The best credit cards for building credit accept low credit scores, require low or no fees and raise your credit limit based on responsible use of your card.
Using credit cards is one of the best ways to build credit. Having a good credit history is very important, as on-time payments can help build a solid record of positive credit.
Before we dive deep into finding out the best credit cards to build credit scores, let's quickly analyze how to build credit fast.
Your on-time payment history is one of the most important factors that can help you improve your credit score. This means you should always try to pay your credit card bills before the due date.
A secured credit card is a common way for people to build their credit. When you sign-up for a secured credit card, the card issuer will require a cash deposit which acts as the credit limit. Usually, the minimum deposit amount is $200, but varies with different credit cards.
Use one of two popular strategies, the debt snowball or the debt avalanche methods, to pay off existing card debts. These two strategies are helpful for lowering your credit utilization ratio and improving credit scores.
If your income or your credit score has gone up, you’re more likely to get a higher limit. Inquire with your card issuer if an increase isn’t offered routinely. When you get approved for a higher credit limit and keep your balances the same, this can immediately drop your credit utilization and can improve your credit score.
An authorized user is someone who has been added to an existing credit card account. The authorized user can use the credit card but is not responsible for the payments. When you become an authorized user on a friend or family member’s card, the card’s history will appear on your report. If the main card’s payment has been made on time, then your credit score could improve.
For individuals with poor credit or new credit, the Discover it Secured credit card is an excellent rewards credit card. Cardholders who have the Discover it Secured credit card can get 2% cash back at gas stations and restaurants for purchases up to $1,000 each quarter, and 1% cashback rewards on any other purchases.
The Discover it Secured Credit Card Card offers a dollar for dollar match to new cardholders. This cashback is earned after the first year.
There is no annual fee, you can earn cash back and can improve your credit score through responsible usage. Your secured credit card will help you build credit with all three credit bureaus.
A refundable deposit of $200 is required to establish credit lines. When submitting your deposit, you must provide bank information. Automated reviews start at 7 months.
Gas stations and restaurants offer a 2% cashback on purchases up to $1,000 each quarter. You can also earn unlimited cashback on any other purchase. Nearly 99% of US retailers accept Discover.
You can also access U.S.-based customer support and your FICO credit score free of charge.
The Petal 2 Visa credit card is designed to help people with no credit or limited credit build a solid credit history. It’s easy to see if you’re pre-approved without affecting your score.
The card is designed to help build a good credit history, however those with poor credit or a bankruptcy are unlikely to be approved.
The card does not charge any annual fee, foreign transaction fee, late fee or over limit fee. It also does not require a credit history check or a security deposit.
The card has a variable APR that ranges from 13.24%- 27.24%. It doesn’t offer cash advances or balance transfers.
The Petal 2 Visa offers up to 1.5% cash back on eligible purchases after making 12 on-time monthly payments, and is also eligible to receive 1% cash back on purchases made right away. Cardholders can also receive 2%-10% cash back at select merchants.
The Discover It Student Cash Back program is for students looking to build credit and earn cash back. You can earn 5% cashback on everyday purchases each quarter at Amazon, gas stations, supermarkets and restaurants.
The cashback you earn at the end of your first year with Discover Card will be matched dollar for dollar.
The card does not charge annual fees, late fees on your first late payment and no APR change for paying late.
Capital One’s QuicksilverOne card offers unlimited 1.5% cash back on every purchase and you can sign up for rotating categories. There is no limit on how much cash you can make and the cashback offer doesn't expire during the term of your account.
In as little as six months, you’ll be automatically considered for a higher credit limit. CreditWise, a free app that tracks your credit score, is also available free.
If your card ever gets lost, stolen or fraudulently used, you’re not liable for the purchases. Capital One's mobile app allows you to receive personalized alerts, manage your account and get customized notifications.
If you are a new or existing cardholder with limited credit, the Capital One Platinum Credit Card can help you establish credit through responsible usage.
In as little as 6 months, eligible cardholders can be considered for a higher credit limit.
The card does not offer a rewards program, but if you qualify for the Platinum, you’ll also qualify for the Capital One QuicksilverOne, which offers rewards.
There is no annual or foreign transaction fee. The Platinum also provides fraud protection, emergency card replacement and alerts via Eno, Capital One's assistant.
Based on the five credit cards above, the best credit card to build your credit score is most likely the Discover it® Secured Credit Card. The card is perfect for those who are looking to build credit with limited credit history. The card also offers good cash back offers on most eligible purchases.
If you don’t have it yet, download the Bright app from the App Store or Google Play. Connect your checking and your cards in a snap, set a few goals and let Bright get to work.
With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.