Choosing a Credit Card to Rebuild Your Score

October 17, 2018

By Sarah Harris

There are all kinds of reasons why we develop bad credit.  In some cases, we leap into using credit without fully understanding the contract, treating credit like cash on hand instead of a loan that we have to repay with interest.  Other times, we’re fully aware of the dangers of operating on credit, but we find ourselves in binds where we feel that we have little choice but to buy on credit.

Then there are situations where we spend without thought, or suffer from out of control spending habits.  At some point, however, you have to admit that you’ve gotten into hot water with credit and it’s time to regain control of your finances and your life.  Unfortunately, the world practically runs on credit these days, and you really do need a top tier credit rating to make major purchases (like a car or a home) and get the best terms (like the lowest interest rates).

This means you have to learn responsible spending habits so that you can use credit to your advantage.  First, you’ll need to pay down existing debts.  Once this is done, however, you’ll have to start rebuilding your credit, and this means using a credit card wisely.  You’ll need to find the right credit card for the job, but this can be difficult when you’re starting with a low score and spotty history.  Here are just a few things to look for when choosing the perfect credit card to rebuild your credit score.

Secured Cards

A secured card is nothing more than a line of credit secured with collateral.  What this means is you provide cash or a check to the creditor, generally in the amount of the limit on the card.  Many are limited to just a few hundred dollars, although a few will go up to a couple thousand.  When you make on-time payments for a set amount of time (generally about 6 months to a year), you’ll get your collateral back with interest, and you’ll often be offered an unsecured card, potentially with a higher limit.

In the meantime, your good behavior in paying off your card monthly will be provided to credit reporting agencies and applied to your history, helping to raise your credit score.  You’ll probably find yourself getting more offers for credit cards with higher limits, lower interest rates, and favorable rewards programs.  You’ll have to be careful to choose only the ones that you can afford and that offer the best terms, but with careful planning you can make the most of a secured card and the benefits it ultimately produces.

Desirable APR

Finding a credit card with a low annual percentage rate (or APR) when you have poor credit is like finding a four-leaf clover.  It’s not impossible, but it certainly won’t be easy.  Again, secured cards are likely to offer the best options.

Some cards will offer only a very high fixed rate, while others offer variable rates that start low, but with the lowest rates only applying to top tier credit scores.  Neither of these are desirable, but when you do your homework, you can find cards that offer decent interest rates.  In truth, many of the best cards are linked to special groups, like the military or government employment.  If you are a member of such groups, make sure to take advantage of cards geared toward you that offer the lowest APR.

Low APR on Transfers

While you’re rebuilding your credit, you may still have some debt to pay down, and if it’s attached to a normal credit card, you might be struggling to pay with an untenable interest rate slowing you down.  If you’re looking for a card to help you rebuild your credit, finding a low APR for transfers is essential, but it’s not always easy when your credit is in the basement.

Luckily, many secured cards are designed for those either building credit for the first time or recovering from a bad credit score.  Some offer introductory benefits like balance transfers for the first several months as a way to help you dig your way out of debt and begin the recovery process.

Zero Annual Fees

If you’ve had credit problems in the past, you need a card that charges as little as possible so you have the best chance to pay down debt and rebuild your credit score.  For this reason, you should probably avoid annual fees.  Often, these are associated with cards that offer rewards of some sort, so you might be tempted by the promise of gain, but you’re better off focusing on repairing your credit before you set your sights on rewards.


To be honest, there aren’t a lot of credit cards for people with low scores that include rewards.  They mostly tend to focus on encouraging better spending habits.  You can find them, but again, the most important thing is rebuilding your credit, and this generally means using a card that doesn’t tempt you to spend more than you can reasonably afford to repay.

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