Credit Cards for Rebuilding Bad Credit

Which credit cards help rebuild bad credit scores

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To rebuild a bad credit history, you must begin adding positive information to your credit score. The more positive information you can add, the more your credit score will improve. The trouble is finding credit cards for rebuilding bad credit. The majority of credit cards on the market are for people with good to excellent credit scores. Finding credit cards for rebuilding credit isn’t always easy. But, there are some credit cards out there that approve people who are rebuilding their credit.

Secured credit cards for rebuilding bad credit

Secured credit cards are good options for rebuilding credit because they typically don’t require a credit check. Secured credit cards behave like regular credit cards. The difference is that you have a security deposit against the credit limit on the card. The deposit is put into a savings account and only used if you default on your credit card. Otherwise, your purchases go against your credit limit.

If you have enough money for a security deposit, then you can get a secured credit card. Your deposit could be as low as $49 on the Capital One Secured MasterCard. The Discover it Secured Credit Card, which is a rewards secured card, is another great option for rebuilding your credit.

There are several other good secured credit cards on the market - the Secured Visa from Merrick Bank is one. Look for a secured card that reports to the major credit bureaus, has low annual fees, and converts to an unsecured credit card after a period of timely payments.

Other Credit Card Options

Retail credit cards are an option, but the high-interest rate and limited use make them less attractive than other credit cards for rebuilding credit. If you're approved for retail credit cards, you'll likely have a very low credit limit, around $100 to $300. You may be able to have your credit limit increased periodically as you use your card responsibly and pay it on time each month. Several months of positive payments with a retail card can help you qualify for something better.

Watch out for credit cards that charge extremely high annual fees relative to the credit limit – like a $125 annual fee for a $500 credit limit. These fee harvester cards take advantage of consumers with bad credit, who have trouble qualifying for credit elsewhere. The high cost isn't worth the small benefit.

Finally, prepaid cards are a credit card or checking account alternative that can be used to make credit card and debit card type purchases. However, these cards don’t improve your credit score – at least not the mainstream credit score that most lenders use to approve your applications.

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  1. Capital One. "Secured Mastercard® From Capital One."

  2. Experian. "Do Prepaid Credit Cards Help Credit Scores?"

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