Here’s What It Takes to Apply for a Credit Card with Fair Credit

30% of Americans have fair credit — or worse! But few Americans understand that the detriments of fair or bad credit can have surprising and far-reaching consequences.

Some Americans don’t even know what credit scoring is.

With poor credit comes higher interest rates from creditors and an increased likelihood to be denied most credit cards. Your credit score will also negatively influence key agents such as employers, insurers, and even landlords.

Ultimately, this could deny you employment, insurance, and housing opportunities.

Enhancing your credit score is as simple as opening new lines of credit with responsible borrowing and repayment methods.

But how can you improve your credit score when most creditors won’t give you a chance?

The truth is there’s a variety of opportunities to apply for credit cards with fair credit. You just need to know where to look.

And we’ve done the looking for you.

Financial self-improvement starts here, with our comprehensive guide of some of the best credit card options for people with fair or bad credit.

How to Apply for Credit Cards With Fair Credit

While most typical credit cards offer a variety of gimmicks and cash back bonuses, they aren’t the easiest credit cards to get.

With a credit score of 660 or below, we recommend you apply for these suggested types of credit cards as you’re much more likely to be approved.

They’ll have you back on the path to financial well-being — and without the headache.

1. Secured Credit Cards

The vast majority of credit cards are unsecured. So what are secured credit cards, and how are they a good option for people with fair or bad credit scores?

The application process is identical for both. Borrowers will be asked for personal information, such as a social security number, income, and your employer’s information.

Once the credit issuer examines your credit information, they’ll be willing to offer a line of credit.

But this is where unsecured and secured credit cards differ.

At this point in the process, a secured credit card will also require that the borrower make a deposit based on the amount of credit.

This will then be used as collateral.

Once this deposit has been paid, the secured line of credit will be officially approved.

If the cardholder defaults on the line of credit, the deposit will cover the charges.

Best of all, the deposit will be refunded entirely if the borrower decides to close the paid-off account. In this sense, the deposit for a secured credit card is like a security deposit for an apartment.

Remember to pay off your new secured credit card every month. As your credit history improves, you’ll be able to apply for credit cards with better terms.

Some popular secured credit cards include the Discover IT card, which boasts 2% cash back at 25.24% APR, and the Capital One Secured Mastercard, with an increasing credit line over 5 months at 26.99% APR.

If you want more credit card recommendations for people rebuilding their credit history, be sure to check our list.

2. Subprime Credit Cards

All secured credit cards are subprime, but not every subprime credit card is secured.

You’ve probably heard the phrase subprime before, but what does it mean?

A prime rate is the interest rate that most banks give to customers with great credit scores and payment history.

Put most simply: It’s the interest rate paid by the top borrowers.

When your payment history and credit score are only fair or worse, banks see you as a liability and give you rates that are considered “subprime.”

A subprime rate is worse than the prime rate, which means you’ll be paying at a higher interest rate since your lender isn’t confident they’ll get their loans paid in full.

While it sounds like a terrible deal, subprime credit cards are a means to improving your credit history, and as long as your card is paid off every month, the interest is nothing to fret over.

Subprime credit cards without a security deposit are also likely to have additional fees, either annual or monthly, and may outright require a non-refundable payment just to open the account.

While secured cards tend to have significantly fewer fees, subprime credit cards may offer you additional incentives that you’d otherwise not have access to.

They’re certainly worth your consideration.

Here’s our list of some of the best unsecured credit cards currently on offer.

3. Student Credit Cards

New borrowers don’t necessarily have bad credit just because their credit score is low. Those new to credit borrowing are unproven and have a limited payment history, so they start with extremely low scores.

But they’re in the same situation as those with fair or bad credit. How do they get a line of credit and improve their credit scores?

Many banks offer student credit cards which are a fantastic option for young adults new to the financial world. These cards also tend to offer better interest rates than their subprime or secured counterparts.

And applying for them is easy: The only requirement is that the borrower is enrolled in college and has no payment history.

The Bank of America Cash Rewards Credit Card for Students (what a name!) offers 3% cash back for gas and online shopping and has no annual fee.

Another great option is the Journey Student Credit Card from Capital One, with 1.25% cash back if your card is paid in full.

Learn More About Credit Cards

It’s that easy to apply for a credit card with fair (or no) credit. Banks offer a variety of subprime, secured, and student cards to assist those just starting off or with a troubled payment history.

Need some additional motivation to improve your credit score? Take a look at our overview of credit cards rewards programs!

Here are some other articles you may enjoy:
10 Tips on How to Use a Credit Card to Your Advantage
Your Guide to Bad Credit Installment Loans
Is a Personal Loan Right for You? 10 Essential Financial Tips for Millennials
Everything You Need to Know About alternatives to No Credit Check Business Loans