If you have a low credit score, there are limited credit card options available. Most credit cards want a score of at least 700. There are only a few ways to improve your credit score, and the majority take time. The best option is paying your credit card on time, but if you are constantly being denied credit cards, this option seems impossible. You also run into other financial issues with a low credit score, such as being unable to take out a loan or getting denied for a large purchase, like an apartment or car.
Fortunately, even if you have a poor credit score, there are credit card options available. Many credit card companies offer special lines of credit with minimal requirements. Some cards do not even have a minimum credit score. These credit cards have stricter interest rates and come with a minimal amount of perks compared to the mainline credit cards. Listed below are five of the best credit cards to rebuild your credit score.
Different Types of Credit Cards
There are two different categories of credit cards, secured and unsecured. A secured credit card requires you to submit collateral before opening an account. Most companies want a refundable deposit as collateral, ranging between $50 to $200. If you do not pay your balance, the company keeps your deposit. This proves an extra security layer for credit lenders, which makes it easier to approve credit cards no matter how low your credit score.
An unsecured credit card does not have any collateral. As a result, the eligibility requirements are higher on unsecured credit cards, with most applicants needing at least a credit score of 600. Some companies provide exceptions or consider other factors, such as your savings. Unsecured credit cards typically have better rewards compared to secured credit cards. Both types of cards are equally effective at improving your credit score, as long as you make timely payments.
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Capital One Secured Mastercard
Capital One’s Mastercard only requires a $49 deposit to get a $200 balance, making it one of the best secured credit cards if you are on a limited income. As you make payments on time, you not only increase your credit line, but also receive your deposit back as part of your statement credit. All card holders are considered for a higher line of credit within six months. You can also monitor your credit card for free using CreditWise. This not only allows you to track your credit score, but it also protects you from identity theft.
Another benefit if you have limited income is the ability to track all monthly subscriptions to your credit card. This is a great way to stay on top of your payments and keep track of when each monthly charge occurs, keeping you from being surprised and going over your balance.
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Aspire Credit Card
Aspire is an unsecured credit card with minimal eligibility requirements, especially compared to other unsecured cards. At minimum, you need a credit score of 300 to apply. You can also go through a pre-qualification process online, which has no impact on your credit score. Aspire has two primary reward systems. You earn 3 percent cash back when shopping at select gas and grocery stores, as well as utility payments. Every other purchase earns 1 percent cash back.
Aspire also has options for contactless payments on popular online services, such as Apple and Google Pay. There is an annual fee which ranges from $85 to $175, based on your maximum credit. This fee decreases after the first year to $29 to $49. During your first year, there are no monthly payments, but afterwards there are fees between $7.25 and $12.50.
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Discover it Secured Credit Card
Discover provides a top-of-the-line secured credit card. There are no annual fees, but you must submit a $200 refundable fee when you open an account. In order to make this deposit, you must have access to a bank account. After a period of eight months, you are automatically eligible for a credit review to determine whether you can shift to an unsecured credit.
The biggest advantage Discover has over other secured cards is the reward program. You can earn 2 percent cash back up to $1,000 each quarter at eligible restaurants and gas stations. All other purchases earn 1 percent cash back.
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Self Credit Builder
Self is a secured Visa card marketed specifically towards individuals rebuilding their credit. Self is available to all applicants, no matter how low their credit score. The interest rate is 15.92 percent, which is below average for a secured credit card. Your self account reports to all three major credit bureaus, greatly increasing how quickly your credit score improves. Through your account, you can set up monthly payments for bills and insurance.
After you make three monthly payments on time and have at least $100 or more in your account, you are automatically eligible for an unsecured credit card, without any credit check. While Self has many advantages and is a great way to quickly rebuild credit, it has a $25 monthly fee. This may initially seem expensive, but if you upgrade to an unsecured line within three months, the cost is similar to any other annual fee.
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Surge Mastercard
Surge is an unsecured credit card, offering a starting credit between $300 and $1,000. As long as you make payments on time for six months, you are eligible for an automatic credit increase. Unlike most unsecured credit cards, you can apply for Surge even if you have a bad or poor credit rating. Like Self, Surge automatically reports your payments to the three major credit bureaus, so you can quickly rebuild your credit score with each monthly payment.