Rebuild Your Credit Score With Credit Cards in the US

Are you trying to rebuild your credit score, but you don’t know where to start? First, you should know you’re not alone as 16% of Americans have very poor credit and 18% have fair credit. Experian, one of the “Big Three” credit-reporting agencies, reports that seniors actually have the highest credit score with an average of 749, followed by people ages 50 to 59 with an average of 706. It’s come as no surprise that the lowest credit score belongs to people ages 20 to 29, with a score of 662. So, if you have bad credit, how can you rebuild your credit score? Actually, the best and only way to improve your score is to sign up for another credit card. There are many credit cards that are marketed towards helping people rebuild their credit score.

Rebuilding your credit score is important because it will help you get approved for loans, lines of credits, and mortgages in the future. So, what’s considered a low credit score and how can you check to see what you’re credit score is? You’ll have to continue reading to find out.

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Credit Scores

Your credit score can range between 300 to 850. Higher numbers correlate to better credit scores and they make it easier to apply for credit cards or loans. Very poor credit scores are 300-579, fair credit scores are 580-669, good credit scores are 670-739, very good credit scores are 740-799, and exceptional credit scores are 800-850. If you have higher credit scores, you shouldn’t have any issues getting approved for a credit card. However, when your score falls below 650, you may start getting denied by companies. It’s not impossible to get approved for a credit card with low credit scores, you’ll just have to pay additional fees like a higher APR (Annual Percentage Rate), higher annual fees, and a security deposit which is usually around $200. 

If you have bad credit, you probably learned about it after you were denied for a credit card loan and credit-based services. But, if you don’t know your credit score, it’s important to check so you aren’t shocked when you get denied for credit cards. You can request a free credit score check through Equifax, Experian, or Transunion—the “Big Three” credit-reporting agencies.

How to Rebuild Your Credit Score

The best way to build your credit score is to open a new credit card and to pay your credit card bills on time. There are two types of credit cards you can choose between—secured and unsecured. No matter your credit score, you shouldn’t have any trouble getting approved for secure cards as they are marketed to those with bad credit. They work the same way as normal credit cards, but you usually have to put a security deposit down on them that matches the size of the credit limit. This makes it so there is no risk for the credit card company if you default on your monthly payment. If and when you decide to close your account, the deposit will be refunded. For secured credit cards, the spending limit usually starts at $200 and goes to around $5,000. The annual fees are also low, with many starting at $35 and some are even $0, they depend on creditworthiness.

After a year of on-time payments, many secured cards can be converted to unsecured cards. Unsecured cards are what most people use and they don’t require a security deposit. You won’t have any issues getting approved for them if you have good credit, with scores around 650 or above. These cards usually have perks which include rewards like travel points and cashback.

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