Best Credit Cards to Build Credit
April 2024
If you’re wondering which credit card is the best to build credit, the answer is simple: cards with low or no annual fees that report to the credit bureaus and accept applicants with limited or bad credit. This list will help you find the best credit building cards for your situation.
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There are two main types of credit cards to build credit with: secured credit cards and unsecured credit cards for people with limited or no credit. However, there are dozens of credit cards that claim to help people build their credit.
Below we summarize the best cards to build credit based on SuperMoney's algorithms and community feedback. If your priority is to save money and start building your credit as soon as possible, we recommend going for the cheapest option you can qualify for that reports to all three credit bureaus.
FAQs on Best Credit Cards to Build Credit
What are the best credit cards to build credit?
The best credit cards for building up your credit are those with lower annual fees (some even have a $0 annual fee) that report to the credit bureaus.
The two main types of credit cards you can use to boost your credit score include secured and unsecured credit cards they offer for those with limited to no credit. If you are in college, a student credit card is probably the best option.
Can I get a credit card with bad credit?
Yes, but you probably won't be able to get a card with good benefits or high-earning rewards. Instead, apply for a basic card you'll only use temporarily to build your credit back up. Once your credit is good, you can apply for a card with more perks.
How do I qualify for a card with a low credit history?
You will probably need to go with a secured credit card first. Unsecured cards with a high annual fee are another option. In general, you should be at least 18 years old and be able to provide a social security number. In most cases, you need to prove you earn a regular income and have a bank account.
What is the best type of credit card for those who want to increase their credit?
Secured cards are the easiest to get but they require a security deposit. When you upgrade or close your account, you will get your security deposit back.
What boxes should I check off when shopping for the best credit card to build credit?
Although you may not find a card that offers many rewards or benefits, you can find a decent card if you look for the following features:
- 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?
There are three national credit bureaus: Experian, Equifax, and TransUnion. Each of these bureaus maintains a copy of your credit history. This means that you have three separate credit reports. Each one can vary depending on how your creditors report your activity and how the bureaus file your information.
In the future, when you apply for credit, your prospective lender will check your credit score with one or more of the credit bureaus. Most, however, don't check all three.
So, let's say you get a credit card with an issuer that only reports your activity to Equifax. You use the card responsibly for a year and establish a solid payment history. After that year, you apply for a better credit card hoping to get approved with your improved credit history.
If the new credit card issuer only checks your TransUnion and Experian credit reports, there will be no record of that card's positive history because the original issuer only reported it to Equifax.
As a result, it's best to apply for a card that reports to all three credit bureaus.
Which credit card issuers report to all three credit bureaus?
Between banks, credit unions, and other financial institutions, there are hundreds of credit card issuers in the U.S. market. So although we can't include a comprehensive list of which issuers report to all three credit bureaus, we can say that every major credit card issuer reports to all three. This includes, but is not limited to:
Many other big banks and credit unions also report to all three bureaus. However, if you're getting a card from a smaller issuer, check they report to the credit bureaus.
SuperMoney allows you to filter credit cards based on the bureaus they report to. If they don't report to all three or try to avoid the question, you may want to try with another card issuer.
How can you build credit with a credit card?
It takes time to build your credit. It's best to view it as a marathon, not a sprint. Here are some specific steps you can take to build your credit.
- 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?
Depending on your situation, you may not be able to get a credit card on your own. Maybe you don't currently have any income, or you've recently filed for bankruptcy. In such cases, consider asking a friend or relative if they can add you as an authorized user. This could help your credit as long as the credit card payments are made regularly and on-time.
Regardless of how you choose to build credit, make sure you understand all your options and pick the one that is best suited for your specific circumstances.
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SuperMoney
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