Best Credit Cards to Build Credit: Building a solid credit history is essential for financial stability. Whether you want to qualify for a mortgage, get a car loan, or secure a better interest rate on loans, a good credit score can save you thousands of dollars over time. One of the easiest ways to establish and improve your credit is by using a credit card responsibly.
However, not all credit cards are ideal for building credit. Some come with high fees, while others don’t report to all credit bureaus. In this article, we’ll break down the best credit cards to help you build credit and provide tips on using them wisely.
Understanding How Credit Cards Build Credit
Before diving into the best credit cards for building credit, it’s crucial to understand how they contribute to your credit score. Here are the main factors:
- Payment History (35%) – Paying your credit card bill on time is the most critical factor in determining your credit score.
- Credit Utilization (30%) – This is the percentage of your available credit that you’re using. Keeping it below 30% helps improve your score.
- Length of Credit History (15%) – The longer you have an account open, the better it is for your score.
- Credit Mix (10%) – Having different types of credit (e.g., credit cards, loans) can positively impact your credit.
- New Credit Inquiries (10%) – Applying for multiple credit cards in a short period can hurt your score.
Key Features to Look for in a Credit Card to Build Credit
When selecting a credit card for credit-building, consider the following:
- No Annual Fees – Avoid unnecessary costs while establishing your credit.
- Low APR – A lower interest rate is beneficial if you carry a balance.
- Reports to All Three Credit Bureaus – Ensure the card issuer reports to Equifax, Experian, and TransUnion.
- Security Deposit (for Secured Cards) – Some cards require a refundable deposit to open the account.
- Rewards and Benefits – Some beginner-friendly cards offer cash back or other perks.
Types of Credit Cards for Building Credit
Not all credit cards are the same. The best type for you depends on your credit history and financial situation. Here are the main types:
Secured Credit Cards
Secured credit cards require a refundable deposit, which serves as your credit limit. These are ideal for individuals with no credit or bad credit.
Student Credit Cards
Designed for college students with limited or no credit history, student credit cards typically offer lower credit limits and rewards.
Retail Store Credit Cards
Retail credit cards are easier to get but often come with high interest rates. They can help build credit if used wisely.
Credit Builder Loans vs. Credit Cards
Some lenders offer credit-builder loans, which don’t require a credit check. While these can help establish credit, a well-managed credit card is generally more beneficial.
Best Secured Credit Cards to Build Credit
Discover it® Secured
- No annual fee
- 2% cash back at gas stations and restaurants
- Reports to all three credit bureaus
Capital One Platinum Secured
- Low security deposit requirement
- Potential for credit line increase after six months
- No annual fee
Citi® Secured Mastercard®
- $200 minimum deposit
- No annual fee
- Helps build credit with responsible use
Best Student Credit Cards for Building Credit
Discover it® Student Cash Back
- 5% cash back in rotating categories
- No annual fee
- Good for students new to credit
Chase Freedom® Student
- $20 bonus after first purchase
- No annual fee
- Reports to all three credit bureaus
Capital One SavorOne Student Cash Rewards
- 3% cash back on dining and entertainment
- No annual fee
- Good for students with limited credit history
Best Credit Cards for No Credit or Limited Credit History
If you’re new to credit or have limited history, these cards can help you get started without requiring a security deposit.
Petal® 2 “Cash Back, No Fees” Visa® Card
- No credit history required
- No annual fee, late fees, or foreign transaction fees
- 1.5% cash back on eligible purchases after on-time payments
Deserve® EDU Mastercard
- Designed for students and young adults
- No security deposit required
- 1% cash back on all purchases
Capital One QuicksilverOne Cash Rewards
- 1.5% unlimited cash back
- $39 annual fee
- Ideal for those with fair credit looking to improve their score
Best Store Credit Cards to Build Credit
Retail store credit cards are often easier to get approved for, making them an option for credit-building. However, they typically come with higher interest rates, so they should be used carefully.
Amazon Prime Store Card
- 5% cash back for Amazon Prime members
- No annual fee
- Good for frequent Amazon shoppers
Target RedCard
- 5% discount on all Target purchases
- No annual fee
- Helps establish a credit history with responsible use
Best Buy Credit Card
- Special financing options
- Rewards on Best Buy purchases
- High APR, so it’s best if paid in full each month
Prepaid Cards vs. Credit Cards for Building Credit
Some people assume that prepaid cards help build credit, but that’s not the case.
Key Differences:
| Feature | Prepaid Cards | Credit Cards |
|---|---|---|
| Reports to Credit Bureaus | ❌ No | ✅ Yes |
| Helps Build Credit | ❌ No | ✅ Yes |
| Requires a Credit Check | ❌ No | ✅ Sometimes |
| Security Deposit Required | ❌ No | ✅ For Secured Cards |
Since prepaid cards don’t extend credit or report to the bureaus, they won’t help improve your credit score.
How to Use a Credit Card Responsibly to Build Credit
Getting a credit card is only the first step. Using it wisely ensures that you actually build a positive credit history.
- Always Pay On Time – Late payments can hurt your score significantly.
- Keep Credit Utilization Low – Try to keep your balance below 30% of your credit limit.
- Use the Card Regularly – Making small, consistent purchases helps establish your credit history.
- Don’t Max Out Your Card – High balances can negatively impact your credit score.
Mistakes to Avoid When Using a Credit Card for Credit Building
Some common pitfalls can slow down your progress or even damage your credit.
Maxing Out Your Credit Limit
Using too much of your available credit makes you look like a high-risk borrower. Aim to keep usage under 30%.
Missing Payments
A single missed payment can stay on your credit report for up to seven years. Set up automatic payments to avoid this.
Applying for Too Many Cards at Once
Each credit application results in a hard inquiry, which can temporarily lower your score. Apply only when necessary.
How Long Does It Take to Build Credit with a Credit Card?
Credit building takes time, but you can see progress within months.
- First 3-6 Months – Your credit score starts to form with responsible usage.
- 6-12 Months – A steady history of on-time payments can significantly boost your score.
- 1-2 Years – A strong credit profile emerges, making you eligible for better cards and loans.
Consistently using your credit card responsibly will yield the best results over time.
Credit Card Alternatives for Building Credit
If you’re unable to get a credit card, other options can still help you establish credit.
Credit-Builder Loans
A small loan held in a savings account until you complete the payments, then the money is released to you.
Become an Authorized User
Ask a family member with good credit to add you as an authorized user on their credit card.
Rent Reporting Services
Some companies can report your on-time rent payments to the credit bureaus, helping boost your score.
FAQs about Best Credit Cards to Build Credit
What is a credit-building credit card?
A credit-building credit card is designed for individuals with little to no credit history or those looking to improve their credit score. These cards typically have lower credit limits and higher interest rates but can be a useful tool for establishing a positive credit history when used responsibly.
How do credit-building credit cards work?
These cards work by reporting your payment history to the major credit bureaus (Experian, TransUnion, and Equifax). Making on-time payments and keeping your balance low can positively impact your credit score. Conversely, late payments or high utilization can harm your credit.
Who should consider a credit-building credit card?
Credit-building cards are ideal for young adults, students, or anyone with a damaged or unestablished credit history. They are also useful for those who have experienced financial setbacks and are in the process of rebuilding their credit scores.
What should I look for in a credit-building credit card?
When choosing a card, consider factors such as the annual fee, interest rate, and whether the issuer reports to all three major credit bureaus. Additionally, some cards offer rewards or free credit score monitoring, which can be beneficial.
Can anyone get a credit-building credit card?
While these cards are more accessible than other types of credit cards, approval is not guaranteed. Issuers may still check your credit history and income to determine eligibility. For those with very poor or no credit, secured credit cards might be a better option.
How long does it take to build credit with a credit-building credit card?
Building credit is a gradual process. Typically, it takes about six months of reported payments to establish or start improving a credit score. Consistent, responsible use over time is key to building a strong credit history.
What are the risks of using a credit-building credit card?
The primary risks include high interest rates and potential fees, which can add up if the balance isn’t paid in full each month. Additionally, if not managed properly, there’s a risk of falling into debt, which can negatively affect your credit score.
Building credit with a credit card is simple if you follow good habits. Choose the right card, use it responsibly, and watch your credit score grow over time.
