Having a good credit score is essential for anyone who wants to get a loan, a mortgage, or even rent an apartment. But how do you build credit in the first place? One way is to get a credit card and use it responsibly.
In this blog, we will take a look at some of the best credit cards in the USA that can help you build credit in 2023.
What is a credit score?
Before we dive into the best credit cards for building credit, let’s first understand what a credit score is. Your credit score is a three-digit number that represents your creditworthiness. It ranges from 300 to 850 and is based on your credit history. The higher your credit score, the more likely you are to get approved for credit and receive lower interest rates.
Why is building credit important?
Building credit is important because it can help you achieve your financial goals. A good credit score can make it easier to get approved for loans, credit cards, and even apartments. It can also result in lower interest rates, which means you will pay less over time.
Best Credit Cards for Building Credit in 2023
Here are the best credit cards for building credit in the USA in 2023:
1. Discover it® Secured Credit Card
The Discover it® Secured Credit Card is a great option for those who are just starting to build their credit. It requires a security deposit, but it also offers cashback rewards and no annual fee. Plus, Discover will review your account periodically, which could result in a refund of your security deposit.
2. Capital One Platinum Credit Card
The Capital One Platinum Credit Card is another great option for building credit. It offers a higher credit limit after you make your first five monthly payments on time, and there is no annual fee. Plus, Capital One offers tools and resources to help you manage your credit and improve your score.
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3. Petal® 2 “Cash Back, No Fees” Visa® Credit Card
The Petal® 2 “Cash Back, No Fees” Visa® Credit Card is a good option for those with limited credit history. It offers cashback rewards and no fees, and it also takes into account other factors besides your credit score, such as income and expenses, when considering your application.
4. Discover it® Student Cash Back
The Discover it® Student Cash Back is designed for college students who are looking to build their credit. It offers cashback rewards and no annual fee, and Discover will also match all the cashback you earn in your first year as a cardholder.
5. Capital One QuicksilverOne Cash Rewards Credit Card
The Capital One QuicksilverOne Cash Rewards Credit Card is a good option for those with fair credit. It offers cashback rewards and no annual fee, and you may be able to increase your credit limit after making your first five monthly payments on time.
Read more details here Capital One VentureOne Caredit Card Review
How to Use a Credit Card to Build Credit
Now that you know the best credit cards for building credit, it’s important to understand how to use them responsibly. Here are some tips:
1. Pay on time
Paying your credit card bill on time is the most important factor in building credit. Late payments can have a negative impact on your credit score.
2. Keep your balance low
Another factor that affects your credit score is your credit utilization rate. This is the amount of credit you are using compared to your credit limit. It’s best to keep your balance low and avoid maxing out your credit card.
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3. Don’t apply for too many credit cards at once
Applying for too many credit cards at once can have a negative impact on your credit score. When you apply for a credit card, the issuer will make a hard inquiry on your credit report, which can lower your score by a few points.
If you apply for multiple cards within a short period of time, it can make you appear desperate for credit and lower your score even more. It’s best to apply for one or two cards at a time and wait a few months before applying for more.
4. Choose the right credit card
Look for a credit card that fits your spending habits and credit history. If you’re new to credit, consider a secured credit card or a credit card designed for people with limited or no credit history.
5. Monitor your credit score
Regularly check your credit score and credit report to make sure there are no errors or fraudulent activity. You can get a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year.
Best Card for Average Credit
If you have average credit, meaning your credit score is in the range of 630-689, you may still be able to qualify for a credit card with decent rewards and benefits. Here are some options to consider:
Capital One QuicksilverOne Cash Rewards Credit Card: This card offers 1.5% cash back on all purchases, with no limit on the amount of cash back you can earn. There is an annual fee of $39, but if you use the card regularly, the cash back rewards can offset the fee.
Discover it Secured Credit Card: This is a secured credit card that requires a minimum security deposit of $200. You can earn 2% cash back on up to $1,000 in combined purchases each quarter at gas stations and restaurants, and 1% cash back on all other purchases. Discover will also match all the cash back you earn in your first year.
Petal 2 Visa Credit Card: This card is designed for people with limited or no credit history, but can also be a good option for those with average credit. It offers up to 1.5% cash back on all purchases, with no annual fee or foreign transaction fees.
Capital One Platinum Credit Card: This is a no-frills credit card that doesn’t offer rewards, but can be a good option for those looking to improve their credit. It has no annual fee and offers access to a higher credit line after you make your first 5 monthly payments on time.
Remember to compare the fees, interest rates, and rewards offered by each card to find the one that best fits your needs and spending habits.
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Why is building credit important?
Building credit is important for several reasons. Firstly, having good credit can make it easier for you to get approved for loans, credit cards, and other forms of credit. It can also result in lower interest rates, which can save you money over time.
Secondly, many landlords, employers, and insurance companies use credit scores as a factor in their decision-making process. Having a good credit score can increase your chances of being approved for an apartment or job, and may result in lower insurance premiums.
Finally, building credit is important for your long-term financial health. A strong credit history can make it easier to qualify for larger loans, such as a mortgage or business loan, which can help you achieve your financial goals. It can also provide a safety net in case of emergencies, such as unexpected medical bills or home repairs, by making it easier to access credit if needed.
Can I get approved for a credit card with no credit history?
Yes, it is possible to get approved for a credit card with no credit history. Many credit card issuers offer cards specifically designed for people who are new to credit, such as students or recent immigrants. These cards may have lower credit limits and higher interest rates than other cards, but they can be a good way to establish credit and begin building a credit history.
If you don’t have any credit history, you may need to provide additional documentation to the credit card issuer, such as proof of income or a co-signer. You can also consider getting a secured credit card, which requires you to make a deposit that serves as collateral for your credit limit.
It’s important to use your credit card responsibly by making all payments on time and keeping your balance low, as this will help you establish a positive credit history and improve your chances of being approved for other forms of credit in the future.
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Conclusion – USA Best Credit Cards to Build Credit
In conclusion, building credit is an important part of your financial well-being. A good credit score can make it easier to get approved for loans, credit cards, and other forms of credit, as well as lower your interest rates and insurance premiums. It can also provide a safety net in case of emergencies.
If you’re new to credit, you may be able to qualify for a credit card designed for people with limited or no credit history. If you have average credit, there are still credit cards available that offer decent rewards and benefits.
Remember to use your credit card responsibly by making all payments on time and keeping your balance low. This will help you establish a positive credit history and improve your chances of being approved for other forms of credit in the future.
By choosing the right credit card and using it wisely, you can build your credit and take control of your financial future.