With the state of the economy and market, more and more people are suffering due to their bad credit score. Poor credit can make it hard to get a car loan, mortgage, or apartment lease, so taking steps to improve your credit is crucial. Luckily, an easy way to start improving your credit score is through a new credit card. By choosing the right credit card, you can have all the financial benefits of good credit score holders, as well as improve your overall credit score.
One of the best ways to begin rebuilding your credit is with a good credit card. These will permit you to keep your balance low, and if you routinely make your payments on time, a credit card can help rebuild your credit reputation quickly. What’s great is that these cards are designed for people with a poor credit history already. If you find yourself burdened with the dark mark of bad credit, there is still hope. Just because your credit is bad, doesn’t mean that you have to be limited in all walks of life.
Here’s everything you need to know about getting a new credit card and which cards to consider when rebuilding your credit reputation.
Secured Vs. Unsecured: What’s The Difference?
There are two different kinds of credit cards available if you have a poor credit history. Both of these types of cards can help rebuild a solid relationship with your bank, and can also provide you with financial security. The two types of accounts you need to familiarize yourself with are as follows:
Secured credit cards grant you full control over your credit limit, the only thing you have to do is deposit a line of credit through whichever bank you are working with.¹ Rather than depending on a real line of credit, you’re actually just spending your own money each time you use the card. In essence, you are acting as your own credit issuer, and your deposits secure your credit limit. Secured credit cards are typically used by those with poor credit history or young people who haven’t yet built any credit. The great thing about this type of credit card is that once you have improved your credit score, you can close the account and your line of credit, or “down payment”, will be refunded.
Unsecured credit cards build trustworthiness for their cardholders. This type of account is usually reserved for people with extensive credit histories and higher credit scores. The credit card is set up with a credit limit, for example, $5,000, and you can only make purchases up to that limit.² This is the bank’s money that they permit you to shop and spend with. As a result, you will be charged fees for using their money. This can improve your credit score even further since the bank has trusted your creditworthiness to be able to pay them back.
1. Capital One Secured Mastercard
This credit card can help you rebuild your credit score as well as establish a good credit history. This credit card allows you to choose the best credit line for your needs and keep track of your credit score using CreditWise from Capital One. With each timely payment, your overall credit score will improve. Thanks to the app, you can always track your progress and plan your budget accordingly. This credit card has no annual fees and requires only a deposit ranging from $50 to $200 to open a line of credit. As your credit score increases over time, you won’t need to make any additional deposits.
2. Indigo Platinum Mastercard
If you have had financial difficulties in the past and can’t seem to find a good credit card provider for yourself, look into getting an Indigo Platinum MasterCard. This card doesn’t require you to deposit funds to open a line of credit, but it does need you to pay a small annual fee. You can avoid high interest rates and improve your credit score by making payments on time. You could apply for this credit card even if you filed for bankruptcy in the past. ³
3. Credit One Bank Unsecured Visa
You can prequalify for this credit card without further damaging your current credit score. This is the ideal card for anyone who has a history of bad credit scores. If you make your monthly payments on time, you can get a 1% cashback reward on all your purchases, regardless of your credit score. The due dates are very flexible at the cost of an annual fee.3
Tips and Tricks to Rebuild Your Credit Score
Whether you are looking to establish a good credit score or improve your current credit score, there are a few things that you should keep in mind.
Sending out multiple applications for credit cards can considerably lower your credit score. Credit card companies always perform a thorough credit check for all their new applicants, and this can damage your annual credit score. Take your time and explore all your options before applying for the credit card you want.
All the cards mentioned above will allow you to prequalify without taking a hit on your credit score. Just because you made bad financial decisions in the past doesn’t mean you have to carry the burden of a lousy credit record your whole life. By acquiring a new credit card, you can quickly rebuild your credit score and get your finances back on track.
[1] Kali Hawlk. “How a secured card deposit relates to your credit line.” credit karma. 27 July 2019. https://www.creditkarma.com/credit-cards/i/secured-card-deposit-credit-line/
[2] Brittney Mayer. “15 Best Unsecured Credit Cards for Bad Credit in 2020.” CardRates.com. 6 April 2020. https://www.cardrates.com/advice/unsecured-credit-cards-for-bad-credit/
[3] “Platinum Edition Visa Card.” fnbo. https://www.fnbo.com/personal-banking/credit-cards/visa-platinum-edition/
