how to choose personal loans for debt consolidation

If you’re up to your eyeballs in debt, a personal loan may seem like the perfect way to find relief. You’ll get the benefit of paying one creditor each month instead of several. Plus, you’ll probably save on interest, and eliminate your balances more quickly.

However, since there are so many personal loans for debt consolidation out there, how do you know which options are worth considering?

Read on to learn more on how to evaluate your options.

1. Check the qualification criteria

Not all lenders are made equal. In other words, some will have more stringent qualification criteria than others. So, when conducting your initial search, you’ll want to be mindful of the following:

  • Minimum credit score: if the lender doesn’t post this information, call to inquire. Having a lower score doesn’t mean you won’t qualify, but it helps to know where you stand before applying.
  • Work history: It’s common for those who’ve recently entered the workforce to seek out more affordable financing for their credit card debt. However, some lenders require you to have been employed for a minimum number of years.

2. Compare interest rates

As with most debt products, the lowest interest rates go to the customers with the best credit scores. Having blemished credit doesn’t mean you won’t get approved, but the loan will be more costly. In some instances, the interest may outweigh the benefits of debt consolidation, despite the fact that consolidating is more convenient.

The following scenarios illustrate why it doesn’t always pay to consolidate your debt using a personal loan:

3. Remember the fees

Some lenders cater to consumers with less-than-perfect credit. What seems like a good way to get out of debt could be another debt product riddled with fees. You should be mindful of origination fees before applying for a personal loan to consolidate your debt.

“If you’re saving a minuscule amount just to make the payments easier, the costs of originating a new loan won’t make much financial sense,” notes Jeff White, JD and Analyst at Fit Small Business. Also, inquire about prepayment penalties, because they could cost you a fortune if you plan to pay off the loan early.

4. Choose a repayment period

If you’re looking to consolidate installment loans, pay close attention to the proposed repayment period. An extended loan term may lowers your monthly payments but it also means you’ll pay more in interest over time. And, if the rate on the personal loan is similar to what you were already paying, you could end up paying more.

Some important considerations

Some companies that claim to offer debt consolidation products are credit counseling agencies. Instead of paying off your debt and collecting the proceeds from you through a new loan, they pay your creditors on a monthly basis in exchange for a fee. Some also negotiate with creditors to secure a lower monthly rate or settlement. This may not be a bad idea if you don’t qualify for a debt consolidation loan and you need help to set up a budget and negotiate with lenders.

Where to Find Personal Loans for Debt Consolidation

Are you ready to start searching for debt consolidation loans? To help you find the most competitive rates, use SuperMoney’s personal loans review and comparison tool. This tool allows you to view a variety of lenders along with their qualification criteria, APR ranges, and amounts. You can also see reviews from existing customers. It can be accessed free of charge and it only takes a few minutes of your time.

Most lenders also offer a pre-screening tool to help you determine if their loan products are a good fit. So, consider using this tool to help you narrow down your final options. There is no impact to your credit since it only performs a soft pull on your credit.

Finally, run the numbers to confirm you can afford the new monthly payment before signing on the dotted line.

personal loan can help rebuild credit score after bankruptcy

Filing for bankruptcy clears many of your personal financial obligations, but it also places you in credit purgatory. Whether you declare Chapter 7 or Chapter 13, bankruptcy leaves a stain on your credit profile that will stay with you for up to 10 years. But you don’t have to wait 10 years to rebuild your credit. A personal loan, especially from your local credit union or an online lender, can be a powerful tool to help you regain your financial footing and rebuild your credit. 

Tip: Using personal loans to rebuild your credit history is a two-edged sword. Although making regular payments on a personal loan can help, taking on debt can be expensive and push you into deeper financial difficulties. Take a reality check before purchasing a personal loan and make sure you can afford the monthly payments. 

Build Favorable Credit History with On-Time Payments

According to MyFICO.com — the company behind the most commonly used credit score by lenders — your payment history is the single largest factor in calculating your FICO score. A whopping 35 percent of your score is determined by how promptly you pay your bills. By taking a personal loan with lenders that report to major credit reporting bureaus, such as NetCredit or Rise, you can nudge your credit score in the right direction. Why? Personal loans are repaid over months or years, which gives you plenty of time to establish a pattern of on-time payments. 

Tip: If you do decide to get a loan to help your credit score, avoid payday loans. They don’t report to credit bureaus and will do nothing to rebuild your credit. 

Give Yourself A Loan

The drawback of using a personal loan to improve your credit is you may be tempted to buy things you cannot afford. You can minimize the cost of a personal loan by investing the funds in a secure investment instrument, such as a CD, and use the loan as a tool to save money.

Captian Money Tip: Notice the interest you pay on the loan will exceed the income you generate from the CD. This is not a good investment idea. The primary goal (and only potential benefit) is to build a positive payment history.

Many banks and credit unions will provide loans secured by CDs. The money you borrow is deposited directly into the CD account while you make payments on the loan each month. You are essentially borrowing from yourself. This option is great for lenders because there is no risk for them. After you have repaid the amount of the loan, plus whatever interest is charged, the bank releases its hold on your CD. Once your CD matures, you receive earned interest along with your original deposit. In the meantime, your bank or credit union reports your on-time payments to the three major credit reporting agencies, which could help your credit score.

If your bank or credit union doesn’t offer CDs, or if you cannot qualify for a bank or credit union loan, do not despair. You can obtain a personal loan and use the money to purchase a CD from any financial institution that you choose. If you get your loan through an alternative lender, make sure they report to at least one credit bureau.

Obtain A (Secured) Credit Card

Many people choose to live without a credit card after bankruptcy. But everyday activities, such as renting a car or booking a hotel, can be difficult without a credit card. If you qualify for an unsecured credit card after filing for bankruptcy, the terms you receive will be less than desirable: low credit limits, stiff fees, and high interest rates.

Secured credit cards, such as First Progress Platinum Elite MastercardUSAA's Platinum Mastercard (only for members of the armed forces and their families), look and work like regular credit cards but are available to people with poor credit. Also, they usually offer lower interest rates and few or no fees because the credit limits are dictated by the guarantee deposit you provide. 

However, if you just filed for bankruptcy, you probably don’t have much cash lying around to deposit as a guarantee. A personal loan allows you to obtain the cash you need to make a substantial deposit and receive a reasonable credit limit of $1,000 or $1,500.

Captian Money Tip: Credit score algorithms also look at your debt-to-available-credit ratio. In fact, credit utilization accounts for 30 percent of your FICO score. Once you have a credit card, you could further improve your credit score by maintaining low balances on your secured credit cards.

Qualify for Better Credit Offers

None of these methods are quick fixes for your credit. Don’t trust people or companies who claim they can remove all negative items on your credit report. Although incorrect items can be deleted from your credit profile, there’s no way you’re removing legitimate items, such as a bankruptcy. The best approach is to ensure that there are no errors in your credit report and rebuild your credit profile with regular and on time payments, such as loan or credit card payments. Expect to see improvements in your score after about six months to a year.A personal loan can help improve your credit score after a bankruptcy

If you do decide to get a personal loan, stick with lenders that offer competitive rates, consider borrowers with poor credit and report payments to credit bureaus. Of course, obtaining a loan is not the only, or the best, way to rebuild your credit score. Consider talking to a credit specialist about your options. Compare the best credit repair companies and read customer reviews at SuperMoney.com.

Tip: Reputable credit repair companies can help consumers save time and money by providing an in-depth analysis of their credit report and helping with the submission of dispute letters to challenge inaccurate credit reports. Having said that, there is nothing a credit repair company can do that you can’t do for yourself if you have the time and know-how. As with all lines of business, there are bad credit repair companies that are big on promises but provide little to no value for money. Check expert and consumer reviews on credit repair companies before hiring their services.

can paying off your car improve your credit score

If you’re trying to buy a house or car or seeking a new job, making the effort to boost your credit score could mean the difference between success and disappointment, especially if your credit profile is marginal. Even if you’re not in the market for new credit, working to improve your credit score is a good strategy in general. Whether your credit is poor, so-so or even pretty good, chances are it could be even better.

On the other hand, if you’re seeking a silver bullet or magic wand, you are bound to be disappointed. While some of the strategies below can result in a dramatic rise in your credit score within a short period of time, there is no quick fix where improving your credit score is concerned. Nonetheless, following these tips will greatly improve your odds of achieving a higher credit score.

1. Pay Bills on Time

Your payment history counts for a whopping 35 percent of your overall credit score. Maintaining a current payment record is an excellent way to boost your credit score substantially. On the other hand, falling behind on your payments for even one account is an almost guaranteed way to sink your FICO score considerably.

2. Reduce Debt Levels (or Increase Income)

Another significant factor in your FICO score is your debt-to-income ratio. Therefore, reducing your debt levels can improve your credit score quite a lot. If your expenses are already cut to the bone, you might look into boosting your income. Not only will your credit score likely improve, you may feel less overall stress about your finances.

3. Concentrate Credit Inquiries

When you are house hunting, you will probably seek out the best possible interest rate for your mortgage. Likewise, you will probably shop around for the lowest interest rates for a car loan if you’re in the market for a new ride. Credit reporting agencies account for that by counting similar credit inquiries made within a limited period of time as one “hard” credit inquiry, which translates to a lesser hit on your credit score.

4. Leave Old Accounts Open

The age of your oldest active accounts also has a bearing on your credit score. Therefore it’s a good idea to leave old accounts open if they are in good standing. This is especially true for credit cards with high credit limits that you don’t use often – leaving those accounts open also improves your credit utilization ratio, which also boosts your score.

5. Re-schedule Payment Due Dates

Many accounts give you the option of scheduling your due dates. Take advantage of this convenience and schedule your due dates for one or two days after your pay dates if you are a wage earner so that you are more likely to have cash on hand to pay. That’s another way to help maintain consistent on-time bill payments.

6. Correct Credit Report Errors

You are entitled to obtain one free copy of your credit report annually from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. If you space your credit reports every four months, you could monitor your credit year round for free. Monitoring your credit reports and correcting errors is a nearly effortless way to improve your FICO score.

7. Establish and Maintain a Mix of Credit

Maintaining a perfect on-time payment record for one credit card account is great. But maintaining a record of on-time payments on a credit card, and your mortgage and maybe a car note is even better. That’s because credit cards count as revolving credit while mortgages and car notes are categorized as installment debt. Responsibly handling both types of debt definitely improves your credit report and FICO score.

8. Clean Up Overdue Debts

OK, so you messed up one or two accounts in the past. It happens. But if at all possible, you should clean up those accounts that are reported as delinquent or as write offs rather than leaving them in their present status. Paying off those bad debts should result in your credit report reflecting them as paid in full (and if not, write to the credit reporting agencies to correct the errors). That looks much better on your credit report and will in turn improve your credit score.

9. Don’t Telegraph Future Credit Problems

Are you going through a nasty dispute with a partner or (soon to be ex) spouse? Avoid paying attorney’s fees with a credit card, taking a rash of cash advances or using your credit card at a pawn shop. While these actions themselves don’t have a direct adverse impact on your credit report or your FICO score, such behaviors could indicate that you’re having money problems. Merchants and credit card companies might get spooked and reduce your credit limits or even close your accounts – which definitely would adversely affect your FICO score.

10. Consolidate Small Balances

Let’s say you owe 200 dollars on one card and 450 dollars on another and 135 dollars on a third credit card. If possible, pay off those small debts either with a personal loan or by consolidating them onto a single (hopefully low-interest) credit card. Your credit report will reflect one monthly payment instead of several, which can improve your credit score. Just don’t take the opportunity to run up new debts on your paid off cards, or you will defeat the purpose of consolidating your old debts.

Improving Your Credit Score

If you know you’ll be seeking new credit in the foreseeable future, begin taking action as soon as possible to clean up your credit. Allowing at least a year is ideal, but even beginning several months in advance is good. You should also sign up for services like Credit Karma and Mint, which provide free credit scores along with copies of your credit report. That way, you can monitor the progress of your credit boosting efforts.

Although improving your credit score requires both effort and patience, the above examples illustrate that many of the strategies available to improve your credit score involve common sense actions that you should be taking anyway. That’s the good news: nearly everyone can improve his or her credit score significantly.

Credit repair companies exist to help individuals repair their overall credit score by handling the process on their behalf. They help clients evaluate their credit report to identify the possible inaccurate information. They can then act on your behalf to challenge those items as well as those that are unfair or unsubstantiated and request that they be corrected or removed.

We really dig in to the Realities of Credit Repair Companies in this article.

A good credit repair company will have several flagstones that set it apart from some of the fly-by-night companies that continue to surface. One key thing you should look for is that the organization has licensed legal staff and is registered with the Attorney General.

Another important aspect is the length of time they have been in business as well as their rating with the Better Business Bureau (BBB). When looking into that you can also see how many claims have been filed against them and how they have resolved them.

Further, a reputable organization will offer more than just credit repair. They should also offer you credit counseling or advice and strategies to re-build good credit. After all, there is no point in re-establishing good credit if you don’t know how to keep it.

Finally, you will want to make sure that progress is being made at an acceptable rate once you do choose a company to go with. Unfortunately, there are too many crooked organizations out there today that will be more than happy to collect a monthly fee but are slow to act on your issues.

With these things in mind, here are some of the top Credit Repair Agencies out there, all of them featured on our Credit Repair Reviews page.

1. CreditRepair.com

Credit Repair

Credit Repair was established in 1997 and is well regarded as an industry leader. This full service credit repair and financial improvement center does not require a contract nor does it have any hidden fees. They provide clients with 24/7 access to online tools for repairing bad credit and communicating progress updates. The service empowers customers to control their credit repair plan and progress.

Credit Repair has a simple process to remove negative items from your credit report such as late payments, charge offs, collection accounts, bankruptcies, liens, repos, foreclosures, judgments and more. They contact the three major credit bureaus on your behalf to get these negative items removed which helps to raise your overall credit score.

2. Sky Blue Credit Repair

Sky Blue

For over 20 years, Sky Blue Credit Repair has been helping people with their credit repair needs. They offer a comprehensive package which includes disputing issues on your credit report and helping to rebuild your credit.

Sky Blue Credit Repair offers their customers credit counseling to get their credit back on track. They have flat rate pricing, a licensed legal staff, and are registered with the Attorney General. They also offer an unconditional guarantee which offers a complete refund if for any reason you are not happy with your service. This service combined with their A+ rating with the Better Business Bureau, make Sky Blue Credit Repair an excellent choice.

3. Lexington Law

Lexington Law

Lexington Law is yet another firm that specializes in the process of removing inaccurate entries from your credit report. The firm has been in the business for 23 years and has served more than a half a million customers. With a long history of restoring good credit, Lexington employs lawyers and paralegals that are experts in the area of credit repair laws nationwide and successfully removes over 2.5 million inaccuracies each year.

Lexington Law offers it’s customers credit counseling, credit score updates, and flat rate pricing. They are also registered with the Attorney General and have a licensed legal staff on hand.

4. Ovation

Ovation

Ovation Credit Services offers a free credit consultation even before you sign up for their services. They have been in business for 10 years and offer their customers a customized credit repair service with easy online access to your specific credit repair information.

This organization prides itself on the one-on-one customer service it offers, with an advisor that is assigned at the beginning of your service that follows you through the entire process. This organization is an accredited business with an A+ rating with the Better Business Bureau, and is also registered with the Attorney General.

5. MSI Credit Solutions

MSI Credit Solutions

MSI Credit Solutions offers credit counseling for it’s customers as well as a licensed legal staff to assist with your credit repair needs. They are licensed with the Attorney General and have been in business for almost ten years. They offer credit score updates and flat rate pricing for their services.

One of the unique things about this company is that it guarantees to boost your credit score by at least 50 points or it will refund your money back to you. Their helpful and friendly staff offer good customer support and are very knowledgeable in the field of credit repair issues.

6. MyCreditGroup

MyCreditGroup

This company was established in 2000 to help customers address their credit report issues and improve their credit score by eliminating errors and negative marks on their credit report. They have a licensed legal staff on hand ready to help you with your credit repair needs, and are registered with the Attorney General. They are also an accredited business with the Better Business Bureau and are listed with an A+ rating.

My Credit Group specializes in negotiating payments with your creditors to help fix your bad credit, as well as helping you open new positive lines of credit. They offer a full complement of features and services, flat rate pricing, and credit counseling services.

7. Academy Credit

Academy Credit

Academy Credit offers debt-settlement services as well as all other credit repair services to help you fix your credit. They provide great resources for understanding and evaluating your credit rights, and promise to fight on your behalf for your credit rights so that you don’t have to deal with the hassles and headaches.

Academy Credit boasts a credit repair success rate of 95% for their clients. They also offer a unique Bill Reporter tool which helps you pay your bills on time by keeping track of them which can help improve your credit score. They have a licensed legal staff and are registered with the Attorney General.

8. The Credit People

TheCreditPeople

This organization was started in 2001 and is one of very few credit repair organizations to offer its services for a one time flat fee, and no recurring monthly fees after that. With their services, you get unlimited credit repair services and allows you to be involved in the process as much or as little as you want.

The Credit People also offers a guarantee that if you do not see an improvement in your credit score within six months, they will pay you $50. They also offer a complete money back guarantee if you are not happy with the services that you receive.

9. Veracity Credit Consultants

Veracity Credit Consultants

Veracity Credit Consultants takes a unique approach to tackling your credit issues by asking you where you want your credit rating to take you before they determine what kind of service they will offer you. They are honest and realistic with what they tell their clients to expect, and focus on making corrections to your credit report and getting inaccurate information removed, thus helping improve your credit score.

This company was formed in 2003 and boasts over 100,000 customers served to date. They offer credit counseling, credit score updates and flat-rate pricing. They are also an accredited business with the Better Business Bureau and are listed with an A- rating.

10. 180 Credit Solutions

180 Credit Solutions

This agency offers a full complement of credit repair services to help you improve your credit score, and works closely with you throughout the process. Clients are assigned a dedicated account manager that helps you with an unlimited number of disputes to the credit bureaus. They also offer something that many other organizations don’t: a pledge to accomplish their services within six months so that you are not stuck paying endless monthly payments to a company not producing enough results.

180 Credit Solutions employs a licensed legal staff that is happy to help repair your credit issues and offer credit counseling. They also offer credit score updates and are registered with the Secretary of State.

Best Credit Cards for Bad Credit

Top 15 Credit Cards For Bad Credit of 2018

Credit card companies are like bad friends: all over you when you’re flush with money but nowhere to be seen when you’re broke. If you’re shopping for a credit card and have great credit, they will fight for your business. Not so much, if you have bad credit. What’s more, many of the companies that do target those with bad credit charge predatory interest rates and exorbitant fees for the privilege.

This comprehensive review of the best credit cards available for people with bad credit scores will help you avoid the scams and misleading offers touted by opportunistic and unscrupulous credit card companies. We will analyze the top 15 credit cards for bad credit and share useful tips on how to best use credit cards to repair your credit.

Before we dive into our list, we’d like to start with some tips on how to manage credit cards when you have bad credit. The harsh reality is that credit card companies consider customers with bad credit as a liability and either deny them credit or charge higher interest rates and annual fees to offset the risk. The good news is you can work your way out of bad credit.

Related: If you’re a student and are looking for the best credit cards for students, check out this article.

Unsecured Cards for Bad CreditAPRAnnual Fee 
29.99%*$152Apply
23.9%*$99Apply
23.9%*$35 to $75 depending on credit profileApply

How Do Credit Cards Help Rebuild Your Credit? 

Credit card companies report your payment history and credit usage to the credit bureaus: the companies in charge of keeping the credit file on which your credit score is based. Your payment history accounts for 35% of your score calculation. How much you owe in relation to available credit contributes 30% to your score’s calculation.

Super Tip: Unless it’s a real emergency and only as a slightly better alternative to getting a payday loan or selling your kidneys on the black market, don’t keep a balance on your credit card. When you have bad credit, interest rates can easily reach prohibitive levels of 30% or more. A low balance will also increase your available credit to debt ratio, which will boost your credit score.

There are four main credit card types available to people with bad credit. These are, in order of most to least desirable: unsecured credit cards, secured credit cards, department store cards & gas credit cards, and prepaid credit cards. We will start with our top picks for each category and then the entire list of cards.

Credit-Building ToolMethodPrice 
Secured Credit Card$35 annual fee (plus security deposit)Apply
Secured Credit Card$29 annual feeApply

Things to Look for When Choosing a Card

If your credit score is not great, you won’t be able to be too picky when it comes to applying for credit cards. That doesn’t mean you shouldn’t apply for just any old card either.

When looking for the best credit card for your financial circumstances consider the following:

APR: This is the annualized interest rate you will pay on your credit card balance. Try to find the lowest APR you can qualify for that meets your line of credit requirements. The APR is not so important when you are not planning to carry a balance.

Annual Fees: Spoiler alert, credit card companies are only in business to make money. Annual fees help increase the profitability of credit cards by covering the administrative costs of managing a credit card.

Line of credit: Because consumers with bad credit are a higher risk to lenders, credit card companies tend to offer lower lines of credit. Credit cards that accept applicants with low credit scores and have decent lines of credit are rare.

Research & Selection Methodology

SuperMoney’s team of credit card experts selected the top cards in each category based on their overall value to users. Of course, “value” is subjective depending on what credit card features are important to you. These are the factors on which we based our credit card selection algorithm:

  • Fees: Annual fees and also penalty fees
  • FICO score required: Naturally, this is particularly important for people with bad credit scores
  • Credit limits and security deposits: This is particularly important for secured credit cards
  • APR: Annual Percentage Rate or the interest you pay on your credit card balance
  • Reward rates, redemption options, and how difficult it is to redeem points or miles
  • Sign-Up Bonuses

How to Apply for a Credit Card with Bad Credit

As mentioned above, qualifying for a credit card is easier said than done when you have bad credit. Here is a step-by-step guide on how to apply:

  • Find out what your credit score isCredit Sesame lets you check your credit score for free. You don’t even have to provide a credit card.
  • Use a credit card database that allows you to filter credit cards by credit score requirements. We may be a little biased, but we feel SuperMoney’s Credit Score search engine is one of the best in the business. It’s completely free and allows you to filter cards by target credit score, fees, rewards, and interest rates.
  • Start with a secured credit card. If your credit score is really in the dumps, you may need to get a secured credit card first. Secured credit cards are not technically credit cards. They are debit cards that base your line of credit on how much you gave as a security deposit. In effect, you are paying interest to lend yourself money. The good news is that many banks and credit card issuers will upgrade you to a regular credit card once you can show a pattern of responsible card use for six months.
  • Pay your balance in full every month. If possible, pay it several times a month. This will keep your debt to credit ratio low, which may bump your credit score. Having a low balance — or even better a $0 balance — is particularly helpful if you do it just before applying for a new credit card.

Related: How to get your first credit card if you’re a student.

Important Disclaimer: Credit score is not the only factor credit card companies consider when approving or denying applications. The credit scores used in this article are only guidelines. Your application may be accepted or denied regardless of whether you meet the credit score requirements mentioned.

Using Credit Card To Raise Money In Emergencies

Looking to raise money using credit cards? If you have good credit, getting a cash advance is a good idea to raise some emergency money. You just need to go to the nearest ATM. But credit card companies often charge a premium on cash advances with higher interest rates. And unlike regular transactions, there is almost no grace period for a cash advance. You’re being charged from the minute you clutch the bills in the palm of your hand. Use cash advances on credit cards with caution.

Best Unsecured Credit Card: Capital One Classic Platinum Credit Card

cccapitalone-creditcard-bad-creditThe Capital One Platinum Credit Card gives customers with a poor to fair credit score access to a real credit card and the chance to rebuild their credit, without having to pay a high annual fee. As you would expect, interest rates are high: 24.99% for purchases and balance transfers.

The Capital One Platinum Master Card has no annual fee and it gives you the benefits of a real credit card, such as fraud protection, and free access to your credit score. Customers who make their first five monthly payments on time qualify for a higher credit line.

Unfortunately, the Capital One Platinum is not available for users at the lower end of “bad credit.” For this reason, we also recommend the Milestone Gold Mastercard, which provides the benefits of a regular credit card and is more forgiving on really low credit scores.

Super Tip: Capital One allows you to request a soft pull on your credit score to determine your eligibility for a pre-qualified offer. This is a useful feature because applying for the card will not count as a credit card application, so it won’t harm your credit score.

Best Secured Credit Card: OpenSky Secured Visa Credit Card

The OpenSky Visa Secured Credit Card is an inexpensive way to qualify for a secured credit card that reports to all three credit bureaus. Cardholders can choose credit lines ranging from $20 to $3000, secured by a fully refundable security deposit.  No credit check necessary and no checking account required.

Once accepted, you can apply for a credit line of up to $5000. Users can also access complimentary financial education online.

Best Secured Credit Card for Military Service Members: The DCU Visa Platinum® Secured Credit Card

visa-rewards-credit-card-bad-creditOur favorite secured credit card is the USAA Secured Card Platinum Mastercard. Sadly, it is only available to U.S. military service members, veterans, and their families. If you’re not a member of the military, the

If you’re not a member of the military, the DCU Visa Platinum® is another great option. It gives people with bad credit access to the convenience of a credit card with an APR as low as 11.75% APR. The catch is that your credit limit is equal to your secured deposit: a minimum of $500.

However, there is no annual fee and you receive generous travel perks, such as free auto rental collision damage waiver and $50,000 in travel insurance coverage. Your secured deposit earns 0.05% interest and it’s refunded when you close the account.

Super Tip: If you’re not eligible to join the DCU credit union by virtue of your employment or place of residence, you can qualify by joining one of their associated charities. The cheapest options are a one-time $10 donation to the Reach Out for Schools foundation or a one-time $15 donation to the American Association of People with Disabilities.

Best Retail and Gas Credit Card: Walmart Credit Card

Walmart credit card

Walmart’s credit cards are some of the easiest credit cards to qualify for with bad credit. The store has two types of cards, the Walmart Mastercard and the Walmart Credit Card. Both cards offer up to 3% discounts on Walmart purchases, $0 fraud liability, no annual fee, and free monthly access to your FICO score. You can use the Walmart Mastercard anywhere a Mastercard is accepted, but it’s harder to get approved.

The Walmart Credit Card is only for in-store use but it’s easy to get approved. Interest rates for both cards are high but Walmart does report to all three credit bureaus, which will help improve your credit score without having to pay a dime in annual fees, security deposits or interest, as long as you never carry a balance. Both cards allow you to benefit from special financing deals for purchases worth more than $150.

Read Reviews

Best Prepaid Credit Card: American Express® Serve

amex-serve-credit-card-bad-creditA low monthly fee of $5.95 (no fee in TX, NY, or VT), free direct deposits, mobile check deposits, bank transfers. Cash reloads cost up to $3.95. ATMs, make the American Express® Serve one of the best prepaid card out there. Sending and receiving money is free and there is no card replacement fee.

Although this card will not help your credit score, it gives you – without even a peek at your credit history – the convenience of a debit card, free access to your cash at over 23,000 ATMs, and you can add cash to your account for free. You can even deposit checks at no cost by using American Express®’ mobile app.

Unsecured Cards for Bad CreditAPRAnnual Fee 
29.99%*$152Apply
23.9%*$99Apply
23.9%*$35 to $75 depending on credit profileApply

Unsecured Credit Cards for Bad Credit (Scores 550 – 650)

Unsecured credit cards offer the best rewards, the lowest interest rates, and don’t require a security deposit to open an account. However, if your credit score is any lower than 550, you probably won’t qualify for an unsecured credit card. In that case, apply for a secured credit card and try for an unsecured credit card when your score improves. You can also try your luck with a department store or gas credit cards, which include some unsecured credit cards and are often much less selective about your credit history.
If your credit score is between 550 and 650, you may qualify for a few unsecured credit cards, but expect low lines of credit, high-interest rates, and outrageous fees.

Related: SuperMoney’s Collection of Best Prepaid Credit Cards of 2016

Milestone Gold Mastercardmilestone mastercard

The Milestone Gold Mastercard is an unsecured credit card that allows you to check if you pre-qualify. This means your credit won’t be hurt if you don’t meet the eligibility requirements. It does have an annual fee ranging from $35 to $99, depending on credit score.

Milestone Gold Mastercard charges a $35 annual fee and $25 fee for every authorized user added to the account. During the first year, there is no cash advance fee. After the first 12 months, there is either a $5 or 5% cash advance fee, whichever is greater (up to a maximum of $100), on every transaction. Foreign purchases come with a 1% fee.

Indigo Platinum Mastercard

The Indigo Platinum Mastercard is an effective way to build your credit if your score will not allow you to qualify for regular unsecured cards. It has an annual fee of $99 and an APR of 23.9%.

This card does not offer a rewards program. However, it does include additional benefits, such as car rental insurance, extended warranty on purchases, and travel insurance, which most unsecured credit cards designed for people with bad credit don’t offer.

Credit One Bank Visa Platinum® Credit Cardcredit one bank visa platinum

The Credit One Bank Visa Platinum® credit card has high interest rates of up to 23.90% and an annual fee of $75 for the first year and $99 thereafter. Lines of credit start as low as $300, but you can qualify for a credit line increase if you make your first five payments on time. On the positive side, you get 1% back on all gas purchases and you receive complimentary free credit score tracking. As with the Captial One Classic Platinum, you can ask Credit One to prequalify you for credit, so applying for the card doesn’t affect your credit score further.

Discover it for Students.

If you’re enrolled in a 4-year college or university, the Discover it for Students may accept your application, even if your score is below 650.

The card has no annual fee, no penalty APR, no late fees, no foreign transaction fees, no overlimit fees, and you get 5% cash back in certain categories that change each quarter and 1% cash back on all other purchases.

Unsecured Cards for Bad CreditAPRAnnual Fee 
29.99%*$152Apply
23.9%*$99Apply
23.9%*$35 to $75 depending on credit profileApply

Secured Credit Cards for Bad Credit (Scores 300 – 600)

If you have no credit or a bad credit history, secured cards are an excellent option for establishing or rebuilding your credit. Even if your credit score is less than 550, you still have several secured cards to choose from. However, secured cards typically have more expensive annual fees and higher interest rates. They also require a deposit, which is held as a security to cover the balance in case the account is closed. The size of your deposit generally determines your credit limit. For instance, a deposit of $500 gives you a credit limit of $500. In some cases, the bank or credit union may increase the credit limit to more than your security deposit.visa-rewards-credit-card-bad-credit

DCU Visa Platinum® Secured

A relatively low-interest rate of 11.90% APR and decent travel benefits without an annual fee make the DCU Visa Platinum® the best deal in secured cards for non-military members.  It gives people with bad credit access to the convenience of a credit card with an APR as low as 11.75% APR. The catch is that your credit limit is equal to your secured deposit: a minimum of $500.

The best thing about the DCU Visa Platinum® is that it has no annual fee and you receive generous travel perks, such as free auto rental collision damage waiver and $50,000 in travel insurance coverage. Your secured deposit earns 0.05% interest and it’s refunded when you close the account.

Capital One Secured Mastercardcapital one secured mastercard

Capital One’s Secured Mastercard is designed for people with poor or no credit history who want to build or repair their credit and have cash on hand to make a security deposit. It has a $29 annual fee and the lowest minimum-security deposit in the market: $49 to $200, depending on how bad your credit is

. The security deposit and the annual fee buy you a credit line of $200 to $3,000, which can increase if you pay your bills on time. However, interest rates are high: 22.9% variable APR.

SDFCU EMV Savings Secured Visa Platinum® Cardsdfcu emv savings secured visa platinum

The State Department Federal Credit Union’s EMV Savings Secured Visa Platinum® Card offers rates as low as 7.24% APR with no annual or foreign transaction fees, without asking for income verification or a credit check. You also receive points for every dollar you spend; the card comes with the “new” chip-enabled technology.

The catch, as with most credit union secured cards, is that your credit limit is your security deposit, which has a minimum of $250. Anybody can join the SDFCU by choosing the American Consumer Council as an associated organization when filing a membership application.

Harley-Davidson Visa Secured Cardharley-davidson-visa-secured-credit-card

US Bank’s Harley-Davidson Visa Secured Card has no annual fee; gives you reward points you can redeem for Harley Davidson gift cards for every $1 you spend; and includes fraud protection and auto rental collision damage waiver. You even get a $10 Genuine Rewards Certificate.

Yet, it has a 23.24% APR and your credit limit is tied to your initial deposit.

USAA Secured Credit Card

If you, your spouse or parent serves or served in the military, the USAA Secured Credit Card may be your best option. It has a low-interest rate of 9.9%, a reasonable annual fee of $35 and no penalty APR rate. However, your credit limit is determined by how much money you put in upfront ($250 to $5,000). This deposit is invested in a 2-year variable rate CD. As of September 2016, the annual percentage yield on the CD is 0.54%.

USAA is a members-only financial services company that is open to U.S. military service members, veterans with an honorable discharge and their family members. There is no penalty rate for late payments, but there are fees to consider. For instance, there is a $35 annual fee and a 3% fee on balance transfers and cash advances (maximum of $200). However, the cash advance fee is waived when used to transfer funds electronically to a USAA deposit account.

America First Credit Union Secured Visaamerica-firsts-secured-visa_toe

America First’s Secured Visa is another example of why credit unions are often the way to go for customers with bad credit. It has no annual fee, relatively low rates starting at 6.99% APR, and credit limits ranging from $200 to $15,000. This card is great for people trying to rebuild their credit because you can qualify for large credit limits if you have the cash to place as a security deposit.

The America First’s secured credit card has no annual fee, which is a $30 to $70 saving when you compare it to other secured credit cards. The cash advance fee is low compared to other cards, just 1.5% of the amount.  However, not everyone can become a member. You must meet the credit union’s eligibility requirements.

First Progress Platinum Elite MastercardFirst Progress Platinum Elite

The First Progress Platinum Elite Mastercard has a relatively low annual fee of $29, an ongoing APR of 19.99% and penalty fees and cash advance fees that will make you cry. However, no credit history or minimum credit score is required for approval. And if you don’t mind paying a higher annual fee of $39 or $44, you can get lower interest rates of 14.99% and 11.99% respectively.

The First Progress Platinum Elite is a secured card, not a credit card. This means the line of credit is only as high as the security deposit you place on the card. The maximum credit limit is $2,000.

Department Store and Gas Credit Cards for Bad Credit

Store and gas credit cards are rarely a good deal, but they do have a place in the toolbox of consumers with bad credit. On the one hand, they are easier to qualify for than regular unsecured cards and don’t require a deposit. On the other hand, they generally have low credit limits and they’re not always accepted outside the establishment that issues them. Except for those that require a good-to-excellent credit score, which are not an option for those with bad credit, the rewards they offer are not competitive and are restricted to purchases made at their stores. What’s more, not all of them report your account and payment history to the credit bureaus, which negates any credit repair benefit they may have.

Walmart Credit CardWalmart credit card

The Walmart Credit Card has no annual fee, does not require a deposit and you can use it wherever Mastercard cards are accepted. Customers with credit scores as low as 550 are considered.

The Walmart Credit Card is only for in-store use but it’s easy to get approved. Interest rates for both cards are high but Walmart does report to all three credit bureaus, which will help improve your credit score without having to pay a dime in annual fees, security deposits or interest, as long as you never carry a balance. Both cards allow you to benefit from special financing deals for purchases worth more than $150.

Marathon Credit Cardmarathon-visa--through-comenity-bank

The Marathon Credit Card is an unsecured credit card that approves customers with credit scores in the low 600s. Interest rates are high: 16.99% to 24.99% depending on your credit, and lines of credit start low, but they grow as you make regular and on time payments. The card’s main feature is a 25 cents a gallon rebate if you spend $1,000 a month on the card. Lower gas rebates apply if your spending levels are lower. If you drive a lot and your credit precludes you from the top rewards cards, the no-annual fee, and unlimited rebates could make this card a good option for rebuilding your credit.

Unsecured Cards for Bad CreditAPRAnnual Fee 
29.99%*$152Apply
23.9%*$99Apply
23.9%*$35 to $75 depending on credit profileApply

Pre-Paid Credit Cards for Bad Credit Folks

Let’s start by saying that prepaid credit cards are not credit cards. They will not help improve your credit score and are usually, but not always, more expensive than using a debit card and a checking account. Having said that, if you don’t qualify for a reasonably-priced checking account; you don’t care about building credit, and you are chronic overspender; prepaid credit cards may provide you the convenience of a credit card while protecting you from racking up an overdraft and late payment fees. Prepaid credit cards work in a similar way to a regular checking account. Once you deposit money into your prepaid card, also known as reloading, you can use at businesses or make cash withdrawals.

American Express® Serveamex-serve-credit-card-bad-credit

American Express®’ Serve card is the lowest-fee prepaid card available, as of 2016. If you register for direct deposit and you stick to American Express®’ network of ATMs, you can get the equivalent of a free checking account with a debit.

It offers free ATM withdrawals at over 24,000 MoneyPass ATMs, free online bill pay, and American Express® customer service for just $1 monthly. As far as prepaid cards go, American Express® Serve is the card to beat.

American Express® Bluebirdamerican-express-bluebird

The American Express® Bluebird has no monthly fee, regardless of whether you have a direct deposit linked to your account or how much you reload every month. You can add money to your account for free from any Walmart cash register or by buying a reload back, which costs around $3.95. Withdrawals are surcharge-free if you stick to MoneyPass ATMs, but Bluebird will charge you a $2 fee per withdrawal.

However, you can get round this fee if you set up direct deposit for your paycheck or government benefits.

BB&T MoneyAccountbb&t moneyaccount

The beauty of BB&T’s Money Account is its simplicity. You only have to worry about three fees: a $2.50 fee, if you use an ATM out of BB&T’s network; a monthly fee of $5, which can be reduced to $3 if you make $1,000 in deposits a month; and a $5 fee for using international ATMs. All other transactions are free. Not a bad deal, if you’re willing to make BB&T’s MoneyAccount your main form of banking and your volume of deposits qualify you for the discounted monthly fee.

 So, Which Credit Card Should You Get, If You Have Bad Credit?

As you can see, even customers with bad credit have many credit card options to choose from. But make your selection wisely. A lot depends on what your financial goals are and what you can afford. Check out our Credit Card reviews, there are comments and tips from existing users you might find useful.

the realities of credit repair companies

If you have ever had a bad credit score, you have more than likely felt the effects of how much credit can affect your life. Your credit report can directly impact your ability to get a loan, buy a car or a home, start a business, and sometimes even get a date. Building and maintaining a good credit history are integral parts of continued success in life.

But for some of us, establishing a good credit foundation has been a difficult task to accomplish. There are times in everyone’s life that we encounter hardships or other “bumps in the road” such as loss of employment, divorce or separation, unexpected medical bills, and more. Sometimes these unexpected life events can hit our credit score hard, causing long lasting effects that impact our life in so many ways.

So how do you get out of that downward spiral? One popular way to improve your credit score is to use a credit repair company. Before you jump to a decision of which organization to use, it is important to know a few things about credit repair companies.

Can credit repair companies fix & repair your credit, as they promise?

What can a credit repair company do for you?

Credit repair companies exist to help individuals repair their overall credit score by extensively evaluating your credit report to identify possible inaccurate information. They then challenge those items as well as those that are unfair or unsubstantiated and request that they be corrected or removed.

The Letter of Deletion

The primary tool used in their battle to remove negative credit report remarks is a “Letter of Deletion.” This letter is simply a written or electronic request to remove inaccurate marks from your credit report which is sent to all three major credit bureaus (Transunion, Equifax, and Experian).

Attempting to remove negative information is a reactive strategy. The proactive one is focusing on building credit (and reducing debt). A good credit repair firm will help you develop a strategy to proactively rebuild your credit, which can be difficult to come up with on your own. This is not a quick fix but there are definitely strategies that will help speed up the process.

What credit repair companies can’t do

Many credit repair companies claim that they can fix all of your credit problems and even guarantee that they can accomplish a credit overhaul for you. But the reality is often something very different.

There are no guarantees

One important thing to remember is that there are no guarantees in this process, and despite their best efforts and abilities, no one can remove negative information from your credit report legally if that information is accurate and within the legal time frame. Accurate information, whether good or bad, usually stays on your credit report for seven years. Exceptions to this would be in the case of a bankruptcy filing, which remains for 10 years, and criminal information which can remain forever. Regardless of what anyone might promise, no credit repair company can change that.

In 1997, Congress enacted the Credit Repair Organizations Act (CROA), which was designed to protect the public when dealing with credit repair issues and allows you to ask for an investigation of information in your file that you believe is inaccurate or incomplete. It is free of charge for you to do this on your own if you chose to.

This same law protects consumers from shady organizations as well as setting up industry guidelines. These regulations prevent companies from charging for services in advance, making any promises to the consumer, and requires that they allow the customer to cancel at any time.

What to look for when hiring a credit repair company

A good credit repair company will have several flagstones that set it apart from some of the fly-by-night companies that continue to surface.

Licensed, Registered, and High-Rated

One key thing you should look for is that the organization has licensed legal staff and is registered with the Attorney General. Another important aspect is the length of time they have been in business as well as their rating with the Better Business Bureau (BBB). When looking into that you can also see how many claims have been filed against them and how they have resolved them.

Further, a reputable organization will offer more than just credit repair. They should also offer you credit counseling or advice and strategies to re-build good credit. After all, there is no point in re-establishing good credit if you don’t know how to keep it.

Finally, you will want to make sure that progress is being made at an acceptable rate once you do choose a company to go with. Unfortunately, there are too many crooked organizations out there today that will be more than happy to collect a monthly fee but are slow to act on your issues.

Where to find reputed credit repair companies? What to avoid when looking for one?

Unfortunately there are many organizations out there that promise results and even often a “100% guarantee” that they will fix your credit woes. But rather than viewing this as a desirable feature, it should really be a big indication that you need to read the fine print.

Fancy Guarantees and Money Upfront

Credit repair companies are required to disclose your legal rights to you at the start of the relationship, so if that is something they manage to leave out of their “sales pitch”, you might want to walk away before they go any further.

Also, if they ask for any money up front before they do anything for you, or tell you to send the payments to them instead of your creditors, they are operating in violation of Federal regulations.

Another huge red flag is if they ask you to lie or provide false information to your creditors or the 3 major credit bureaus, or if they tell you to apply for an Employment Identification Number (EIN) in order to create a new credit profile. If you engage in this kind of criminal activity, you can be charged with fraud.

SuperMoney has a list of top rated credit repair companies on our reviews page, with some very good reviews from our users. Check it out!

What are the top credit repair companies out there? Which one is right for you?

The answer to that question really depends on what services you need and how much you are willing to pay for them. Some services offer credit monitoring at no additional charge, 24/7 online account access or mobile apps that allow you to view the progress of your credit repair on the go.

Regardless of whether or not you need all these options, make sure the company has good ratings for customer service and is a well-established and reputable organization.

Many non-profit organizations exist for the sole purpose of helping people repair their credit. These companies often provide free or low-cost services. You can ask a local trusted agency or financial institution who they would recommend based on your situation.

Additionally, you can always check the website for the National Foundation for Credit Counseling which is the largest non-profit credit counseling service in the United States.

How to keep track & repair your credit? Things to know.

It is important to keep a close eye on your credit report and your credit score in order to make sure it remains accurate and relevant. You can receive a free credit report from each of the 3 major credit bureaus at AnnualCreditReport.com once every year, or in the event that you are denied credit or employment based on your credit.

It is also important to realize that credit repair is not just for those of us who suffer from the lowest credit scores and can’t seem to find anyone to lend to us. Remember, even if your score is not the worst, improving it even slightly can help lower your interest rates and save you thousands of dollars over the term of a loan or the time it takes to repay your debt.

The bottom line is that only time, effort and a secure plan for repaying your debt will ensure the improvement of your overall credit score.

If you are shopping around for a credit repair company, do take a look at SuperMoney’s top rated credit repair companies here.

Photo Courtesy – Laura