one of the few credit cards in this credit score range that offers rewards. Through the Petal Perks program, you can earn between 2%-10% cash back when you make purchases at Petal retail partners, a list that includes Costco, Dunkin, Sam’s Club, and McDonald’s.
If your payment history with Petal 1 is satisfactory and your credit score improves, Petal also offers the Petal 2 Cash Back Rewards Card. This card offers a lower APR, a higher credit limit, and more rewards.
Petal 1 Visa Credit Card features:
Annual fee: annual_fees
Credit Limit: $300 – $5,000
Reports to all three credit bureaus: Yes
Bonus: None
Rewards: Earn from 2% to 10% cash back from select merchants using the Petal Perks program.
Petal Credit cards are issued by WebBank, Member FDIC
Capital One Platinum Secured Credit Card
The card_name offers a credit limit of $200 with a security deposit of as little as $49. A major advantage to the card, especially if you have limited savings, is that if you can’t pay your security deposit upfront, they’ll allow you to make installments as long as the full amount is paid within 35 days of approval.
If you’re trying to improve your credit, you can monitor your progress through CreditWise, a free credit monitoring service offered by Capital One. And if your monthly payments are made on time, Capital One will perform an account review within six months.
This may result in an increase in your credit limit without you needing to deposit more money. On top of no annual fees, you may be able to upgrade to an unsecured Platinum card once your credit score improves.
While Capital One accepts applicants with all types of credit history, you can still be declined for certain factors, like high outstanding debt or insufficient income. However, that’s a risk when applying for any credit card, including those for credit scores below 600.
Capital One Platinum Secured Card features:
Annual fee: annual_fees
Credit Limit: $200 credit line with an initial deposit of $49, $99, or $200 for those who qualify. You can deposit more money before your account opens to increase your credit limit to a maximum of $1,000.
Reports to all three credit bureaus: Yes
Bonus: None
Rewards: None
Chime Credit Builder Secured Visa Credit Card
The Chime Credit Builder Secured Credit Card is a prepaid credit card, so you don’t pay interest, and there is no annual fee. Chime doesn’t even pull your credit report. The card reports to all three credit bureaus.
To qualify, you need to open a Chime checking account and set up a direct deposit of $200. And because the credit line on your card is based on your checking account balance, there is no preset limit.
A major benefit of the Chime card is that your revolving credit utilization, which normally accounts for 30% of your credit score, will not be reported to the credit bureaus. However, missing payments is not an option, as your card will be disabled until the payment is made. If your payment is 30 days late, that will be reported to the bureaus, and it will have a negative effect on your score. Learn more in our full Chime Review.
Chime Credit Builder Secured Visa Credit Card features:
Annual fee: $0
Credit Limit: Based on the amount in your Chime checking account
Reports to all three credit bureaus: Yes
Bonus: None
Rewards: None
👉 Learn More about Chime Credit Builder
Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. Please see back of your Card for its issuing bank.
Discover It Secured Card
When it comes to rewards, Discover It Secured may be your best option. With no credit score required, Discover It pays rewards on all qualifying purchases. And within seven months, your account will be reviewed to see if you qualify for an unsecured card. If so, your security deposit will be refunded.
With a full cashback match at the end of your first year, you’ll also receive 2% cash back on places like gas stations and restaurants, as well as 1% cash back on all other purchases. Discover also gives you the ability to monitor your FICO credit score as a free service.
This is one of the few credit cards for the 500 – 599 credit score range to offer rewards. Cardholders earn 1% cash back on all purchases plus 2% cash back on rotating categories. And at the end of the first year, Discover will match all the cashback you earn.
Discover It Secured Card basic features:
Annual fee: $0
Credit Limit: Based on the deposit amount, however, a minimum of $200 is required, and the maximum is $2,500
Reports to all three credit bureaus: Yes
Bonus: None
Rewards: 2% cash back on rotating categories and 1% on all other purchases. Discover It Secured offers unlimited cashback matching at the end of your first year.
DCU Visa Platinum Secured Credit Card
DCU offers one of the top secured credit cards in the industry. Credit limits are set by the cardholder, or more specifically, by the cardholder’s security deposit. The card also features a low APR and no fees – as in no annual fee, no foreign transaction fees, no cash advance fee, and no balance transfer fee. The same APR applies to purchases, cash advances, and balance transfer amounts.
One drawback is that you must open a DCU checking account to qualify for the card; however, DCU is one of the few credit unions that accept applicants from across the country.
When your credit score improves, you can trade up to a traditional, unsecured credit card. DCU offers several, including a rewards credit card, also with a low APR and no fees.
DCU Visa Platinum Secured Credit Card features:
Annual fee: $0
Credit Limit: Deposit determines your credit limit with a minimum $500 deposit required
Reports to all three credit bureaus: Yes
Bonus: None
Rewards: None
FAQs
Yes. The best option may be credit builder loans, which are available from many banks and credit unions. With a credit builder loan, the “lender” provides you with the funds for the security deposit, so you don’t need to come up with the funds out of your own pocket. The savings account will act as security for a loan that matches the amount on deposit.
For example, DCU Credit Union’s credit builder loan has a fixed rate of 5% APR and allows loan amounts ranging from $500 to $3,000 for terms of 12 to 24 months. You can either make the monthly payments from your paycheck or have them deducted from the securing savings account.
If you’re trying to improve your score while already having a large amount of debt, opening a new credit card account could actually hurt your credit score.
If you’re looking to build or improve your credit, start out with one credit card. Then wait a year or so before applying for another. The credit card offers should get progressively better, along with your credit score.
Yes, some companies specialize in providing mortgages and car loans to those with poor credit. The downside to these types of loans is the high-interest rates.
The answer is yes but with limits. That’s because credit is necessary when it comes to personal, student, auto, and home loans. If you don’t plan on having any of those, you may be able to go through life with poor credit.
That said, renting an apartment or leasing a car often requires a certain level of credit to qualify. Essentially, with poor or no credit, you must rely on your cash savings to pay for whatever you need to buy.
Final Thoughts
Whatever your reasons for having a low credit score, there are steps you can take to improve it. If you’re unsure what your credit score is, here are some ways to check your credit score for free.
Having a low FICO score can limit your ability to get adequate housing and transportation. By improving your credit, you can build a more secure future.
Getting the right secured credit card isn’t the only answer, but it can certainly help.
