Best Credit Cards to Build Credit
SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids. Learn more
FAQs on Best Credit Cards to Build Credit
What are the best credit cards to build credit?
Can I get a credit card with bad credit?
How do I qualify for a card with a low credit history?
What is the best type of credit card for those who want to increase their credit?
What boxes should I check off when shopping for the best credit card to build credit?
- The issuer reports to the top three credit bureaus. Make sure the card issuer reports to Equifax, Experian, and TransUnion. If you want your card to help you build credit, the company has to report your payments to the credit bureaus.
- Look at annual fees. Look for annual fees below $50.
- Make sure they offer the option to upgrade to a better card. This will enable you to keep your credit card account open while getting your security deposit back.
Why do you need your card issuer to report to all three credit bureaus?
Which credit card issuers report to all three credit bureaus?
How can you build credit with a credit card?
- Establish a perfect payment history. Your payment history is the most important factor in your FICO credit score, making up 35% of your score. So, it's of utmost importance that you pay your credit card bill on time every single month. And if you pay it in full, you'll get the extra benefit of building credit without ever paying a penny in interest. If you need help, consider setting up automatic payments on your credit card account. That way, you'll never forget or miss a due date.
- Keep your balance low. How much you owe is the second most important factor in your credit score, and your credit card balance is a huge part of that through your credit utilization rate. That rate is calculated by dividing your balance by your credit limit. So, if you have a $500 balance on a card with a credit limit of $1,000, your utilization rate is 50%. Having a low utilization is a sign that you manage your credit well. Anything under 10% utilization is considered pretty good. It's also important to keep your balance low. If possible, try to keep it under 1% of your credit limit. But make sure you use the credit card so there is some activity to report to the bureaus.
- Avoid applying for multiple credit cards. Every time you apply for a credit card or loan, the lender runs a hard inquiry on your credit report. When you're just starting, every hard inquiry counts because each one can ding your credit score. Apply for several cards in a short period, and you could signal to future lenders that you're struggling financially and can't manage your money without credit. So, when you're starting out, stick with one or two cards. Then, as your credit improves, it may make sense to apply for more.
How do you build credit if you can't get a credit card?
About the Author
SuperMoney is the most comprehensive financial services comparison site around. We have published hundreds of personal finance articles and provide detailed reviews on thousands of financial products and services. Our unbiased advice and free comparison tools help consumers make smart financial decisions based on hard data, not marketing gimmicks.