Rebuilding credit can be tough to do. The best way to improve your credit is to open a new account and create a record of timely payments. Yet, predictably, few banks are willing to grant credit cards to those who have a poor credit history.
You don’t have to give up hope, though, as there are some credit cards out there that are specifically designed for people who are rebuilding their credit.
How to find the best cards to rebuild credit
First, applicants need to find the cards for which they are most likely to be approved. The easiest ones to obtain are secured credit cards that require applicants to make a refundable deposit but have few other requirements. Next in line are basic credit cards that are targeted to customers who are rebuilding their credit.
Then, look for a card with the most favorable terms and the lowest fees. There are too many products with excessive fees that are marketed towards those with poor credit, but thankfully there are still a few reasonable cards available. For example, try to avoid cards with no grace period that force you to pay interest on all charges, even when paid in full.
Finally, look for a card issuer that offers a pathway to a more feature filled product. For instance, some secured card issuers invite customers to apply for a standard card after a year of timely payments. Others offer to report payments to all the major credit bureaus, which is a good way to build your score.
Examples of good credit cards for rebuilding credit
Capital One Secured MasterCard. This secured card features a reasonable $29 annual fee and will report payments to the major credit bureaus. Cardholders may also receive a credit line increase as their credit improves. This card has a standard interest rate of 22.9% and a 25-day grace period.
First Progress Platinum Prestige MasterCard. This card’s $44 annual fee is a little high, but its 11.99% APR standard interest rate is quite low for a secured card. There is a 25-day grace period for this card. Cardholders must make a deposit of at least $300 but it is held in an interest-bearing account.
Capital One Cash Rewards For Newcomers. Those with few negatives on their credit report but a limited credit history should consider this card. It has no annual fee, but a 24.9% APR standard interest rate. In addition, cardholders earn 2% cash back on travel purchases and 1% back on all other transactions.
At publishing time, Capital One Secured MasterCard, First Progress Platinum Prestige MasterCard and Capital One Cash Rewards For Newcomers are offered through Credit.com product pages and Credit.com may be compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment.