Credit building credit cards refer to cards that help people establish or repair their credit scores.
In this article, we’ll be exploring credit-building credit cards in detail, answering common questions we receive about them, and explaining how to quickly build credit in the most secure way possible.
This article is part of our free series on US credit card essentials, including how to apply for a credit card with an ITIN number, how to open a bank account in the United States without an SSN or ITIN, and much more.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Credit Building Credit Cards
- What Are the Benefits of Credit Building?
- How to Apply for Your First Credit Card?
- How Do I Build Credit?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Credit Building Credit Cards
Credit building credit cards refer to unsecured credit cards that allow cardholders to securely establish or repair their credit scores. These cards are an important tool to help people build credit in order to access more meaningful debt financing in the future.
Of course, credit-building credit cards are not the only way that individuals can establish a good credit score. As we’ll discuss below, secured credit cards, starter credit cards, and even being added as a user to an existing credit card can offer similar benefits.
Before diving in, if you’re looking to compare your credit options and specifically what the difference is between a credit card and a debit card, you can get started by accessing our free article linked here.
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What Are the Benefits of Credit Building?
The benefits of building credit include access to a wide range of credit products in the future, including those that are important for major life purposes like a mortgage, university tuition, automotive financing, and more.
Needless to say, responsible credit management plays an important role in building a strong credit score. So, anyone looking into building credit with credit cards should have a clear understanding of their repayment capabilities.
Here’s a look at a few of the key benefits of building credit.
Benefits of Building Credit
- Access to financing
- Access to a wider range of lenders
- Lower interest rates available
- Support for major life purchases
- And more
How to Apply for Your First Credit Card
To apply for your first credit card you can choose between starter cards, credit builder cards, young adult cards, secured credit cards, or be added as an authorized user to the credit card of a family member.
In most cases, when a family member has a strong credit score and is willing to help, being added as an authorized user can be a fast way to start building a credit history. Doing so helps the authorized user absorb a good credit score from the original cardholder.
That said, if a young person does decide to get their own card, it’s important to note that you should not use more than 30% of the total credit card limit available to you. Here are a few additional card considerations for individuals looking at building their credit through credit cards.
Can I Apply for Any Credit Cards?
Yes, you can apply for credit cards as a young person looking to get their first card. However, if you do not already have a credit score established, you will have limited options available to you. With this in mind, it is best to review card requirements and find cards that specifically cater to individuals looking at building their credit.
Should I Have a Credit Limit?
Whether you should have a credit limit depends on your credit requirements, your ability to responsibly manage your credit, and the credit facilities available to you. In most cases, credit limits are imposed on the vast majority of credit products. This is especially true if you do not yet have an established credit history.
How Do I Build Credit?
To build credit an individual needs to model good credit management behavior, use relevant credit products, and have a certain level of patience. However, there are techniques that can be used to build credit faster, which range from using secured credit products to being added as an authorized user on another person’s card.
With this in mind, we have prepared a list of different techniques that have been proven to assist with building credit, which you can find below.
How to Build Credit Fast
- Use a secured credit card to start building credit initially
- If possible use unsecured credit cards that report monthly
- Become an authorized user on the card of someone with good credit
- Maintain a credit utilization score of no more than 30%
- Never miss a payment on your credit card
Frequently Asked Questions
Below are five of the most common questions we receive from people looking into how to obtain credit-building credit cards. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Is the Fastest Way to Build Credit With a Credit Card?
The fastest way to build credit with a credit card is to start using it immediately and to do so in a responsible manner. Responsible credit use involves never missing a payment, carrying a minimum balance on the card, and staying consistent in both your usage and repayment plan.
Additionally, according to most credit card experts, you should not use more than 30% of your total available credit limit. The ratio between your credit usage and available credit is known as your credit utilization score.
What Is the Best First Credit Card?
The best first credit card for young people looking at building their credit score is often a secured credit card. Secured credit cards offer young people a way to establish a credit score without the risk, liability, and potential for added expenses later on. That said, to obtain a secured credit card, an initial deposit is required to secure the balance that will be used for future charges on the card.
Which Credit Card Is Best for Building Credit?
The credit card category that is best for building credit history is often secured credit cards. This is because secured credit cards offer cardholders a safe way to establish good credit behavior. Additionally, it allows them to slowly increase their utilization. Lastly, secured cards can be accessed by non-residents and individuals with no (or weak) credit.
What Is a Credit Builder?
Credit builder refers to a type of credit card that can help individuals with limited credit history or poor credit history to establish a good credit score. It is another name for credit building credit cards, though a credit builder card is typically associated with helping people who previously had credit and need help increasing their existing score.
How Long Does It Take to Get a Credit Card?
How long it takes to get a credit card depends on the card issuer. In most cases, new credit cards are received within 7 to 14 days of requesting a new card. That said, if your current card is expiring and a new card is scheduled to be delivered, it will usually be before the original card expires.
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