Are you struggling with a low credit score and wondering how you can find a credit card that suits your needs? Don't worry! We've got your back. In this article, we will explore some of the best credit cards for credit scores of 500, so you can work on rebuilding your credit while also enjoying the convenience and perks that credit cards offer.
Credit Cards For Credit Scores Of 500 Table of Contents
Why a Credit Score of 500 Matters
Why a Credit Score of 500 Matters
First, let's understand why a credit score of 500 is crucial. A credit score within this range is considered poor or bad by most lenders, which means you may have trouble getting approved for loans, mortgages, or other credit products. However, having access to a credit card can help you build your credit score over time, making it necessary to find one that fits your situation.
Prepaid and Secured Credit Cards
For those with a credit score of 500, two primary types of credit cards can be a good fit: prepaid cards and secured cards.
- Prepaid cards are not technically credit cards since you need to load them up with your funds before using them. However, they can help you manage your spending without the risk of going into debt. They do not usually report to credit bureaus, so they won't directly help you improve your credit score.
- Secured credit cards, on the other hand, require a refundable security deposit, which usually determines your credit limit. These cards report your payment history to the credit bureaus, so responsible use of a secured card can help increase your credit score over time.
Best Credit Cards for a Credit Score of 500
Here are our top picks for credit cards you should consider if you have a credit score of 500:
- Capital One Secured Mastercard: With no annual fee and a security deposit as low as $49, this card is perfect for those looking to rebuild their credit. The reports to all three major credit bureaus help to establish a strong payment history.
- Discover it Secured: This secured card offers cashback rewards on various purchases, including 2% cashback at gas stations and restaurants (up to $1,000 spent quarterly) and 1% cashback on all other purchases. With no annual fee and the opportunity to earn rewards, it's an excellent choice for rebuilding credit while getting rewarded for your spending habits.
- OpenSky Secured Visa Credit Card: If you don't want to deal with a credit check during the application process, this card is the way to go. The required security deposit can range from $200 to $3,000, and the annual fee is $35.
Credit Cards For Credit Scores Of 500 Example:
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Let's say you apply for the Capital One Secured Mastercard with a credit score of 500. You provide a security deposit of $200, and the bank grants you a $200 credit limit. Over the next six months, you use the card for small purchases and pay off the balance in full each month.
By doing this, you're demonstrating responsible credit use, which will be reported to the credit bureaus. This positive payment history can help improve your credit score over time, allowing you to gain access to better credit products in the future.
We hope this article has helped simplify the process of finding credit cards for credit scores of 500. Remember that building a strong credit history takes time and consistent responsible behavior. Use your credit card wisely, always pay on time, and your credit score will improve over time. Share this article with friends or family who need guidance on choosing the right credit card for a low credit score, and don't forget to explore our other guides on Flik Eco to expand your knowledge on personal finance and investing.
