Keep Your Balances Low Or Better Yet Nonexistent
The second-biggest factor affecting your credit score is how much debt you have, especially relative to your available credit. This figure is known as the , and its simply a measure of your combined credit card balances compared to your total credit available.
For example, lets say you have two credit cards, each with a $5,000 limit. If you have a balance of $1,500 on one and $3,500 on the other, your credit utilization ratio is 50% because your combined balance is $5,000, and your combined limit is $10,000.
Most credit experts advise keeping your credit utilization ratio below 30%. The lower, the betterand best of all, is if you can pay off your balances entirely, and not owe any credit card debt.
You can do this by only charging what you can pay off every month. You can also make multiple, smaller payments each month to keep your spending under control and avoid any surprise, monster bills at the end of the month. Doing so will give a boost to your credit score, and you wont owe any interest if you pay your balance in full each month.
Instead of making a single monthly credit card payment, consider making two or several smaller payments. First, you will reduce the balance that the bank reports to the credit bureau, slightly improving your utilization ratio. Second, as finance charges are often calculated based on the average daily balance, you can shrink the interest you pay by reducing daily balances earlier in the billing period.
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How Long Does It Take To Build A Credit History With A Secured Credit Card
A secured credit card reports your credit history to the major credit bureaus like other credit cards. So your continued responsible credit use can help you build a more appealing credit history over time. How long it takes to get the credit score you want depends on where you’re starting and how you use your secured credit card, as well as other credit accounts and loans. Discover will start automatic reviews of your account after eight months to see if your credit history qualifies to get your deposit back while you continue to enjoy your card.
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We Analyzed 27 Credit Cards That Are Marketed Toward Consumers With No Or Poor Credit To Determine The Best Cards For Building Or Rebuilding Your Credit
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If you lack a credit history or have poor credit, opening a credit card can be a smart way to build or rebuild credit as long as you practice responsible financial behavior.
While there are thousands of credit cards available, most require some sort of credit history in order to qualify. This can make it hard for people with less than stellar credit , or no credit at all, to qualify for a card.
Secured credit cards are one of your best chances at qualifying for credit. They’re similar to traditional cards but require you to make a deposit in order to access a credit limit. Whatever amount of money you deposit becomes your credit limit. If you want a higher credit limit, you’ll need to deposit more money.
Your security deposit acts as collateral if you fail to make payments. But don’t worry about losing that money your deposit is refundable if you pay your balance in full and close your account.
Select analyzed 27 credit cards that are marketed toward consumers with no or poor credit to determine the best cards for building or rebuilding your credit. We considered a number of factors, including security deposit minimums, fees, rewards programs and APR.
Here are Select’s picks for the top credit cards for building or rebuilding your credit:
Rogers World Elite Mastercard
Frequent U.S. travellers and cross-border shoppers need a card that wont break the bank when it comes to the foreign transaction fees that most banks charge. It is usually 2.5% for purchases made in another currency. The Rogers World Elite gets this nod because it offers 3% cash back on U.S.-currency purchases, which works out to a 0.5% return when you factor in foreign transaction fees. Pair that with no annual fee, and 1.5% back on all other purchases, and you have a competitive card.
However, world travellers will want to keep in mind that only the regular 1.5% earn rate will apply on foreign currency purchases outside the U.S., so you wont come out ahead after being hit with the 2.5% foreign transaction fee.
This card does include travel medical insurance, which covers you for trips up to 10 days. However, it also comes with a $15,000-a-year minimum spend, and a steep annual income requirement. So youll want to consider another option if you dont make $80,000 a year as an individual, or $150,000 as a household.
- Annual fee: $0
- Welcome bonus: $25 when you make your first purchase within your first 3 months
- Earn rate: 3% on purchases in U.S. currency and 1.5% cash back on all other purchases
- Income requirement: $80,000 individual $150,000 household
- Additional benefits: Travel emergency medical insurance for 10 days rental car insurance trip interruption and cancellation coverage
|Secured credit card for building credit||$0|
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Can I Get My Security Deposit Back
1. If you pay your balance in full and close your credit card account, we’ll refund your security deposit, which can take up to two billing cycles plus ten days.2. We’ll also automatically review your credit card account monthly, starting at eight months, to see if we can return your security deposit while you continue to enjoy your card benefits. These reviews are based on responsible credit management across all of your credit cards and loans, including Discover and others.
How Do You Build Credit With A Credit Card
Building credit with a credit card is fairly straightforward.
How Do I Build Credit With A Credit Card
Building credit with a credit card isn’t overly difficult, but you may have a better initial experience if you start the process off slowly. Use your credit card for regular purchases you can afford to pay off each month. When your bill comes due, make sure to pay at least the minimum payment and hopefully your entire credit card balance.
As you make payments each month, those payments will be reported to the three credit bureaus. Over time, you’ll build a history of responsible credit use that can help boost your credit score.
Starting To Build Credit With A Credit Card
To start building credit with a card, you’ll need to either open a credit card of your own or become an authorized user on someone else’s credit card. Getting a card of your own can be difficult if you’ve never had credit before, or if you have poor credit. However, there are options.
- Secured credit cards are often a stepping stone if you’re starting to build or rebuild your credit. These cards function like normal credit cards, but you’ll have to send the card issuer a refundable security deposit when you open your account. Secured cards may have high fees and don’t necessarily offer great cardholder benefits, but responsible use can help you qualify for better credit cards later.
- A student credit card can also be a good first option if you’re a student. Student cards tend to have low credit limits however, there are student cards available that have few fees and offer rewards on purchases.
You can also ask a friend or family member to add you as an on one of their credit cards. When they do, their credit card company can report the account to the bureaus under your name as well. You’ll get your own card and can make purchases, as long as the primary cardholder agrees.
Having another person’s card as part of your credit history can help you build creditas long as the primary user manages their card well. Your credit won’t be helped if the primary cardholder doesn’t make payments on time, for example.
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Oakstone Platinum Secured Mastercard
- No minimum credit score requirements! We invite all credit types to apply! No processing or application fees!
- Includes Free Real-Time Access to Your Credit Score and Ongoing Credit Monitoring powered by Experian
- Helps strengthen your credit with responsible card use. Reports to three national bureaus
- Fast, easy application process. Choose your credit line and open your Personal Savings Deposit Account to secure your line.
- Nationwide Program though not yet available in NY, IA, AR, or WI
- Get a fresh start! A discharged bankruptcy still in your credit bureau file will not cause you to be declined.
- See website for additional Oakstone Platinum Secured Mastercard® details
Us Bank Secured Visa Card
The minimum deposit amount for this card is $300, and the size of your credit line will be equal to the size of the deposit. And while this card has a small annual fee, it allows users to put down a security deposit of up to $5,000 for a fairly high credit line.
- Provide a security deposit of $300 up to $5,000 for a credit line equal to your deposit
- Deposit earns interest in a secured savings account
- Pay $29 annual fee
The card also has several user benefits that include online banking access, automatic bill pay features, and $0 fraud liability for unauthorized card purchases.
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Chase Freedom Unlimited: Best For Future Value
Sign-up bonus: $200 bonus after spending $500 in their first three months from account opening. Plus, earn 5% cash back on grocery store purchases on up to $12,000 spent in the first year.
Annual fee: $0
Rewards: Earn 5% back on travel booked through Ultimate Rewards, 3% back on dining and drug stores and unlimited 1.5% cash back on all other purchases.
Why its a great first credit card: The Chase Freedom Unlimited is a great starter card because its buildable. When you have this card by itself, youre earning at least 1.5% cash back on all purchases. However, as you get more comfortable with credit card rewards, this is an easy card to pair with other Chase cards to round out a complete credit card strategy.
When you combine this with the Chase Sapphire Preferred, Chase Sapphire Reserve or the Ink Business Preferred Credit Card, you can merge the rewards you earn on the Freedom Unlimited with your other point balances to effectively convert your cash-back earnings into full-on Chase Ultimate Rewards points which means you can transfer the points you earn on it to one of Chases 10 airline or three hotel partners or redeem them for added value directly in the Ultimate Rewards travel portal. Ultimate Rewards points are some of the most valuable points for travel redemptions, and who doesnt love free travel?
Sign-up bonus: 20,000-mile bonus after spending $500 on purchases in the first three months of account opening.
Annual fee: $0
The Costs Of Bad Credit
There are other costs, too. Even though theyre not designed as such, credit scores have come to be interpreted as a general measure of reliability. Employers, landlords, insurers, cell-phone providers, utility companies and others use them to evaluate customers or applicants.
A NerdWallet survey found that many people are unaware of these effects. Significant numbers of Americans didnt know that bad credit could prevent them from renting an apartment , raise their car insurance costs , limit their options for cell-phone service or force them to provide security deposits for utility service . Further, 1 in 5 respondents thought a score of 600 which is bad credit was enough to qualify for any credit card.
If you have bad credit, or no credit, a card designed specifically for someone like you is usually the quickest and easiest way to build credit.
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Cards For Those With Fair/bad Credit
Your credit score* is one of the primary factors issuers look at when deciding whether to approve you for a credit card. So what if you have fair or bad credit?
Unfortunately, if your credit isnt that good, you may not be able to be approved for the rewards credit cards listed above. However, that doesnt mean youre out of luck. There are plenty of credit cards for fair or bad credit you can apply for to help you improve your credit score before you apply for a rewards credit card. But note that credit limits tend to be lower and the APRs for these cards tend to be higher.
Best Credit Cards For Bad Or Poor Credit Of 2021
At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our .
Some of the best cards for people with bad or poor credit are unsecured and secured cards with low annual fees. Often, these cards can serve as stepping stones, giving you access to credit now andwith responsible usehelping you improve your credit scores. You may be able to upgrade or move onto better cards later. Getting a credit card with bad credit and managing it properly by making on time payments may be a good approach to building credit.
|Our Picks for the Best Credit Cards for Bad Credit|
The OpenSky® Secured Visa® Credit Card
Capital One Platinum Secured Credit Card
Refundable security deposit starting at $49 to get a $200 initial credit line
No annual fee
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How To Upgrade To An Unsecured Credit Card
You probably dont want to keep a secured card forever for most people, secured credit cards are a bridge to bigger and better things. When you are able to upgrade, your next credit card should be a rewards card. If you have good credit and are able to pay your bill in full each month, passing up on a rewards card is like passing up on extra money, essentially. In addition to higher credit limits, youll have the luxury of earning cash back or travel points and access to exclusive perks like sign-up bonuses and 0% intro APR offers.
So how does upgrading your secured credit card work? Heres what a typical timeline looks like:
How To Increase Credit Score To 800
An 800 credit score is considered a perfect rating. That means it may take you several months or even years to achieve it, especially if you currently have poor credit.
However, if you consistently follow our tips on how to build credit fast, youll be on your way to increasing your credit score gradually until you reach 800.
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Chase Sapphire Preferred Card: Best For Travel Rewards
Sign-up bonus: 100,000 points when you spend $4,000 on purchases within the first three months of account opening. TPG values this bonus at $2,000, depending on how you redeem them either by transferring them to an airline or hotel or directly through Chases travel portal.
Annual fee: $95
- 5x total points on all travel purchased through Chase Ultimate Rewards
- 3x points on dining, including eligible delivery services, takeout and dining out
- 3x points on select streaming services
- 3x points on online grocery purchases
- 2x points on all other travel
- 1x point on all other purchases
Why its a great first credit card: If youre an avid TPG reader, you know we recommend this card a lot and with good reason. After all, it is one of the best credit cards on the market, and it even won Best Travel Rewards Credit Card in the 2020 TPG Awards. Those rewards rates on dining and travel add up quickly travel especially is a broad category and includes everything from Uber to public transit to flights. The points youll earn can be transferred to Chases various partners or redeemed for 1.25 cents each through Chases travel portal.
Right now, Chase is offering some perks for Chase Sapphire Preferred cardholders, including new redemption options with the new Pay Yourself Back feature through Sept. 30, 2021. However, keep in mind that the Chase Sapphire Preferred typically requires you to have at least a little bit of credit history and a decent credit score.