If you are one of the 48 million people in the United States with bad credit, you understand the importance of establishing a good credit score. Credit cards play a central role in this process, allowing you to build a positive credit history and improve your financial situation. In fact, a study conducted by the Fed found that borrowers who are knowledgeable about credit scores tend to have 5 to 10 percent higher scores.
In this article, we will highlight the best credit cards for individuals with little to no credit or even bad credit. Whether you’re just starting your credit journey or looking to repair your existing credit, these tools can be invaluable.
Why credit is important
Credit is used for a wide variety of purposes, including obtaining home loans, business loans, and even car loans. Additionally, credit scores also impact your ability to rent a home, as landlords often check credit scores to assess your reliability as a tenant. A good credit score can also lead to lower insurance premiums because insurance companies consider credit scores when setting rates. In fact, a 2021 study by Zebra showed that people with a credit score above 800 pay an average of $1,224 per year for car insurance, while those with a score below 579 pay an average of $2,755. $, which represents an increase of 125%.
Even employers can review your credit score to assess your suitability as an employee. Therefore, it is better to use a credit card to build credit rather than a debit card because using a debit card does not contribute to your credit history. Additionally, credit cards offer additional benefits such as rewards programs and consumer protections. For example, credit card companies are legally required to protect you from fraudulent purchases made with your card.
Secured or unsecured credit cards
When considering credit cards, it’s important to understand the difference between secured and unsecured cards. Secured credit cards require a deposit, usually between $50 and $200, which serves as collateral for the credit card company. These cards are ideal for people with no credit or extremely poor credit. On the other hand, unsecured credit cards do not require a deposit.
Discover it Secured credit card
The Discover it secured credit card is a great choice for those looking to build or rebuild their credit. Although this requires a fully refundable deposit of $200, the benefits are worth it. This card is designed for people with little to no credit and offers easy approval. A unique aspect of this card is its cash back program, with 2% cash back at restaurants and gas stations, as well as 1% cash back on all other purchases. Discover also matches your cash back earnings for the first year, providing additional value. Plus, there is no annual fee and the card includes free FICO credit score monitoring and fraud protection.
Petal 1 Visa Credit Card “No Annual Fee”
For those looking for an unsecured credit card, the “no annual fee” Petal 1 Visa Credit Card is a great option. This card stands out because it does not require a credit history or credit score to be approved. Instead, it uses a system called cash score, which offers a more comprehensive assessment of an individual’s financial situation. This makes it accessible to a wider range of people. The Petal 1 card offers rewards based on different categories, such as grocery stores, gas stations and transportation, with unlimited rewards after 12 months of on-time payments. The card also offers a flexible credit limit system, allowing for potential increases over time. Plus, there are no foreign transaction fees, annual fees, or late fees.
Take control of your credit journey
Credit cards are essential tools for building credit and ensuring a strong financial future. Whether you want to buy a home or get a car loan, a good credit score is crucial. By exploring the features and benefits of these recommended credit cards, you can take control of your credit journey and start building a positive credit history.
Remember, it’s important to make your payments on time and maintain low credit utilization to maximize the benefits of these cards. So if you found this article useful, please like and subscribe. Stay tuned for more informative videos to help you navigate the world of credit cards and personal finance.
