What Cards Are The Easiest To Get Approved For?
If your FICO score is below 680 you may find it difficult to be approved for a traditional credit card offered by banks and other financial institutions.
- Credit builder cards are specifically designed with the needs of bad credit borrowers in mind and their application requirements are a lot less stringent.
- One of the major differences between these cards and regular credit cards is that they often have lower limits and sometimes come with higher APRs. Once your FICO score has risen sufficiently, you can always upgrade to an option with a higher limit and lower interest.
If you’re keen to explore this option as part of your strategy for rebuilding credit, here are some of the basics you’ll want to know before you begin.
How To Use A Credit Card To Build Credit
Most financial products that allow you to borrow money will report your credit balances and payment behavior to at least one of the three main credit bureaus.
- If you make your payments on time and maintain low balances on your cards, these positive efforts will appear in your credit record.
- Likewise, if you’re late in paying or default on in your loans, these negative marks will stay on your record for years - and you’ll see a significant drop in your FICO score.
A credit card is an ideal borrowing product to build your credit because it impacts every factor that FICO uses to calculate your credit score: payment history, credit balances, the age of your accounts, your credit mix, and new credit applications.
All you have to do is apply, provide a security deposit, and make your payments on time each month.
Top Credit Cards For Building Credit In 2020
If you’d like to increase your FICO score you’re probably wondering which credit builder card to apply for.
Here are our top three picks for credit card holders with average to poor credit.
Discover it® Student Cash Back
This product is ideal for young customers with thin credit files who want to establish a positive credit record.
- The card company will match every dollar of your cashback rewards at the end of the first year of use.
- You’ll receive 5% cashback on purchases (up to a quarterly limit) and 1% on any purchases exceeding it.
- If you maintain a GPA of 3.0 or higher in a given year, you’ll receive $20 statement credit over the next five years.
- The card comes with a FreezeIt option to stop all payments in case of fraud and also features enhanced privacy protection.
Capital One VentureOne card
If your credit score is 670 or higher but you haven’t used a credit card in the past, this product may be a good option to improve your credit mix and raise your FICO score.
- The Venture One card offers 1.25 travel miles for each dollar you spend. You’ll receive 20,000 bonus miles if you charge $1000 or more to your card in the first three months.
- You can take advantage of an introductory 0% APR in the first twelve months.
- There’s no annual fee and no additional foreign transaction fee.
- Due to the high credit score needed to qualify, this card may not be suitable for bad credit borrowers.
Petal Visa Card
This relatively new lending product stands out for its affordability and the features included in the Petal Visa card app that’s used to manage payments and view balances on the card.
- There are no annual fees and you won’t be penalized with late payment fees.
- The card offers 1% cash back on all purchases in the first year. This amount increases to 1.5% when you make 12 on-time payments consecutively.
- It’s important to note that the card has a relatively low maximum credit limit at $500.
Each of these card issuers will report your payment and balance information to Experian, Equifax, and TransUnion - and this will help you boost your credit.
Whether you’re a new borrower with a thin credit file or a bad credit customer on the road to recovery, you’ll benefit from using a credit builder card to boost your FICO score.
Applying for one of the cards on our list and managing your card payments effectively each month will help you increase your score over time, gain access to better APRs, and gradually deliver more attractive borrowing options.