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The 6 Best Credit Cards for Rebuilding Your Credit

9 min read
Susan Shain By Susan Shain Dec 31, 2018 | Updated Oct 15, 2019

Maybe no one ever taught you about finances or credit cards, and you didn’t realize only making the minimum payment would lead to serious interest charges and mounting debt that you couldn’t pay back.

Or maybe you lost your job or had a medical emergency, and had to charge bills you couldn’t afford.

Whatever happened, your credit is shot. And you need a way to rebuild it. You’re not alone: More than 20% of Americans have “deep subprime” credit scores, according to Experian.

So don’t let yourself spiral into shame — instead, consider using a credit card to rebuild your credit. Here’s how.

4 Best Secured Credit Cards for Rebuilding Credit

Best For Card
Rewards and No Annual Fee Discover it® Secured Credit Card (Review)
Low Security Deposit Capital One® Secured Mastercard® (Review)
No Bank Account Citi® Secured Mastercard® (Review)
No Credit Check OpenSky® Secured Visa® Credit Card

 

Best for Rewards and No Annual Fee

Discover it® Secured Credit Card

Discover it® Secured Credit Card

Our rating
Min. credit levelBad
Details
Annual Fee$0
Regular APR24.74% Variable
Apply Now

securely on the issuer's website

  • Security deposit: $200–$2,500
  • Annual fee: $0
  • Rewards: 2% cash back at restaurants and gas stations (up to $1,000 spent each quarter, then 1%); 1% on everything else
  • Cashback Match: At the end of the first year, you’ll receive double the cash back you earned
  • Upgrade path: Every eight months, Discover will review your account and may refund your deposit and upgrade you to an unsecured card

With no annual fee, cash back rewards, and an easy upgrade to an unsecured card, this is our top pick for a secured card with solid credit-building benefits.

 

Best for Low Security Deposit

Capital One® Secured Mastercard®

Capital One® Secured Mastercard®

Our rating
Min. credit levelBad
Details
Annual Fee$0
Regular APR26.99% Variable
Apply Now

securely on the issuer's website

  • Security deposit: $49, $99, or $200 for a $200 credit line (depending on creditworthiness); can deposit up to $1,000 for a $1,000 credit line
  • Annual fee: $0
  • Credit line increase: Access a higher credit line without an additional deposit after making your first five payments on time

Unlike most secured cards, your initial deposit amount will be based on your creditworthiness, and that will get you a $200 credit limit. You can deposit more for a larger credit line if you’d like.

 

Best for No Bank Account

Citi® Secured Mastercard®

Citi® Secured Mastercard®

Our rating
Min. credit levelNo Credit
Details
Annual Fee$0
Regular APR23.99% (Variable)

The information related to Citi® Secured Mastercard® has been collected by Credit Card Insider and has not been reviewed or provided by the issuer or provider of this product.

  • Security deposit: $200–$2,500
  • Annual fee: $0
  • No bank account needed: For in-person applications only
  • Upgrade path: With responsible use, Citi may provide an upgrade to an unsecured card

The biggest perk of this card is you can pay the deposit in-person at a Citibank location, making it the best option for people without a bank account. If you do have a bank account you can apply online.

If you can’t get any of the above cards — and don’t want to try a credit builder loan — you can consider getting a credit card that doesn’t check your credit, like the following card.

 

Best for No Credit Check

OpenSky® Secured Visa® Credit Card

OpenSky® Secured Visa® Credit Card

Our rating
Min. credit levelNo Credit
Details
Annual Fee$35
Regular APR19.14% Variable
Apply Now

securely on the issuer's website

  • Security deposit: $200–$3,000
  • Annual fee: $35
  • No credit check or bank account required to apply
  • Income requirement: Monthly income must be higher than monthly expenses

We only recommend this card as a last resort, however, as no-check credit card issuers often have poor customer service, outdated payment systems, and high fees.

2 Best Unsecured Cards for Rebuilding Credit

Best For Card
Earning Rewards Journey® Student Rewards from Capital One® (Review)
No Annual Fee Capital One® Platinum Credit Card (Review)

 

Best for Earning Rewards

Journey® Student Rewards from Capital One®

Journey® Student Rewards from Capital One®

Our rating
Min. credit levelNo Credit
Details
Annual Fee$0
Regular APR26.99% Variable
Apply Now

securely on the issuer's website

  • Annual fee: $0
  • Credit line increase: Access a higher credit line after making your first five payments on time
  • Rewards: 1% cash back on every purchase; if you pay on time, that increases to 1.25%
  • Easily accessible: Available for students and non-students alike
  • Good for traveling abroad: No foreign transaction fees

 

Best for No Annual Fee

Capital One® Platinum Credit Card

Capital One® Platinum Credit Card

Our rating
Min. credit levelFair
Details
Annual Fee$0
Regular APR26.99% Variable
Apply Now

securely on the issuer's website

  • Annual fee: $0
  • Credit line increase: Access a higher credit line after making your first five payments on time
  • Good for traveling abroad: No foreign transaction fees

 

Store credit cards are also decent options for rebuilding credit because they’re usually easier to qualify for than general-use cards. If you’re a frequent shopper at a major retail store, you can try applying for its co-branded credit card. You could, for example, apply for the Walmart Rewards Mastercard® (Review) or Target REDcard™ Credit Card (Review). Both of these unsecured options have relaxed application requirements, no annual fee, and in-store offers.

What’s the Deal With Credit Scores?

Your “credit” isn’t one single entity. It’s made up of several credit reports and dozens of different credit scores.

In general, the higher your scores, the more “creditworthy” lenders deem you; the lower they are, the riskier you appear. When you have poor credit, lenders may charge higher interest rates or fees, or refuse to give you a loan at all. A shaky credit history could also impede your ability to get a job or an apartment.

Your scores may be low because you’ve missed payments, paid bills late, maxed out credit cards, defaulted on loans, or experienced a bankruptcy.

While it can be tempting to swear off credit entirely, the only way to regain the trust of lenders is to demonstrate you can use credit responsibly.

Since credit scores prioritize recent behavior over old behavior in many ways, you have ample opportunity to bring your scores back up.

How Can Credit Cards Improve Bad Credit?

As we mentioned earlier, you have dozens of credit scores. The most common type comes from the Fair Isaac Corporation; you probably know it as a FICO score.

You can check your FICO scores for free online. You should also check your credit reports with a monitoring service or at AnnualCreditReport.com. There, you can get one free credit report per bureau per year. If you notice any errors, report them immediately — they could be having a detrimental effect on your scores.

Under FICO Score 8, “bad” or “poor” scores are typically seen as about 579 or less. Here’s what goes into your scores:

What’s In Your Credit Score?

This chart shows the criteria used to create FICO scores and their relative importance in your credit score.

Given the chart above, the quickest route to better credit scores is making on-time payments and improving your “amounts owed” — both of which you can accomplish with a new credit card.

The first is probably obvious: With a card, you can establish a steady history of on-time payments. Any late payments will cause you to lose points here.

Amounts owed, however, is a little more complex. This takes into account your “credit utilization ratio,” which is how much you owe divided by how much credit you have in total. With a new card, you can increase your available credit and reduce your utilization, which will help your scores.

Let’s say the only credit you currently have is a card with a $1,000 limit, on which you’re carrying a $900 balance. That would make your credit utilization ratio 90% ($900/$1,000) — not good. For strong credit scores, you want this number as low as possible.

But then you get another credit card with a $1,000 limit, increasing your available credit to $2,000. Now, your $900 balance accounts for only 45% of your total credit ($900/$2,000). While not stellar, it’s a lot better, and will continue to improve as you make payments to reduce the balance.

So, opening a new credit card can help with the payment history and amounts owed categories. And, if you didn’t have any credit cards before, it will also help with the “types of credit used” category.

Only pursue this strategy if you know you can be responsible with the new card. If you plan to max out the new card as soon as you get it, you’ll only damage your credit further. While easier said than done, we urge you to pay off your debt before applying for more credit.

Opening a new credit card is good for your credit in the long run, as long as you use it responsibly. Here’s why you may have heard otherwise: When you apply for a card, the issuer performs a “hard inquiry” into your credit reports, causing a temporary dip in scores. Having a new account on your reports also adds to the “new credit” category and will reduce your average account age, both of which will lower your scores a bit. Responsible card use, however, will eventually bring you back up — and beyond.

How to Choose a Card for Rebuilding Your Credit

The biggest choice you’ll face in choosing a credit-rebuilding credit card is whether to go secured or unsecured. (That is, if the choice isn’t made for you, as unsecured cards are harder to get.)

  • Secured credit cards require an upfront deposit that serves as collateral for your loan. Your credit limit is typically equal to the deposit, although in some cases you can get a higher limit. Deposits usually start around $200 and tend to max out around $2,000 or $3,000. Secured cards are a great way to start rebuilding your credit, with the only caveat being that your credit line will usually be relatively low (meaning your credit utilization may be high).
  • Unsecured credit cards extend you a line of credit based on your creditworthiness — no deposit needed. While these are generally a better option, due to their lower fees and higher credit limits, they might not be available if your credit scores are very low.
Even though secured cards require a deposit, they’re not the same as debit or prepaid cards. Debit cards pull funds from your checking account and don’t report your behavior to the credit bureaus. Prepaid cards are like gift cards: They don’t require a bank account and don’t have any effect on your credit.

Whether it’s secured or unsecured, here are a few things to look for when you’re searching for a credit-building card:

  • Low or no annual fee: Because “age of accounts” is an important factor in credit scores, you should aim to hold on to your new card for as long as possible. That’s why you should also aim to find a card without an annual fee — or at least a very reasonable one that you won’t mind paying.
  • Few additional fees: Financial institutions often hedge the risk of lending to subprime borrowers by charging exorbitant fees. Watch out for setup, monthly maintenance, and credit limit increase fees.
  • Good customer service and payment options: Some issuers have terrible customer service or outdated portals that make it difficult to pay on time. So before applying for a credit card, read the reviews. You should also make sure your chosen card offers zero fraud liability, so you won’t be on the hook for charges if it’s lost or stolen (this comes standard on the major credit cards).
  • Credit bureau reporting: Although most card issuers report your payments to all three credit bureaus, some smaller companies don’t. Without this, your new card isn’t going to improve your credit, so make sure it reports to TransUnion, Equifax, and Experian.
  • Automatic upgrades: When it comes to secured cards, some issuers periodically review your behavior — if you’ve been making on-time payments and your overall credit satisfies their criteria, they’ll automatically refund your deposit and upgrade you to an unsecured credit card. That’s a huge perk, since you won’t have to apply for a different card and face another hard inquiry on your credit reports.

You’ll note we didn’t mention APR in this list. That’s because we strongly encourage you to pay your statement balance in full when it arrives. If you do this, you won’t pay any interest on your card for purchases, thereby rendering the APR unimportant.

How to Get Approved for a Credit Card With Bad Credit

Before applying for any credit cards, you should strive to pay off existing debt if possible. Although it’s not a factor in your credit scores, issuers do consider your debt-to-income (DTI) ratio when deciding whether to approve your card application. (Your DTI ratio isn’t a factor in your credit scores, but don’t forget that credit utilization is.)

We also recommend checking to see if you have any pre-approved card offers. Who knows? You might think you can only get a secured card, before discovering you qualify for a better unsecured card. Doing so is easy and free, and it won’t affect your credit; if you already have an offer, your likelihood of getting approved is quite high.

If you don’t have any pre-approval offers, consider a card’s target demographic before applying. As each application results in a hard inquiry, you should only apply for cards you think you have a reasonably good chance of being approved for.

No luck getting a credit card? Or just looking for an alternative? Consider a credit builder loan. With these, you essentially pay off the loan before getting the money. The lender reports your payments to the credit bureaus, helping you boost your scores over the course of your loan and afterward.

If you’re struggling with a large balance under hefty interest rates with your current card, you can also look for cards that offer a 0% balance transfer APR. These allow you to move that balance over to a new card with a 0% rate, giving you time to pay off the debt at no interest.

5 Keys for Improving Your Credit Scores

Holding that shiny piece of plastic in your hands? Congrats! Now your work has just begun.

Here’s how to make sure your new credit card pushes your scores in the right direction:

  • Make on-time payments: Whatever you do, pay your bills before the due date. While you should always pay at least the minimum, we recommend paying the statement balance in full to avoid interest charges. Setting up automatic payments is always a great idea.
  • Use your card: Don’t let your card collect dust in a drawer. Make purchases with it at least once a month, but don’t come close to maxing it out. One smart, hands-off strategy is to put a recurring charge on your card — like a gym membership — then set up automatic payments to make sure you never miss a beat.
  • Sign up for a credit monitoring service: Stay motivated by watching your scores rise through a site like Credit Karma or Credit Sesame. You can also use services from major banks like Discover, Chase, and Capital One (whether you use any of their credit cards or not).
  • Ask for credit limit increases: Once you’ve graduated to an unsecured card, regularly ask the issuer for a higher credit line. If you keep your spending the same, this is an easy way to reduce your credit utilization and further improve your scores.
  • Keep your accounts open: An important factor in your credit scores is your average age of accounts. That means you should avoid closing old credit cards unless they come with high annual fees that aren’t worth paying.

How long does it take to improve your credit scores? Unfortunately there aren’t any magic numbers or fast shortcuts. You just have to be diligent and patient.

If you follow the steps above, you’ll see your scores improve slowly over the course of months, and greatly over the course of years. Then one day, you’ll be able to apply for any of the best credit cards available with good chances of approval.

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AT A GLANCE

See six cards designed for rebuilding credit, including two unsecured cards and four secured options. Learn how to increase your card approval odds and build your credit scores.

Credit Card Insider receives compensation from advertisers whose products may be mentioned on this page. Advertiser relationships do not affect card evaluations. Advertising partners do not edit or endorse our editorial content. Content is accurate to the best of our knowledge when it's published. Learn more in our Editorial Guidelines.

The information related to Citi® Secured Mastercard® has been collected by Credit Card Insider and has not been reviewed or provided by the issuer or provider of this product.

The responses below are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. It is not the bank advertisers' responsibility to ensure all posts and/or questions are answered.