2014′s Best Credit Building Credit Cards

Posted by CreditCardGuru

Q: What are the best cards for building credit for 2014?

fresh start with moneyA: Are you new to credit or trying to rebuild your credit? Whatever the case may be, it’s important to realize this:

For building credit, how you handle your credit card account is much more important than what specific card you carry.

So before offering recommendations for bad credit credit cards, as well as cards designed for those with little or no credit history, here are 5 key tips for managing your account in way that will improve your credit score over time:

Tip #1: Have More Than One Credit Account

Not too long ago, someone posted a question the forum – she had a credit history of 5 years but could still not get approved for a mid-tier credit card. It appears the reason was because she had only been using one card with a low limit during that entire time.

As a long term goal, you want to eventually build up to having several different credit accounts on your file – a few revolving accounts (credit cards) as well as at least one or two installment accounts (loans). This is because your FICO score takes into account the types of credit accounts you have as well as the total number. So, if you currently have no cards you may want to try to get more than one in your first year or so of starting and then try adding several more over time as your score grows.

Tip #2: Avoid High Credit Utilization

This is one of the most important tips for how to build credit. It also happens to be one of the most common mistakes made!

While it can be convenient to use a credit card to pay for almost everything, not to mention rewarding if you have a cash back or miles credit card, it can cause you to use an excessive percentage of your credit line. Unfortunately, if you use too much of your credit limit, it actually backfires and hurts your FICO score! Why? Because this “credit utilization” is a factor in scoring. Using a high amount of credit = bad news! Ideally you should aim to stay below 30 percent of your limit at all times (on any given card and in total across all your credit lines).

Tip #3: Don’t Carry a Balance

This is another frequent mistake made when using credit cards to build credit. It’s frightening just how many Americans believe that having a balance is better for credit scores.

You do NOT need to keep a balance to build your credit. Now if you do carry a balance (using a small amount of your credit limit) I’m not claiming that will be bad for your credit score, but it’s simply not necessary. Here’s why…

Each month when your cycle closes, the total amount owed is what gets reported – that’s current charges + any balances you are carrying. So carrying a debt will indeed show account activity each month, but simply using your credit card each month for purchases will accomplish the same thing, too. So why keep a balance? Just use your account each month and pay off the purchases in full.

Tip #4: Always Pay on Time

Few people realize that a full 35% of your FICO credit score is based on payment history! Credit building cards won’t be helpful if you don’t pay your bill on time. So do yourself a favor and do whatever is necessary to MAKE SURE you have that payment in on time each and every month.

To do this you may want to even consider setting up automatic payment using your checking account. But doing that can be risky if you don’t keep close tabs on your current balance (because one month you may have insufficient funds in your checking, so the payment won’t go through). Your credit card due date will be the same each month so it can be helpful to put a reminder in your calendar and even sign up for text reminders online from your issuer. There’s never an excuse to be late with a payment, so don’t be.

Tip #5: Keep Tabs on Your Credit Report

Don’t forget to regularly keep tabs on your credit report. This is important because even if it looks like it should right now, you never know in the future when something incorrect might appear, either by accident or due to identity theft. Now I’m not saying you have to go pay for one of those monthly credit monitoring services, but you should at least take advantage of the free credit report all Americans are entitled to once per year. Bear in mind this won’t provide your credit score but will show everything in your credit file. You can get a free report each year from each of the three credit bureaus at AnnualCreditReport.com.

Whew… now that we have all that info out of the way, let’s discuss my recommendations

Credit Building For Bad Credit?

Rebuilding credit is a bit more difficult than building credit for scratch. This is especially true nowadays, after the banks got burned so badly during the Great Recession. Even though the economy has improved since then getting approved for an unsecured credit card can still be challenging. This is why a secured card can be a good alternative – many have guaranteed approval (if you meet their basic residency, age requirements and can put some funds on deposit to secure the credit line) and they look the same on your credit report as an unsecured card would.

Compare secured cards for credit building

Credit Building For Limited or No Credit History?

For college students the easiest ones to get approved for will be student cards. They are typically very accommodating to those with no credit history.

Compare student cards

For all others it will be a little bit trickier to get approved. Often times I see adults that are 25, 30, or older and have never had a credit card. Much to their surprise, when the apply for a basic credit building card they get denied due to insufficient history.

Each person’s circumstance is different, but if you have zero history than I would recommend a good secured card like this.

If you already have a little credit history (such as a loan) then I would recommend cards for fair credit.

Written or last updated July 29, 2014


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

11 comments... read them below or add your own

  1. Sarah Black August 30, 2014 at 1:53PM

    I am 42 and have dealt with crook …err credit cards in the past, they are very unforgiving and it is nearly impossible to rebuild. My 2 cents would be skip it if possible and you will find that life is much more stress free. Besides this, how many of us out here actually make anything over bills of living?

    Think the banks that got us into that recession need to rethink they’re practices before they put themselves under again.

    Have a nice day :o)

  2. Traci January 10, 2014 at 6:09PM

    Hi. I applied for a CC with Barclayard and recieved that I was denied. I just want to share that how am I to build my credit when my credit was ruined from a nasty divorce of 18 years. I had a Capital One with a max of $1000. and noone is able to tell me when my account closed. I found out that my acct closed when I requested a new card because it was expired. I recieved no email, no mail and no phone call about this. I had this card since 2006 and was on time with my monthly payments nor missed a payment. I have also never owned another credit card in my life. Only a debit card. If you have any suggestions or recommendations, please let me know. Kind Regards, Traci Pearson

    • David Gaines January 18, 2014 at 8:14AM

      I didn’t have credit cards until I was past 30 just out of fear of them, not realizing how it prevented me from having a good credit score. So, I started building my horrendous credit with credit cards from First Premiere ($300) and Credit One Bank ($300). I also got one from Capital One ($200). Barclays, though, denied me as well.

      I also got approved for $800 from FingerHut/WebBank which also reports to all three agencies.

      It’s a start. Never missed a missed a payment, keep a low utilization of available credit, and never miss a payment. And, I repeat, never miss a payment. My score has steadily been going up.

      And I use CreditKarma’s app to track my score. It’s free. As well as Credit Sesame.

      Hope this helps.

  3. Kelly December 8, 2013 at 11:02PM

    hi i dont have enough credit and i keep getting denied for credit cards…how can i get approved for a card to build my credit?

  4. Bobby Rice November 21, 2013 at 3:40PM

    I work at a car dealership and need a small amount of money to get my transportation situation taken care of. I have paid off a loan before so just trying to continue building my credit.

  5. Martha November 7, 2013 at 11:18PM

    I have very bad credit but have 2 jobs. I want a credit card with low interest and possibly no annual fee. Not a prepaid or deposit card. what would be best for me?

    • Denise November 24, 2013 at 1:11PM

      Because you have bad credit you will not get approve for what you are asking for. You might get lucky if you
      Get approved at all. You should apply for a secured credit card, which you supply the money that makes up your credit limit. After six months to a year you can apply for a unsecured credit card. After good payment history.

  6. Candy November 5, 2013 at 8:17AM

    I am a student I have poor credit but I have a nice paying job. what card would be right for me.

  7. diksha July 11, 2013 at 10:25PM

    If your business is new, or if you haven’t yet established business credit, obtaining tradelines is a great way to begin building your business credit report.

  8. Joan Yanda March 2, 2013 at 9:04AM

    I have no credit, but wish to establish credit, so I have a card in case of emergencies. I am retired, do substitute teaching–and have a good teaching retirement pension as well. I would like to have some help in deciding how to pick and choose the best way to go.

    • Brit May 5, 2013 at 8:01PM

      You want the capital one secured credit card! as long as you pay your balance every month, and spend under 25% of your credit limit, you will build credit quickly! Keep in mind, the security deposit is fully refundable when you close out your account, so long as you have no balance on your account when you close!

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