Building credit can seem like a Catch-22. You need a positive credit history to improve your credit score, and you’ll build that history with a credit card or loan. But to qualify for a credit card or loan, you often need a good credit score.
“A credit card is the easiest product to get, other than a payday loan,” according to credit expert John Ulzheimer, formerly of Equifax and FICO.
There are several types of credit cards that accept applicants with lower credit scores, including secured cards, student cards, retail credit cards and some alternative card products. Just keep in mind that with a lower score, you might get a lower credit limit or higher interest rate.
Choosing the Best Easy Approval Credit Card
There are four main types of credit cards that accept applicants with no credit history or a low score: student cards, secured cards, store cards and alternative cards. Each comes with benefits and drawbacks.
- Secured cards require a security deposit, meaning you’ll need a decent amount of cash upfront. The amount you deposit is typically equal to your credit limit, so the more you can afford to deposit, the better your available credit (a factor in your FICO score) will be.
- Student credit cards can offer great rewards-earning potential, but they are only available to students. They typically also come with higher interest rates and relatively low credit limits.
- Store cards are more accessible to those with low credit, but they can still offer good rewards if you frequent the retailer. That said, they tend to have high interest rates, and their rewards potential is often limited outside of the store.
- Alternative credit cards are designed for building credit. These cards could offer you a better credit limit or educational tools to help you improve your score. However, you’re unlikely to earn rewards.
Besides these factors, you should consider terms including fees, whether your payments are reported to credit bureaus, interest rate and rewards when choosing a credit card.
Best Student Card: Capital One SavorOne Student Cash Rewards Credit Card
The Capital One SavorOne Student Cash Rewards Credit Card is an excellent choice if you’re looking for a card with a lower barrier to entry that also offers great rewards potential. You’ll need to be a student to qualify, but you’ll build your score while earning 3% cash back on dining, entertainment, select streaming services and at grocery stores. All other purchases earn 1% cash back. There is no annual fee associated with this card.
The SavorOne Student Cash Rewards Credit Card is advertised for students at eligible institutions with fair credit. If you are worried about your approval odds, Capital One offers a preapproval tool that allows you to check your eligibility without a hard credit check.
Another great option for students is the Discover it Student Cash Back card. A big draw for this card is the introductory bonus: Discover will match all the cash back you’ve earned at the end of the first year. You’ll earn cash back to the tune of 5% (up to a quarterly maximum) on quarterly bonus categories that you’ll need to activate and 1% on everything else. Past categories have included Amazon purchases, groceries and dining out. This card will take a bit more effort to maximize, but with a bonus that matches your earnings, it can be worth it.
Best Secured Card: Capital One Quicksilver Secured Cash Rewards Credit Card
Secured credit cards offer the lowest barrier to entry of cards for those with bad credit. This is because they require a security deposit to open, which serves as collateral and lowers the risk the issuer takes by offering you credit. The amount you put down is typically equal to your credit limit.
The drawback is that you’ll need to put down a $200 security deposit, and you’ll only receive a $200 initial credit limit in return, limiting your spending power. Still, Capital One will consider you for a higher credit limit after six months of on-time payments. So as long as you use your card responsibly, you can continue to improve your score.
An alternative choice is the Discover it Secured Credit Card. It doesn’t require a credit history to qualify, and you’ll still get the opportunity to earn 2% cash back on up to $1,000 in purchases per quarter at gas stations and restaurants and 1% cash back on everything else. You’ll have to put down a minimum security deposit of $200 for a $200 credit line, but Discover will review your account after at least seven months of on-time payments for transition to an unsecured card.
Best Store Card: Based on Where You Shop
There is no one best store credit card because you’ll get the most value by choosing a retailer you frequent.
In general, retail cards accept applicants with lower credit scores and come with a higher interest rate. Rewards earnings are typically limited to purchases at the store, and you may qualify for benefits like discounts or access to exclusive sales. But to get value out of the card, you’ll need to spend money at the store regularly.
Best Alternative Card: OpenSky Secured Visa Credit Card
An alternative credit card is one that offers approval to applicants with no or low credit scores because approval is based on other factors. The OpenSky Secured Visa Credit Card is a great example, as the issuer does not perform a credit check to approve you for the card.
Despite not requiring a credit check, the OpenSky Secured Visa will still report your on-time payments to all three credit bureaus, allowing you to build your credit score. On the downside, you’ll have to pay a $35 annual fee as well as a security deposit between $200 and $3,000, which matches your credit limit.
If you need an easy approval card because you have a poor credit history or a habit of accruing debt, you could also consider the Upgrade Cash Rewards Visa. This card requires a credit check like other credit cards, but it is available to those with fair credit, and it has a unique payment structure that can help you manage debt repayments and avoid getting caught in a cycle of minimum payments.
Like with a personal loan, the Upgrade card will charge you an installment payment every month over a set term so you have a set plan to repay your debt. You might also have the opportunity to earn 1.5% cash back on your purchases as you make payments.
Credit Card Approval Requirements
Credit card companies are required by the CARD Act of 2009 to use certain approval factors to make sure you can pay back what you charge. When you apply for a credit card, the issuer will consider:
- Your income. The issuer will look at your income to find out whether you can afford minimum monthly payments on your new card, along with payments on any debts you may have.
- Your credit score. Your credit score indicates your past performance with credit products. The higher your score, the better, but a bad or nonexistent score won’t necessarily exclude you from all credit cards.
A credit card issuer may also look at your job history, your housing status and other factors when making credit decisions.
“Your credit score is not the sole determining factor,” says Chip Chinery of Chip’s Money Tips, a personal finance blog and podcast. “I’ve been turned down for too many recent inquiries or too many cards.”
You probably won’t have great odds of approval with an issuer if you’ve discharged a debt with that issuer, Ulzheimer adds.
Is a Credit Card the Right Choice for You?
While applying for a credit card is a good way to build credit, it is not the only option.
You could also consider a credit-builder loan or work on your score by paying on time on existing loans like a car or student loan. You might also be able to get credit for your rent payments, although you’ll have to talk to your landlord or use a third-party service to report payments.
Getting a credit card is a big decision, so make sure you are ready to make your payments on time before you sign up.