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How Second-Chance Credit Cards Work

5 min read

Published June 6, 2025

Table of contents

Key Takeaways

If you have a lower credit score than you’d like, a second-chance card may help you rebuild your credit history.
Some second-chance cards may require deposits, charge annual fees, have high APRs, or offer low credit limits, but requirements and features vary.
While second-chance cards are typically easier to qualify for than traditional cards, they may still have credit score or income requirements.

Whether you’ve faced some major financial challenges or just made a few credit mistakes, rebuilding a less-than-ideal credit score may feel daunting. Fortunately, you can improve a “bad” credit score by practicing good credit habits, like keeping your balance low and paying your bill on time each month.

While a score in the “poor credit” range may make qualifying for a traditional credit card difficult, it doesn’t have to hold you back from rebuilding credit history. Many credit card issuers offer options designed for people who want to improve their credit score, despite bad credit choices in the past.

What are second-chance credit cards?

A “second-chance credit card” could refer to any credit card designed for people who want to rebuild their credit history but may not meet the credit score requirement of a traditional credit card.

Any credit card that has flexible qualifications for people with poor credit and reports your activity to a major credit bureau could act as a second-chance credit card. Some card issuers may call their second-chance card a credit builder card, secured credit card, or another name.

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If you have trouble qualifying for most credit cards, you may want to see whether your bank, credit union, or credit card company offers second-chance cards.

Keep in mind that a second-chance credit card should help you rebuild your credit score, which means it has to give you access to a credit line. If you don’t qualify for a traditional credit card, you might shop with a prepaid card or debit card connected to your bank account instead. But these tools don’t provide a credit line, report your activity to a major credit bureau, or appear on your credit report. Therefore, they don’t qualify as second-chance cards.

Assess each card's offerings and terms carefully to find the best credit cards for your current circumstances and financial goals.

What features do second-chance credit cards have?

Because such a broad range of credit cards may work as second-chance cards, they could come with a variety of features and terms. You may find a match for your situation and preferences by comparing the following:

Annual fees

Some second-chance cards charge high annual fees to keep your account active. Others charge minimal annual fees or none at all. Discover has no annual fee on any card.

Credit limits

Second-chance cards may offer lower credit limits than traditional cards, which can protect you from overspending as you build healthy habits. With a low credit limit, it’s crucial to keep your balance to a minimum to avoid increasing your credit utilization ratio and hurting your credit score.

Annual percentage rates (APRs)

A second-chance credit card may have a high APR to offset the risk lenders take by extending a credit line to an applicant with less-than-ideal credit. That means any balance you carry may accrue more interest. To save on interest charges, try to repay your balance in full each month.

Security deposits

Some second-chance cards are secured credit cards, which means you have to provide a deposit to open an account. Your credit limit is usually equal to your deposit. If you don’t repay your balance, the card issuer may keep your deposit and close your account. On the other hand, if you “graduate” to an unsecured card, you may receive your deposit back. Unsecured credit card options don’t require a deposit but may charge higher fees in some cases.

Rewards

While some second-chance cards may not offer many bells and whistles, you don’t necessarily have to forgo rewards while you rebuild your credit score. Certain card issuers allow you to earn cash back while you develop healthy habits. With Discover, you earn rewards on every purchase.

Online banking

Many card issuers offer online banking and mobile banking tools to help you establish strong credit management skills. For example, you may be able to monitor your credit utilization, track your spending, and automate monthly payments from your checking account. Some mobile banking apps also offer spending alerts to flag overspending.

How to get a second-chance credit card that works for you

Once you’ve identified the features you want in a second-chance card, you can apply for one that meets your needs. Keep in mind, however, that approval isn’t always guaranteed.

A second-chance or credit builder card may still have a credit score requirement, though it’s likely lower than a traditional card. For example, your score may have to fall into the “fair credit” range for some cards. Even cards that don’t require a credit check may still have income requirements or other qualifications.

Before you apply for a card, make sure you meet the qualifications and that the card meets your needs.

Did you know?

You may be able to rebuild your credit history and earn rewards with a Discover it^® Secured Credit Card. There’s no credit score required to apply¹. Cardmembers see an average FICO Score growth of 30+ points after six months of keeping your credit accounts in good standing².

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When you receive your second-chance card, start practicing responsible credit habits to improve your credit history. You might charge a regular monthly expense, like a streaming subscription, to your card each month and set autopay to repay your card balance. Just make sure you keep enough in your linked savings or checking account to avoid over-drafting. Over time, your score may begin to recover.

The bottom line

A low credit score can be a temporary setback—it doesn’t have to define your financial future. By using a second-chance credit card responsibly, you can get back on track toward your financial goals. Before long, you may qualify for a credit line increase or a rewards credit card that offers a higher rewards rate on your favorite purchases.

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