Best Credit Cards for Building Credit in August, 2022

Using credit cards to build credit is a tried-and-true way to establish a borrowing history. Without credit, you may struggle to secure loans or score some jobs and housing. However, credit cards vary widely, and which ones you can get depends on your credit history.

This can make building credit tricky, as new borrowers only qualify for a small number of credit cards. Luckily, there are options out there, you just need to find the right one for you. To build credit with a credit card, look for options that report to the three major credit bureaus, as credit reporting is one of the fastest ways to establish your borrowing history.

What makes a credit card good for credit building beyond that will depend on your borrowing needs, including whether you can afford a credit card security deposit or want to earn cashback rewards. To start your search, check out our top picks for the best credit cards for building credit.

Best credit cards for building credit

Below are the top credit cards you can use to build credit.

Best overall credit card to build credit

Best secured credit card to build credit

Best unsecured credit card to build credit

Easiest-to-get credit card to build credit

Best no-annual-fee credit card for building credit

Best credit card to build credit without an SSN

Best student credit card to build credit

Do credit cards really build credit?

Yes, credit cards really build credit. If your credit card issuer reports your borrowing activities to the credit bureaus (the major three are Equifax, Experience, and TransUnion), that information will be used to update your credit report. Your credit report is what lenders use to check your credit.

Using a credit card regularly and responsibly—meaning you don’t borrow too much and you always pay your bills on time—is an effective way to build credit. How dramatically your credit changes will depend on where it started. For example, someone with no credit history or a bad score might see big changes in credit score after they start using a credit card versus someone with a well-established credit history.

Which credit cards can I use to build credit?

You can use any credit card to build credit, including secured and unsecured cards. The most important feature to look for in a credit card for building credit is credit reporting. (That is, whether or not your credit card issuer reports your payments to any credit bureaus.)

Credit reporting is not legally required of lenders, but many still report your monthly borrowing activities to one or more of the major credit bureaus. For your credit card to be used to build credit, you need to ensure your lender reports. To find out whether a lender reports to the credit bureaus:

• Check their website
• Check the card’s rates and fees page
• Check the card’s terms and conditions
• Call the issuer directly and ask
  

How do I build credit with a credit card?

To build credit with a credit card, follow these steps:

1. Choose the right card: Do your research ahead of time and only apply for a credit card you’re confident you can qualify for. Otherwise, you risk getting hard inquiries on your credit report for no reason. Hard inquiries are when a lender checks your credit history, an act that knocks a few points off your credit score.

2. Pay your bills on time: The most important thing to do when building credit is always pay your bills on time. Failing to pay your credit card bill could result in fees, penalty APR, and credit score damage. On the other hand, paying your bills in full and on time will likely improve your credit history.

3. Don’t borrow too much credit: One factor in your credit score is your credit utilization rate. This number represents how much credit you’re borrowing at any given time. Borrowing too much of your available credit will look bad, so try to limit how much you borrow each month.

4. Keep your credit accounts open: When finding the right card to build credit with, choose one that you can see yourself using for a long time. Try not to open a card thinking you’ll just close it in a year or two, as closing credit cards can hurt your credit score.