5 Ways a Credit Card Can Rebuild Your Credit

Making a few financial mistakes along your journey to good credit is not uncommon and often repairable, and demonstrating that you can use credit responsibly is one of the ways a credit card can rebuild your credit.

But remember, simply owning a credit card is just one component in your overall credit health. To reestablish yourself as a worthwhile credit risk, there are some factors you need to keep in mind.

A credit card is a tool, and when used properly and responsibly, it can help to show you’re developing good credit habits. Here are some of the ways you can use a credit card to rebuild your credit, as well as six of the best cards for getting started. Our list includes both secured and unsecured cards, and we’ll provide some valuable information to help you decide which type of card may be best suited to your unique financial situation.

The single most important factor in calculating your credit score is whether you pay your bills in a timely manner. That’s because 35% of your FICO score is based on your payment history. No other single factor can have as much negative impact on your credit score, as being labeled a late payer.

And it’s not just credit card payments that get reported to the credit bureaus; your cable and cellphone bills, loan payments, even your rent — all of these can have an impact and need to be paid on time.

Another factor in rebuilding your score is the total amount of credit you’re using, compared to how much you have available. This factor accounts for 30% of your overall score and can do a lot of damage if it’s too high.

So, how much is too high? Let’s say you have a single card with a $1,000 credit limit. If you owe $800 on that card, it means you have a credit utilization ratio of 80%. Most creditors want to see a utilization ratio closer to 25% or less. That’s because anyone “maxing out” their credit cards may be in financial hardship, and therefore not a good credit risk.

The length of your credit history is also an important component in calculating your FICO score. In fact, credit history makes up 15% of your total credit score. Even if you don’t use that old credit card with its high interest rate and no rewards points, it could still be helping your score.

Keeping it in an active status will make your length of credit history look more attractive, and may also help contribute to your credit utilization ratio.

Some companies will cancel a credit card if it is inactive for too long, so you may want to use the card occasionally and pay it off immediately just to keep the account alive.

Believe it or not, your credit score is also impacted by the types of credit you have. A mix of revolving and installment accounts is more desirable than only having credit cards, and counts for 10% of your total credit score. Adding an installment account, like a car loan or even financing that new TV purchase, will look better to creditors and can help to increase your credit score.

An inquiry is made into your credit history each time you apply for a loan or credit card. If you apply for multiple credit cards or loans in a short period of time, these inquiries or credit checks can negatively impact your FICO score. That’s because to creditors it may seem like you are in desperate need of cash, and therefore are not a good credit risk.

There are two types of credit inquiries — a soft inquiry and a hard inquiry. Soft inquiries are used for things like an employment background check or when you open a cellphone account, and these won’t trigger a hit on your credit score. A hard inquiry is when you apply for a loan or mortgage, or apply for a credit card. These do make it onto your credit report, and too many of them can cause your credit score to drop.

There are two types of credit cards you can get, and each type can help your credit score if you use it responsibly. A secured credit card is one that uses money you deposit into an account as the available credit line. These are some of the easiest credit cards to get and are usually for people with poor credit or fair credit.

The second type, an unsecured credit card, requires no deposit. This is a true revolving credit account, where the money is lent to you by the issuer and you repay it in increments over time (plus interest of course). Since both secured and unsecured credit card payment information is shared with the credit bureaus, they can both help to rebuild your credit.

3 Best Unsecured Credit Cards for Bad Credit

The upsides to having an unsecured card include no security deposit and perks like cash back or rewards points, depending on the card. The better your credit, the better the rewards card you’ll be approved for. For credit scores above 650, you may benefit from checking out our card reviews for fair credit, good credit, and excellent credit, as these cards offer the best rewards and APRs.

Do your research to find the card that fits your needs. You can start by checking out our top three best unsecured cards for people with bad credit.

Surge® Platinum Mastercard®

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Surge® Platinum Mastercard®

4.1/5.0

About this rating

Our experts rate credit card offers based on factors like rewards, APRs, signup bonuses, fees, and approval rates, with a focus on benefits that provide the best value. We also consider cardholder needs such as credit-building potential, issuer reputation, and customer service. Our ratings are unbiased, updated regularly, and not influenced by issuers.

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Ashley Fricker Senior Editor

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★★★★★ 4.1/5.0

at Continental Finance'ssecure website

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• Up to $1,000 Initial Credit Limit
• See if you Pre-Qualify with No Impact to your Credit Score
• Less than perfect credit? We understand. The Surge Mastercard is ideal for people looking to rebuild their credit.
• Unsecured credit card requires No Security Deposit
• Perfect card for everyday purchases and unexpected expenses
• Monthly reporting to the three major credit bureaus
• Use your card everywhere Mastercard is accepted at millions of locations
• Enjoy peace of mind with Mastercard Zero Liability Protection for unauthorized purchases (subject to Mastercard guidelines)
• Apply with Confidence! There is no impact to your credit score if you’re not approved. See terms.

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Intro (Purchases) See website for Details

Intro (Transfers) See website for Details

Regular APR 35.90% Fixed

Annual Fee $75 - $125

Credit Needed Bad, Limited, Fair

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PREMIER Bankcard® Mastercard® Credit Card

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PREMIER Bankcard® Mastercard® Credit Card

3.0/5.0

About this rating

Our experts rate credit card offers based on factors like rewards, APRs, signup bonuses, fees, and approval rates, with a focus on benefits that provide the best value. We also consider cardholder needs such as credit-building potential, issuer reputation, and customer service. Our ratings are unbiased, updated regularly, and not influenced by issuers.

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★★★★★ 3.0/5.0

at PREMIER Bankcard®'ssecure website

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• PREMIER Bankcard credit cards are for building credit.
• Start building credit by keeping your balances low and paying all your bills on time each month.
• When you need assistance our award-winning US-based Customer Service agents are there to help.
• Credit Limit Increase Eligible after 12 months of consistent responsible account management.
• We report monthly to the Consumer Reporting Agencies to help you build your credit.

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Intro (Purchases) N/A

Intro (Transfers) N/A

Regular APR See Provider Website

Annual Fee See Provider Website

Credit Needed Fair/Poor

Milestone® Mastercard®

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Milestone® Mastercard®

3.8/5.0

About this rating

Our experts rate credit card offers based on factors like rewards, APRs, signup bonuses, fees, and approval rates, with a focus on benefits that provide the best value. We also consider cardholder needs such as credit-building potential, issuer reputation, and customer service. Our ratings are unbiased, updated regularly, and not influenced by issuers.

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★★★★★ 3.8/5.0

at Milestone Mastercard®'ssecure website

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• Guaranteed $700 credit limit if approved.
• Apply with Confidence! There is no impact to your credit score if you’re not approved. See terms.
• Don't Have Perfect Credit? No Problem!
• Join over a million consumers who are working on building their access to credit.
• Zero Fraud Liability - Peace of mind that comes with having a Mastercard.
• Get the credit you deserve, even with less-than-perfect history.
• No security deposit, and a path to better credit.

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Intro (Purchases) N/A

Intro (Transfers) N/A

Regular APR See terms

Annual Fee See terms

Credit Needed Bad/Limited/Fair

See Rates & Fees »

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3 Best Secured Credit Cards for Bad Credit

In general, a secured card will be easier for people with bad credit to get approved for. If issuers view lending to you as more of a risk, using a secured credit card responsibly is a great way to build your credit and work toward a solid financial history.

Below, our experts have picked out the top three secured credit cards for anyone with bad credit.

The secured Chime Visa® Credit Card

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The secured Chime Visa® Credit Card

4.5/5.0

About this rating

Our experts rate credit card offers based on factors like rewards, APRs, signup bonuses, fees, and approval rates, with a focus on benefits that provide the best value. We also consider cardholder needs such as credit-building potential, issuer reputation, and customer service. Our ratings are unbiased, updated regularly, and not influenced by issuers.

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★★★★★ 4.5/5.0

at Chime'ssecure website

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• No minimum balance requirements*
• No credit check**
• 2% cash back on category of choice with direct deposit***
• The perks of credit building meet the best of banking****
• Chime Checking Account required to apply for the Chime Visa® Credit Card

• Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The secured Chime Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank.
  *Money added to Chime CardTM will be held in a secured deposit account as collateral for your Chime Card, and you can spend up to this amount. You can use money deposited in your Secured Deposit Account to pay off your charges at the end of every month.
  **Out-of-network ATM withdrawal and over the counter advance fees may apply.
  ***With a qualifying direct deposit, earn 2% cash back on category of choice on eligible secured Chime Visa® Credit Card purchases.
  ****On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Results may vary.

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Intro (Purchases) N/A

Intro (Transfers) N/A

Regular APR N/A

Annual Fee No annual fees

Credit Needed Poor/Fair/Limited/Damaged

Secured Self Visa® Credit Card

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Secured Self Visa® Credit Card

4.2/5.0

About this rating

Our experts rate credit card offers based on factors like rewards, APRs, signup bonuses, fees, and approval rates, with a focus on benefits that provide the best value. We also consider cardholder needs such as credit-building potential, issuer reputation, and customer service. Our ratings are unbiased, updated regularly, and not influenced by issuers.

Ashley Fricker Senior Editor

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★★★★★ 4.2/5.0

at the issuer'ssecure website

• The secured Self Visa® Credit Card* requires no credit check or minimum score.
• Reports to all 3 major credit bureaus to establish and build credit, with free access to your credit score.
• Secure your credit line with a refundable security deposit as low as $100.**
• Deposits are returned upon account closure after settling outstanding balances.
• *The secured Self Visa® Credit Card is issued by Lead Bank, Sunrise Banks, N.A., or First Century Bank, N.A., each Member FDIC.
• **Qualification for the secured Self Visa® Credit Card is based on meeting eligibility requirements, including income and expense requirements and establishment of security interest. Criteria subject to change.

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Intro (Purchases) N/A

Intro (Transfers) N/A

Regular APR Variable APR of 27.49%

Annual Fee $0 annual fee for the first year only, $25 annual fee thereafter

Credit Needed None, Limited, Poor, Fair

opensky® Secured Visa® Credit Card

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opensky® Secured Visa® Credit Card

4.0/5.0

About this rating

Our experts rate credit card offers based on factors like rewards, APRs, signup bonuses, fees, and approval rates, with a focus on benefits that provide the best value. We also consider cardholder needs such as credit-building potential, issuer reputation, and customer service. Our ratings are unbiased, updated regularly, and not influenced by issuers.

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Ashley Fricker Senior Editor

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★★★★★ 4.0/5.0

at Capital Bank N.A.'ssecure website

Our Review »

• Earn up to 10% cash back on everyday purchases
• No credit check required – 89% approval rate with zero credit risk to apply!
• Boost your credit score fast—2 out of 3 opensky® cardholders see an average increase of 47 points after 6 months
• Track your progress with free access to your FICO® score in our mobile app
• Build your credit history with reporting to all three major credit bureaus: Experian, Equifax, and TransUnion
• Seamless payments—add your card to Apple Pay, Google Pay, and Samsung Pay
• Start with just $200—secure your credit line with a refundable deposit
• Fast and easy application—apply in minutes with our mobile-first experience
• Flexible payment options—pick a due date that works for you
• More time to fund—spread your security deposit over 60 days with layaway
• Join 2 million+ cardholders who have used opensky® to build better credit!

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Intro (Purchases) N/A

Intro (Transfers) N/A

Regular APR 23.89% (variable)

Annual Fee $35

Credit Needed No credit, Poor, Fair

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+See more secured credit cards

Keep in mind that credit cards aren’t inherently good or bad — it’s how you use them that makes the difference. Staying mindful about maintaining your budget, making the payments on time, and using your cards responsibly is the key to credit card success. And the more you know about how your score is calculated, the more control you have over your credit.