Credit cards designed for individuals with a 500 credit score are typically available, often in the form of secured credit cards or specific unsecured options aimed at credit building.
Credit Cards for a 500 Credit Score
When your credit score is around 500, which falls into the "bad credit" category, traditional credit cards are usually out of reach. However, several card issuers offer products specifically designed to help you build or rebuild your credit history. These cards often come with features like no annual fees and reporting to the major credit bureaus, which is crucial for improving your score over time.
Here are some credit cards that are known to approve applicants with a 500 credit score:
| Card name | Annual fee | Review score (out of 5) |
|---|---|---|
| Capital One Platinum Secured Credit Card | $0 | 4.1 |
| Petal® 1 "No Annual Fee" Visa® Credit Card | $0 | 4.4 |
| Discover it® Secured Credit Card | $0 | 4.5 |
| Petal® 2 "Cash Back, No Fees" Visa® Credit Card | $0 | 5 |
Understanding Secured vs. Unsecured Cards for Low Scores
- Secured Credit Cards: A common option for a 500 credit score, secured credit cards require a security deposit, which typically becomes your credit limit. This deposit minimizes the risk for the lender. As you make on-time payments, the issuer reports your positive activity to credit bureaus, helping to improve your credit score. Many secured cards offer a path to upgrade to an unsecured card and get your deposit back after a period of responsible use.
- Unsecured Credit Cards for Bad Credit: Less common but available, these cards don't require a security deposit. They might come with higher interest rates or lower credit limits, and some may have annual fees, though the cards listed above are noted as having no annual fee. Cards like the Petal cards use alternative underwriting criteria, looking at factors beyond just your credit score, such as your banking history and income, to determine approval.
Tips for Improving Your 500 Credit Score
Obtaining one of these cards is the first step; using it responsibly is key to improving your credit score.
- Make On-Time Payments: Your payment history is the most significant factor in your credit score. Always pay your bills by the due date. Even a single late payment can severely impact your score.
- Keep Credit Utilization Low: Aim to keep your credit usage below 30% of your available credit limit. For example, if you have a $300 credit limit, try not to carry a balance above $90.
- Monitor Your Credit Report: Regularly check your credit report from all three major bureaus (Equifax, Experian, TransUnion) for errors. You can get a free copy annually. Disputing inaccuracies can help your score.
- Avoid Opening Too Many Accounts: While building credit, focus on one or two cards and manage them well rather than opening multiple new accounts in a short period.
By consistently demonstrating responsible financial behavior with a card designed for lower scores, you can gradually build a positive credit history and open doors to better financial products in the future.
