Having a low credit score, or bad credit, cripples your ability to borrow money. You will usually pay higher interest on a loan if you qualify at all. Poor credit is an unfavorable sign to many utility companies, cell phone companies, landlords, employers, and insurers as well.
Overusing credit cards often leads to damaged credit, but using a credit card responsibly is the fastest means of fixing your credit. Here are some of the best credit cards with the best credit limits available for improving credit.
The Best Credit Card for Rebuilding Credit
Secured credit cards are ideal for rebuilding credit. These cards require a security deposit as protection against default. This deposit lowers the risk for issuers, so secured cards are quite easy to obtain. You still have to meet income qualifications, and some serious credit issues such as bankruptcies may render you ineligible.
Unsecured cards designed for bad credit do not normally require a deposit, but their fees are typically more expensive than the usual secured card deposit. Store credit cards can be easy to apply for, although they come with low credit limits and extremely high interest rates. A secured card can be an effective temporary tool with which to rebuild credit before moving to a better unsecured option.
Tips for Choosing a Credit Card to Improve Credit
Although credit cards for poor credit often have low credit lines and high interest rates, their main purpose is to help you build or restore your borrowing capacity. When searching for a card, be sure to consider:
Credit bureau reporting: You need a card that reports to the major credit bureaus (Equifax, Experian, and TransUnion). Your credit score is based on information sent to them regarding your payment history with creditors. Prepaid cards do not report to the bureaus because you are not borrowing money from the prepaid card issuer.
Some subprime credit card issuers prey on people with damaged credit by charging outrageous fees. The best secured credit cards have either a small annual fee or none at all. You may also expect to see transfer fees and late fees with credit cards for bad credit. Avoid cards that charge “processing fees” or “maintenance fees”, “authorized user fees”, or other hidden costs. Your deposit should be refundable.
- Upgrade option
Once you have improved your credit, you will want to transition to a card with more favorable terms. Keeping an older account open will benefit your credit score, so it is best to remain with your secured card issuer if possible. Look for an issuer that can convert your account to an unsecured card or another secured card with more benefits. Credit score monitoring: Seek an issuer that offers free access to your credit score. Look for free financial education resources and tools such as debt payment calculators.
Discover It Secured
This Discover card offers many benefits and rewards that rival or outdo most secured and even many unsecured cards. Upon approval, you establish your credit limit with a refundable security deposit of at least $200 up to $2500 — probably the best credit limit available with secured cards. After eight months of responsible use, Discover reviews your account and could upgrade you to an unsecured card. You pay no annual fee, and you can earn cash back.
Digital Federal Credit Union Visa Platinum Secured Credit Card
Digital Federal Credit Union offers secured card interest rates that are significantly lower than many secured and unsecured cards. You must set up a savings account which will become your credit limit, so you determine how high your limit will be. You incur no annual fees or charges for cash advances and balance transfers.
Capital One Secured Mastercard
This Capital One secured card does not charge an annual fee, and it helps you build credit with responsible use. Depending on your creditworthiness, you can obtain an initial credit line of $200 with a security deposit of either $49, $99, or $200. After five timely monthly payments, you may qualify for a higher credit line with no additional deposit.
OpenSky Secured Visa Credit Card
You do not need a credit check or a bank account to apply for an OpenSky secured credit card. Your refundable deposit of at least $200 is your credit limit. OpenSky reports your history to all three major credit bureaus , helping you build or rebuild credit quickly.