How To Build Credit: Useful Tips

Building a good credit score makes your financial life easier and better. With an excellent credit history and scores to show for it, you’re positioned to benefit from better financial services.

These include faster loan and credit line approvals, lower loan interest rates, and better mortgages, among several others. The fascinating part of credit-building is that it’s easier to gain better scores for a person with limited or no credit history than a person with an already good history.

You can build your score by consistently reviewing your history, paying your bills on time, reporting errors, and tracking your monitoring progress.

In all of these points to build credit scores, the type of card you use influences how fast and well you build your score. Whether you use an unsecured card or prefer a secured credit card, the following headings highlight the best cards for building credit.

Credit Cards For Building Credit: Best Offers

A credit card is one of the surest ways to build a good score. When you use your credit card regularly to pay bills and settle transactions, it’ll reflect on your history and make for good reports.

Although unsecured credit cards (cards without collateral or security deposit) are the most common in circulation, secured credit cards do a better job of building credit. So try to choose the best credit card to build credit.

Several credit card companies offer you different incentives for using their credit cards. However, we’ve compiled some of the best offers you can get from a credit card issuer to help ease your choice.

Petal® 2 “Cash Back, No Fees” Visa® Credit Card

This is for individuals who want to build credit but have limited to no credit history. The card is issued by WebBank, allowing you to build a history with no annual fee required.

In addition, If you exhibit good habits with this card and make eligible purchases, you get attractive cashback rates. Although the card is aimed at newbies at building, the issuer does not offer any welcome bonuses. But other rewards come with using the card, including

• Cashback benefits
• Travel benefits
• Building benefits
• A potential higher credit limit

The pros and cons of the card are summarized below.

Pros	Cons
Ideal for individuals with limited or no history	No welcome offer
A report is sent to the top three credit bureaus	Balance transfers are unavailable
No annual fees	Steep rewards structure
Attractive rewards
Room for low utilization

Overall, the Petal card is pretty good for new entrants in the world of credit-building. It lets them have a history to rely on for future purposes with the backing of the credit bureaus. The annual percentage rate is 15.24 to 29.24% based on worthiness.

U.S. Bank Altitude® Go Visa® Secured Card

This is the one for you if you want a secured credit card that offers simple reward points. This card is chiefly to build credit from travel and spending on restaurants, grocery stores, gas stations, and streaming services.

It comes with no annual fees, and new users of the card get a welcome offer of 20,000 bonus points for spending a thousand dollars within 90 days after opening.

It also offers good rewards on car rentals, luxury experiences, and travel benefits. The APR is 17.99 to 26.99% after the first twelve billing cycles. Its pros and cons are summarized below.

Pros and Cons

• No annual fees
• Bonus points only apply through the U.S Bank shopping portal and travel
• Good welcome bonus
• Each point is worth only a cent
• Generous rewards, including four points on $1 spent on dining and delivery services

Unless you’re someone who loves dining out and spending on groceries, this card will not help you build credit history as much. However, it’s the ideal card for those out and about for the better part of a year.

Petal® 1 “No Annual Fee” Visa® Credit Card

Similar to Petal 2, this card is your go-to option if you’ve made poor decisions that affected your scores in the past. In addition, it allows you to rebuild your credit report with no annual fee required.

The card requires no security deposit, and it’s supported by the three major credit unions. You’ll find no welcome bonus offered, but there are cashback rewards on certain expenses. The APR is variable and ranges from 22.24% to 31.74%.

Pros	Cons
No annual fees	Transfer of balance unavailable
2% to 10% cash back on purchases from certain merchants	Limited rewards
No security deposit is needed	No welcome offers
Reports to all three major credit bureaus

You should consider this card if you’re trying to rebuild your score after a few misses in your credit history. In addition, your credit limit can be increased in about six months with this card.

Capital One Quicksilver Secured Cash Rewards Card

This secured credit card has an unlimited 1.5% cash back reward. However, it comes with an APR of 26.99%, which is quite steep for the average credit builder.

The card comes with no annual fees and no welcome offers for newcomers. It also requires a deposit and might not be the best choice for people without strong credit reports. However, it offers rewards including:

• 1.5% cash back on purchases.
• 5% cash back on rental cars and hotels booked through Capital One.
• Redeemable points for cash or gift cards.

Pros	Cons
Good cashback rates	High APR
No annual fees	Deposit required
$0 fraud liability

You can monitor your score freely with Capital One and apply for an unsecured card when your credit report meets the requirements.

Avant Card

This unsecured credit card will allow you to build credit responsibly. The limit is higher than most, which is healthy for your card utilization.

Although the card requires no deposit, it comes with an annual fee and offers no reward programs. Depending on your creditworthiness by a credit bureau, you can pay an annual fee of up to $59. Its APR is variable and ranges from 27.24% to 29.99%.

Pros	Cons
You qualify to apply if your credit scores calculated fall between the FICO score of 580 – 740	Annual fees are required
No foreign transaction fees	No welcome offers
No deposit is required	No reward programs
No risk to your score on your application

Avant gives your credit reports to the three main bureaus so you can build your score responsibly. Over time of using this card, you’ll be able to increase your credit limit for better credit utilization.

Discover it® Student Cash Back

If you’re a student, chances are you’re already building a score with your student loan. But if you want to take charge of your finances and get an impressive credit report, you should get the Discover it Student Cash Back card. It allows you to build credit with several perks attached. These include:

• A welcome offer of unlimited cash back at the end of the first year.
• Quarterly 5% cash back on purchases on Amazon, restaurants, grocery stores, and gas stations.

The card requires no annual fees and also has an APR within the range of 15.25% to 24.24%.

Pros	Cons
Great welcome offer and reward programs	Reward programs are given quarterly
No annual fees	Cashback is capped at $1,500 quarterly
The report is sent to the bureaus
0% APR on purchases for the first six months

As a student, you’ll be on the right track to building and having a great credit score to upgrade to other cards.

Tomo Credit Card

This is one of the cards you can get without a check required. It offers its users a way to build a good credit score without a prior FICO score check, and it comes with no APR charges or annual fees. Its reward is a 1% cashback on all eligible purchases.

Pros	Cons
No APR charges	No welcome offers
No annual fees	No reward programs
No check is required	You must be pre-approved before applying for a card
No deposit is required
Non-citizens of the U.S. can apply
1% cash back on all purchases

Tomo card provides an alternative for its users to get a credit builder loan by using a savings account to determine eligibility. Your credit-building profile is reported to the major credit bureaus.

Discover it® Student Chrome

This card is for students who want to build a good credit history but also love dining out and spending a lot at gas stations. You get a 2% cash back on restaurant and gas station expenses capped at $1,000 quarterly.

It doesn’t require a history or FICO score to apply. Its APR is 0% for the first six months, then 15.24% to 24.24% in the following months. In addition, you get a welcome offer of an unlimited cash-back match at the end of your first year.

Pros	Cons
No annual fees	The quarterly reward is capped at $1,000
Good reward programs
Good reward programs
No FICO score is required

This card is beneficial for students who commute to school daily. It’ll help them build and scale to other cards with time.

How To Build Credit With A Credit Card

A card is your gateway to having an impressive credit score and history, as deemed by a credit union. With a good credit score, you can apply for personal loans for your upkeep or health issues and for auto loans, among others.

Typically, anybody can apply for personal loans, but your score will determine if it gets approved and how fast it does. In the following headings, we’ll detail how you can build with a card by being an authorized user, using the right card, paying bills, and practicing good habits, among others.

The Right Type Of Credit Card

With the list of cards given above, you can observe that there are different types to pick from. The card you pick with its rewards and the point-rewarding system will determine how fast you can build your score.

For instance, if you’re a student, you definitely want to go for one of the Discover It cards with the perks targeted at students. If you travel a lot and spend on deliveries, you’ll also find cards that will give you points for that.

These points and history of spending are what will reflect in an Experian credit report or any of the other two major bureaus. You’ll also see cards that could exempt you from your past history to qualify for a loan or credit card that’ll help you rebuild your credit score.

Authorized User

If your parents, relatives, or friends have good credit history and higher limits, you can “piggyback” on their credit score. Simply ask to be an authorized user of their card, which in turn adds the bank account to your reports. Ensure that the person’s account reports to the bureaus so as to boost your utilization and limits when you eventually get your own card.

Although this practice is low-risk, the good history of the person you piggyback on might make it harder for you to build scores personally.

Your previous report from piggybacking will reflect in the Experian credit files or other bureaus, and you’ll be expected to match their practice. If not, it’ll mean a dent in your history, limiting the financial benefits you should be originally open to.

Automatic Credit Card Payments

This is also known as “Autopay,” and it’s a setting by card issuers that allows users to have an automatic payment for a full statement balance or a fixed amount. The payment will automatically leave your bank account on a bill due date, according to your issuer.

It’s a great setting as it allows you to keep track of your bills and pay them immediately to build your score. It’s a way to eliminate the manual stress that comes with paying your bills. It also helps maintain discipline in your finances, but you can choose to discontinue it at any time.

Second Credit Card

A second card will be beneficial only when you’ve created an impressive history and score with the first. This second card will help you increase your utilization ratio, give you additional purchasing power, and better rewards for daily spending and bill payments.

However, you should only consider a card if you’re getting an income raise, a major lifestyle shift, having an improved credit score, making balance transfers, or financing a huge purchase.

You can apply for a second card from an issuer that offers gains that apply to your needs and goals. Seek for the card with the best gains that apply to your current needs and lifestyle shift, and send an application according to your FICO score.

Limit Increase

When requesting a card from most issuers, they usually set a limit based on your income. However, one of the easiest ways to have your credit score increase is by raising your limit.

It’ll help you lower your credit utilization as your balance remains the same but your limit increases. Your utilization significantly influences your credit score, and you can lower it with a call to your issuer. Simply ask how you can get a higher limit without a hard inquiry.

This option is the most used among several individuals, and it’s also the fastest you can get to build credit. You should ask for a higher limit when you’ve increased your income or gone months improving your score.

Practice Good Credit Habits

If you want to build credit, there are habits that you must adopt and maintain over a period. These habits have been tested and proven by financial experts to give amazing scores and reports. Some of the core practices you should adopt include the following.

• Do not max out your accounts: If you max out your card, your utilization ratio comes to 100%. This hurts your score and makes you look unworthy of loans.
• Manage your debt-to-income ratio: Ensure your expenses and loans do not take up a large percentage of your income.
• Contribute to an emergency fund: An emergency fund lets you cover expenses in case of an unexpected occurrence. This will help you take care of debts without increasing your utilization ratio.
• Monitor your reports: Use monitoring services to track your progress and report errors in your history.
• Know your score: Utilize the Bureaus’ free services to access your FICO score and how it changes over time.

Check Your Scores And Reports

A simple mistake as small as an error in your address can cause a negative report on your scores and report. As a result, requesting your reports and reviewing them to the last letter is always worth the effort.

In addition, you can use free monitoring services to track how your reports build over time and spot errors that you can report to your union. Noticing and reporting errors can improve your scores too.

When you report an error, it takes about 30 days for the bureau to investigate and give a response. You can employ the services of some companies to report and escalate the situation for a faster response. You should review your reports as much as every three months.

How To Build Your Credit Without A Credit Card

Credit cards are not your only window to building credit. In fact, you’ll find over five methods you can apply to build without a card. These alternatives include getting a builder loan, applying for a personal loan, considering a car loan, and paying outstanding loans.

Also, if you have a landlord who reports to credit agencies, paying rent and utility bills will help if you have a landlord who reports to agencies. If you have a lot of unpaid loans, you can consider different debt relief proframs.

Furthermore, you can explore alternative payment data and consider piggybacking as an authorized user. You can also look into services offered by bureaus that allow you to log data into their system and build a profile for yourself. You’ll find many other ways to build without a card.

Conclusion

Building credit is quite essential if you hope to be financially buoyant as an average citizen. Aside from being financially buoyant, it’s the basis of your daily spending and how responsible you are with funds.

With or without a card, you should devise a means to have an impressive report, score, and history, as explained in the above paragraphs. With these, it’ll be easier for you and your immediate family to get by, regardless of the economy. Inculcate the good habits today and experience the better side of financial services!