How to Build Credit With a Credit Card

If you're ready to get a credit card, make yourself at home. We'll talk about four different options: secured credit cards, credit cards for students, credit cards that don't require a deposit, and retail credit cards.

When the target market includes people who are trying to build or rebuild their credit, there will always be a few lenders who try to take advantage of this vulnerable group. Pay close attention to the terms and conditions of secured cards.

Guaranteed credit cards

But I've spent a lot of time learning about secured cards, and some of them are really good. You should know that applying for a credit card could lead to a hard inquiry on your credit report, which usually lowers your score by a few points. Since it's hard to get points when you're just starting out, a few issuers will let you get "preapproved" before you apply. The benefit is that if you don't get the card, you'll know right away and won't have a hard inquiry on your credit report for nothing.

You do have to make a security deposit when you get a secured card, and some cards have annual fees. But if you use them wisely, you can ride these cards straight to the land of fair credit, which is a FICO score between 580 and 669. In this category, there are some pretty good unsecured cards.

Some secured card issuers also offer unsecured cards, so you might be able to move up to an unsecured card with the same issuer. But if they don't, you'll be in a good position to apply for an unsecured card from another issuer. When you close your secured card account, you will get back the money you put down as a deposit.
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