Best credit cards for building credit history

Table of Contents

Introduction

Building a strong credit history is essential for financial stability, securing loans, and getting better interest rates. For those with limited or no credit history, choosing the right credit card can be the first step toward establishing a good credit score. This article explores the best credit cards designed to build credit, their benefits, limitations, and how to use them wisely.

What is a Credit History?

Credit history is a record of an individual’s past borrowing and repayment behavior. It is tracked by credit bureaus and determines your credit score, which lenders use to assess financial reliability. A good credit history can help secure loans, rent an apartment, or even get a job.

Why Use Credit Cards to Build Credit?

Using a credit card responsibly is one of the fastest and easiest ways to build credit. Every time you make a purchase and repay it on time, credit bureaus receive positive reports, improving your score. Credit cards also help in managing finances, offering rewards, and providing financial security in emergencies.

Best Credit Cards for Building Credit History

1. Discover it® Secured Credit Card

Best for: Cashback rewards while building credit
Benefits:
- 2% cashback on dining and gas stations
- No annual fee
- Free credit score monitoring
Limitations:
- Requires a security deposit
- Limited credit line based on deposit amount

2. Capital One Platinum Secured Credit Card

Best for: Low security deposit requirement
Benefits:
- Initial credit limit increases with responsible usage
- No annual fee
- Reports to all three major credit bureaus
Limitations:
- No rewards program
- High variable APR

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

Best for: No security deposit required
Benefits:
- Up to 1.5% cashback on purchases
- No annual fees or foreign transaction fees
- AI-based approval process considering more than just credit score
Limitations:
- Higher credit score needed for approval
- No balance transfer option

4. Chime Credit Builder Visa® Card

Best for: No credit check approval
Benefits:
- No interest or annual fees
- No credit check required for approval
- Reports to all major credit bureaus
Limitations:
- Requires a Chime Spending Account
- No traditional credit line

5. OpenSky® Secured Visa® Credit Card

Best for: No credit check approval process
Benefits:
- No credit check required
- Reports to all major credit bureaus
- Flexible deposit amounts
Limitations:
- $35 annual fee
- No rewards or cashback programs

How to Use Credit Cards to Build Credit

Make On-Time Payments: Late payments negatively impact credit scores.
Keep Credit Utilization Low: Use less than 30% of your credit limit.
Avoid Applying for Too Many Cards: Multiple inquiries lower your score.
Monitor Your Credit Score Regularly: Check for errors and correct them.
Use Auto-Pay: Prevent missed payments by setting up automatic payments.

Comparison Table

Credit Card	Security Deposit	Rewards	Annual Fee	Credit Check
Discover it® Secured	Yes	2% cashback	$0	Yes
Capital One Platinum Secured	Yes	No	$0	Yes
Petal® 2 Visa®	No	Up to 1.5% cashback	$0	Yes
Chime Credit Builder	No	No	$0	No
OpenSky® Secured Visa®	Yes	No	$35	No

Conclusion

Choosing the right credit card is a crucial step in building a strong credit history. Secured and beginner-friendly credit cards help establish credit when used responsibly. Always pay bills on time, keep credit utilization low, and monitor your credit score to maximize benefits. With the right approach, these credit cards can pave the way for a strong financial future.

10 FAQs

1. What type of credit card is best for building credit?

A secured credit card is ideal for building credit, as it requires a refundable deposit and reports to major credit bureaus.

2. How long does it take to build credit with a credit card?

It usually takes 3 to 6 months of responsible usage to start seeing improvements in your credit score.

3. Do all credit cards help build credit history?

No, only credit cards that report to major credit bureaus (Experian, Equifax, and TransUnion) contribute to building credit.

4. What is the difference between a secured and an unsecured credit card?

A secured credit card requires a security deposit, whereas an unsecured card does not and is based on creditworthiness.

5. Can I get a credit card with no credit history?

Yes, secured credit cards, student credit cards, and some alternative cards (like Petal® 2) cater to those with no credit history.

6. What credit score do I need to apply for a credit-building credit card?

Many secured cards and beginner credit cards accept applicants with no credit score or scores below 600.

7. How can I use a credit card responsibly to build credit?

Pay your bill on time every month
Keep your credit utilization below 30%
Avoid opening multiple new accounts at once

8. Will applying for a credit card hurt my credit score?

Yes, a hard inquiry may temporarily lower your score, but responsible usage will help improve it over time.

9. Are there any fees associated with credit-building credit cards?

Some have annual fees, security deposits, or high-interest rates, so it’s important to read the terms carefully.

10. When should I upgrade from a secured credit card to an unsecured one?

After 6-12 months of responsible use, many secured credit card issuers allow you to upgrade to an unsecured card and refund your deposit.