A credit card to build credit can be a powerful tool to improve your chances of getting a financial product with excellent features.
But, before you get a card, it’s essential to understand how they work and how using them can impact your credit rating.
This guide will walk you through everything you need to know about using credit cards.
We’ll cover their basics and show you how to use them responsibly to improve your credit score. So whether you’re just starting or are looking for ways to enhance your current score, this guide is for you!
Best Credit Cards To Build Credit
If you lack a credit history, you may have to turn to a secured credit card to build your credit.
A secured credit card will require that you make a refundable security deposit to the card before you can begin using it. The financial institution issuing the card will then review your usage of and payment to the card over time and help you improve your credit.
Here’s our list of the top credit cards to build credit:
Discover it Secured
This is one of the best credit cards to build credit. It requires a refundable security deposit of $200 after they approve you.
Every eight months, Discover will review your situation to see if they can transition you to an unsecured credit card―which would then refund you your deposit.
The regular APR on this card is currently 22.99%. There is no annual fee for the card, no foreign transaction fees, and one of the best parts is that you can earn cashback rewards while you are building your credit.
The Discover it Secured card offers 2% cash back at gas stations and restaurants, up to $1,000 per year combined.
You can also earn 1% cash back on all other purchases, and Discover will match all the cash back you earn in your first year or redeem it as a statement credit to offset your bill.
Citi Secured Mastercard
This card has no annual fee either and carries a variable 22.49% APR. Citi requires a security deposit of at least $200 to open this account.
Your credit limit will be equal to your security deposit once you’re approved.
You can use the Citi Secured Mastercard anywhere that accepts Mastercard, and it even offers flexible payment due dates based on what works best for you and your budget.
The card doesn’t offer any cashback rewards, points, or miles.
Capital One Secured Mastercard
This secured card has no annual fee and a variable 26.99% APR.
Depending on your application, they will require you to make a security deposit (refundable) of either $49, $99, or $200. They will extend you an initial credit line of $200 once your card is open. Definitely one of the best credit cards that build your credit.
After making your first five monthly payments on time, you’ll be able to get access to a higher credit limit without needing to make an additional security deposit.
The card doesn’t offer any cashback rewards, points, or miles.
OpenSky Secured Visa Credit Card
OpenSky’s card doesn’t do a credit check to approve your application, which is especially nice for people with a complete lack of credit history. A secured credit card’s variable APR of 19.14% is also pretty low.
They will ask you to make a security deposit of at least $200. It is refundable and will become the credit line on your card, so you can choose how much you’d like.
One thing about this card is that there is a $35 annual fee that goes along with it. The card doesn’t offer any cashback rewards, points, or miles.
First Progress Platinum Elite Mastercard Secured Credit Card
The institution offers three different secured credit cards, with 9.99%, 13.99%, and 19.99% variable APR.
The lender won’t require a minimum credit score to approve this card, but it requires a refundable deposit of $200 to $2,000, depending on the credit line you seek.
It also comes with an annual fee of $29. It’s one of the easy-to-get credit cards to build credit. The card doesn’t offer any cashback rewards, points, or miles.
Just keep in mind that these are different than credit cards for bad credit, which lenders issue to people with low credit scores.How to raise your credit score
Credit Cards to Improve Your Credit
If you already have a credit score but need to give those numbers a pump, these credit cards will help you improve your score over time.
- Avant Secured Mastercard Credit Card
- Capital One QuicksilverOne Cash Rewards Secured Credit Card
- Capital One Spark® Classic for Business
Avant Secured Mastercard Credit Card
One of the perks of this card is that it tops the list of easy online approval, which will make people with a not-so-strong credit score very happy.
It does charge an annual fee of $39, but you won’t have to make monthly payments for maintenance or application fees. You won’t require a security deposit amount.
The card they offer has a variable 25.99% APR, and even though it has a low credit limit, you can increase it after you’ve proved responsible use.
Capital One QuicksilverOne (Secured Credit Card)
People with an average credit score will find this card a great option to improve their numbers. And, as its name says, you win rewards with your shopping which you can use later for cash back (1.5% for each purchase), online shopping, and more.
You will require a minimum refundable deposit of $200.
This card’s APR is 26.99%, no fee on balance transfers, and you pay a $39 annual fee, but the benefits can make it up for it: travel accident insurance, extended warranties, secondary auto rental, concierge service 24/7, points on eligible purchases, and others.
Capital One Spark® Classic for Business
This is a great card for you if you are a business owner with an average credit score. It will be much easier to qualify for this card than top-level business credit cards, and it will help your score. Plus, you’ll get some rewards like the 1% of every dollar you spend.
You won’t require a security deposit amount.
It has a $0 annual fee of 26.99% APR, and you also get some other benefits like roadside assistance, no foreign transaction fees, extended warranties, and others.
What Is a Good Credit Score?
A higher credit score indicates that you’re a low-risk borrower, which means you’re more likely to repay your loans on time.
A lower credit score indicates that you’re a high-risk borrower, which means you’re more likely to default on your loans.
The most widely used rating is the FICO score, which ranges from 300 to 850.
Credit bureaus consider a good credit score of 700 or above, below 700 fair, while scores below 650 are poor.
Why Is It Important to Build a Strong Credit Score?
Your credit score is one of the main pieces of information that financial institutions will use to determine whether they think you are worthy of extending credit.
Credit doesn’t come just in the form of a credit card, either.
Your credit score determines whether you can rent an apartment, connect utilities to your home and/or business, get good insurance coverage, get a cell phone plan, and obtain a mortgage and/or car loan, for example.
Not only will a better credit score make you more likely for the lender to approve you for these lines of credit, but your borrowing interest rates will be lower the better your credit score is.
Over the life of a loan, even a small difference in your interest rate can mean hundreds of dollars in savings.
If you lack a credit history or a lower credit score, it may be difficult to build your score up. Over time, though, using a credit card is an effective way to build your credit.
How Do I Improve My Credit Score?
One of the best ways to build credit with a credit card is by paying your bills on time.
This includes any type of bill, from credit card bills to utility bills.
Paying your bills on time will show creditors that you’re responsible, and they can trust you to make payments promptly.
Keep your credit limit utilization low. Credit utilization is the amount of credit you’re using compared to your total credit limit.
For example, if you have a credit card with a $1,000 limit and you’re carrying a balance of $500, your credit utilization would be 50%.
It’s generally recommended to keep your credit utilization below 30%, so in this case, you would want to keep your balance below $300.
Paying down your debts is also a good way to improve your credit score. Your credit score will suffer if you have several debts with high balances.
Paying down those debts will help to improve your score.
If you have any derogatory items on your credit report, working on getting those removed can also help to improve your score.
Derogatory items include things like late payments, collections, and bankruptcies. If you can remove these items from your report, it will boost your score.
How to Build Credit With a Credit Card
Make sure you make your payments on time and in full each month. This will help you avoid interest charges and late fees and will also show creditors that you’re responsible for credit.
Start with a secured credit card
A secured credit card is backed by a cash deposit you make when you open the account. The deposit serves as collateral if you don’t pay your bill and determines your credit limit.
This can be a good way to build credit because it’s essentially the same as a regular credit card, except that you have to deposit it.
Just make sure to use it wisely by always making your payments on time and in full.
Become an authorized user on someone else’s credit card
If you know someone with good credit who is willing to add you as an authorized user on their credit card, this can be a great way to build credit.
Tips on how to use a credit card to rebuild credit
- Use your credit card regularly.
- Make your payments on time.
- Keep your credit card balance low.
- Use a secured credit card.
- Apply for a “credit builder” loan.
Use your credit card wisely by only charging what you can afford to pay back in full each month.
This will help keep your credit utilization low, which is good for your credit score.
Don’t be afraid to shop around for the best starter credit cards to build credit. There are many options out there, so find one that fits your needs and use it to help build your credit.
Ways to build credit without a credit card
You’ll get a card you can use, and your activity will be on your credit report.
Make sure that the primary cardholder always pays their bill on time, as late payments will also appear on your credit report.
Use a credit-builder loan
With this type of loan, you borrow a small amount of money and then make regular payments over time.
The activity goes to the three major credit bureaus, so it can help you build credit.
Just make sure you can afford the payments before you take out a loan like this.
Get a co-signer
If you’re having trouble qualifying for a credit card or loan on your own, you may be able to get someone to co-sign for you.
This means they’ll be responsible for the debt if you don’t pay.
However, if you can find someone who’s willing to co-sign and you make your payments on time, this can be a great way to build credit.
Use a Student Loan
If you have student loans, you can actually use them to help build your credit.
By making your payments on time, you’ll be building a positive credit history that can help you in the future.
Just make sure you don’t get behind on your payments, as that can have the opposite effect and damage your credit.
Use a Personal Loan
A personal loan can be a good option if you need to borrow money for any reason.
You can usually get a lower interest rate if you have good credit, but you can still get a loan with bad credit.
How Does a Credit Card Work?
The card issuer determines the credit limit, and it may vary depending on the type of card and the cardholder’s creditworthiness.
When making a purchase, the cardholder borrows money from the card issuer.
The card issuer then pays the merchant for the purchase, and the cardholder is responsible for repaying the debt, plus interest and any fees that may be associated with the account.
If the cardholder does not repay the debt, the card issuer may report the delinquency to the credit bureaus, which can negatively impact the cardholder’s credit score.
To help offset the risk of non-payment, many card issuers charge an annual fee and/or a monthly maintenance fee. They may also offer incentives, such as rewards points, to encourage cardholders to use their cards.
Should I Get A Credit Card?
Here are a few things to consider when making your decision:
Do you generally carry a balance on your credit card?
You may want to reconsider getting one if you typically carry a balance on your credit card from month to month.
The interest charges on credit cards can be very high, so carrying a balance will cost you a lot of money in the long run.
Do you have trouble controlling your spending?
If you find it difficult to stick to a budget, then a credit card may not be the best idea.
It can be very easy to overspend with a credit card, leading to debt problems down the road.
Do you have good credit?
If you have good credit, then you may be able to qualify for a credit card with perks like cash back or travel rewards.
However, if your credit is not so good, you may end up with a card that has high-interest rates and fees.
Do you need a credit card for emergency purposes?
If you only plan on using a credit card in case of an emergency, then you may want to consider getting a debit card instead.
That way, you can avoid paying interest and fees on your credit card balance.Best Unsecured Credit Cards
When Should I Get a Credit Card?
A few general guidelines can help you decide whether or not now is the right time to get a credit card.
If you have never had a credit card before, you may want to consider getting one in order to build your credit history.
Another factor to consider is whether or not you have the financial resources to use a credit card responsibly.
Credit cards can help manage your finances, but only if you can pay off your balance in full each month.
If you carry a balance on your credit card from month to month, you will pay interest, which can add up quickly.
How To Get a Credit Card
There are a few things you can do to increase your chances of being approved for a credit card.
Here are a few tips:
- Make sure you have a good credit score. A good credit score is typically over 700.
- Have a stable job with a steady income. Credit card companies like to see that you’re able to repay your debts on time each month.
- Don’t apply for too many cards at once. Lenders may view this as a sign that you’re desperate for credit and are having trouble managing your finances.
- Apply for one or two cards at a time and wait until you’ve been approved
How to Choose a Credit Card
A good credit card to build credit for you will depend on your individual financial situation and spending habits.
That said, there are a few key factors to keep in mind when selecting a credit card.
Consider what type of rewards you’re looking for. Do you want cash back, travel or merchandise points, or a low-interest rate?
Think about your credit score. If you have good credit, you’ll likely be able to qualify for a card with great rewards and low-interest rates.
However, if your credit isn’t as strong, you may need to look for a card with fewer perks, but that is more forgiving in terms of credit requirements.
Take a close look at the fees associated with each card you’re considering.
Annual fees, late payment fees, and foreign transaction fees can all add up, so be sure to choose a card that won’t nickel-and-dime you to death.
By keeping these factors in mind, you can be sure to find the best credit cards to build credit with no credit.
Credit Card Requirements
You’ll need to meet a few requirements before a lender can approve you for a credit card. Here’s what you’ll need:
A regular source of income
You’ll need to prove that you have a steady income; this can come from a job, benefits, or other sources.
A positive credit score
Your credit score is a number that shows how risky you are to lenders.
The higher your score, the better your chances of getting approved for a credit card.
*If you haven’t built credit yet, this eligibility criteria doesn’t apply to you.
Enough income to cover your debts
Lenders will want to see that you have enough income to cover your debts, including any new debt from a credit card.
A valid ID
You’ll need to show a valid government-issued ID, such as a driver’s license or passport.
Can You Get Approved For A Credit Card With No Credit History?
Yes, getting approved for a credit card with no credit history is possible.
However, the terms of the card may be less favorable than those offered to borrowers with a longer credit history.
For example, the lender will charge a higher interest rate, or you may not be eligible for the most beneficial rewards program.
If you are looking to establish or rebuild your credit history, consider applying for a secured credit card.
A secured card requires you to put down a security deposit, which serves as your borrowing limit.
This can be a great way to start building your credit score and eventually transition to an unsecured card.
Ways to Get a Credit Card With No Credit
The best way to get a credit card with no credit is to apply for a secured credit card, prepaid card, or with co-signer.
Secured credit cards
With a secured credit card, you’ll have to put down a deposit that the lender will use as collateral in case you can’t make your payments.
This means that you’ll need to have some money saved up before you can get a secured credit card.
Prepaid credit card
Another way to get a credit card with no credit is to apply for a prepaid credit card.
With a prepaid credit card, you’ll load the card with money in advance and then use it like a normal credit card.
This can be a good option if you’re worried about not being able to make your payments, but it can be expensive since you’ll have to pay fees to load the card and use it.
This is someone who will agree to make the payments on your behalf if you can’t make them yourself.
This can be a good option if you have someone who trusts you and is willing to help you build your credit.
However, it’s important to remember that if you default on your payments, the co-signer will be responsible for them.
This means that you need to be sure that you can make your payments on time.
Alternatives to Credit Cards
Credit cards are not the only way to build credit fast. Many alternatives can help you improve your credit score without using credit cards.
One alternative is to take out a personal loan from a bank or credit union. You can use the loan to pay off high-interest debt, such as credit card debt.
Personal loans typically have lower interest rates than credit cards, so you can save on interest charges.
Another alternative is to get a secured credit card. A secured credit card requires you to put down a security deposit, which is your credit limit.
This deposit is usually equal to your credit limit. Secured credit cards can help you build credit by reporting your payment history to the credit bureaus.
You can also use a family member’s or friend’s credit card to build credit.
You can improve your credit score by making regular, on-time payments. Just be sure to get permission from the cardholder before you use their card.
Access Capital And Finance Your Needs
If you don’t have a credit history or would like to strengthen your credit score, choose one from this credit card list to build your credit.
A secured credit card is a great way to build your credit.
The financial institution will just require a refundable security deposit to open your account, and you can get an increase in this credit line―and even switch to an unsecured card―as you make on-time monthly payments.
But other alternatives even allow you to apply if you have no credit history.
Small business loans are outstanding for building credit. Many business owners prefer loans over credit cards because they offer even more capital.
If you need to finance your business while improving your credit score, a loan might be what you need.
We offer business loans to a variety of customers. We live up to our motto of “No Business Left Behind” by providing great lending options as well as educational and information tools from a like-minded group of business owners like yourself.
Apply for a business loan with Camino Financial today.
What is a good credit card?
A good credit card has low-interest rates, no annual fees, and offers rewards for spending.
What is the easiest credit card to be approved for?
OpenSky Secured Visa Credit Card may be the best option since they don’t perform a credit check.
Can you get a credit card with a 550 credit score?
Yes, you can. If you have a credit score of 550 or below, you can apply for a secured credit card (meaning you’ll require to put up collateral to be approved).
How can I build my credit fast with a credit card?
You can take many actions to build your credit quickly by using a credit card.
Try to keep your credit card use below 30% of your credit limit. And always pay your full balance by the due date.
What is the easiest credit card to get with no credit?
The easiest credit card to get with no credit is the OpenSky Secured Visa Credit Card.
As we mentioned, there is no credit check when you apply, so as long as you are 18 years old or older and have enough income to afford your monthly bill payments, you have a great chance of approval.
When to pay a credit card to build credit?
It’s best to pay off your credit card in full every month. This shows lenders that you are responsible with money, and they can count on you to make payments on time.
It also helps keep your debt-to-credit ratio low, another factor contributing to a high credit score.
What is the fastest way to build credit with a credit card?
The fastest way to use a credit card to build credit is by paying the payoff balance in full monthly.
Credit scores are based on two factors: how much you owe and how much credit you have available.
When you use a credit card and then pay off the balance in full each month, you demonstrate that you can handle debt responsibly. This will help improve your credit score over time.
What are the best credit cards for beginners?
The best credit cards for beginners are typically those with low-interest rates and no annual fees.
Some of the best include the Capital One Quicksilver Cash Rewards Credit Card, the Chase Sapphire Preferred Card, and the American Express Gold Card.
What are the best credit cards to start building credit?
A secured credit card and a credit builder loan are two of the best ways to start building credit.
How can I raise my credit score 200 points in 30 days?
There is no one-size-fits-all answer to this question, as the best way to rebuild credit depends on your unique credit history and financial situation.
However, some tips include paying your bills on time, maintaining a good credit history, and using a credit monitoring service.
How to get a secured credit card?
A secured credit card is a credit card where you put down a security deposit, usually equal to your credit limit. This deposit protects the issuer in case you don’t pay your bill.