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Many banks offer credit cards designed specifically for people who are rebuilding credit scores. No matter how low your credit score or how damaged your credit history is, you can always find a credit card that is right for you. Some of your options include:

  • An unsecured credit card. Many credit cards for people with bad credit will have low starting credit limits, high APRs and fees, but they will report your credit activity to the major credit bureaus, allowing you to build credit. If you manage your credit cards wisely, you can minimize card fees. Pay off the card balance in full, never be late with your monthly due payments, and you won't have to pay interest and will be able to minimize card fees.
  • A secured credit card. These cards require users to put down a deposit as collateral to pay the bill in case of default. The average amount of the security deposit is anywhere from $200 to $300, and that will then be your starting line of credit. If you want to increase your credit limit, you will need to increase the amount of your security deposit. Security deposits are refundable, and you will get your deposit back when you close or upgrade your secured credit card (provided you never defaulted on the account).
  • A credit builder account. When you can't get any credit card, a credit builder loan might become an option. With credit builder loans, you do not get money upfront. Instead, your lender deposits the amount of the loan into a savings or CD account that you can't access until your loan is repaid. This might be a drawback, but the sole purpose of credit builder loans is to demonstrate your ability to make timely payments that then get reported to the major credit bureaus. Once you pay off your loan, you receive the money that was originally put into the savings account or CD, and you may receive a portion of the interest you paid back as well.

Once your credit is on the mend after using cards to build credit responsibly for a while, you can become eligible for credit cards with lower fees, lower APRs, higher limits, or even rewards.

tags : Bad Credit Secured Cards Build Credit

Disclaimer: This editorial content is not provided or commissioned by the banks or credit card issuer(s). Opinions expressed here are the author's alone, not those of the banks or credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the banks or credit card issuer(s). Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult with the issuing bank of the card or account for terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are accurate as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.