It’s confirmed—millennials don’t know how to increase their credit scores.
At least that’s what a study from LendEDU indicates. In it, 500 millennials (ages 17–37) were asked questions regarding credit scores, and based on the results, it looks like Generation Y needs to do some credit homework.
Millennial Misconception #1: Use a Credit Card More to Build Good Credit
Almost half of millennials surveyed believe you can improve your credit score by using your credit card more. That is not true. But to be fair, thinking that you should use your credit card more to build your credit score is a general misconception that reaches beyond a millennial mindset. Plenty of baby boomers perpetuate the same misunderstanding about using credit cards more.
The reality is that a “high credit utilization rate” (translation: you use a credit card a lot) lowers your credit score because it makes you look like a bigger risk to lenders,
If you want to begin improving your credit score, you can start with the basics—buy only what you can afford, and pay off your credit card balance before the end of each month.
Millennial Misconception #2: Max Out and Pay Off a Card to Increase Your Score
When asked which behaviors would improve their credit scores, around 36% of millennials selected the following answer: “Maxing out, but paying a credit card on time.”This answer couldn’t be more wrong.
Maxing out a credit card can do serious damage to your credit score. When you max out your credit card, you get a “high credit utilization ratio” (translation: you’re using 100% of your available credit). The actual recommended credit utilization ratio is “below at least 30% and ideally [only] 10% of your total available credit limit(s).”
Besides the impact on your credit score, maxing out your credit card makes you susceptible to higher credit card interest, which can be 20% or more these days. Yikes!
Millennial Misconception #3: Carry Debt for a Good Credit Score
Another 28% of millennials in the survey incorrectly believe “carrying debt is necessary for a good credit score.” It’s true that you can build up your credit score by taking on a bit of debt, but you’ll still need to pay the balance off each month and use less than 30% of your available credit.
Perhaps the best way to dispel these credit score misunderstandings is to go back to what actually makes up your credit score.
A credit score is based on a calculation of the following:
Payment history: 35%
Current credit utilization: 30%
Credit history length: 15%
New credit inquiries: 10%
Credit mix: 10%
Paying your credit card bills on time and keeping your debt under control (again, under 30%) account for 65% of your credit calculation. If you take care of those two, the credit history (15%) should take care of itself, and you’ll get that score moving upward.
A credit score ranges from 300 to 850, with the national average at 673 in 2016. A score of 750 or above is considered excellent, and the other ranges are as follows: 700–749 (good), 650–699 (fair), 600–649 (poor), and below 600 (bad).
Of course, the higher the credit score, the better (lower) interest rate you’ll get for a mortgage, auto loan, etc., which can save you hundreds or even thousands a year in interest payments. So a word of advice to millennials: get a copy of your credit report, and make sure you have a basic understanding of how that score is calculated—so you don’t pay for it in the future.
Attending college comes with a host of new responsibilities, and your parents have (hopefully) sent you off with the wisdom and encouragement you need to handle those responsibilities on your own. Your studies and your GPA are your top priorities, but you may have other obligations that are important too. Whether you are responsible for paying tuition, holding a part-time job, or fulfilling an internship, these life-learning experiences can help you prepare for your future career.
While you’re busy writing term papers and picking up weekend shifts, though, there’s something else you should be working on: your credit score. That little number will play a significant role in your financial future, so here’s a closer look at why your credit score is so important as a student and how you can build, maintain, and keep your credit score in tip-top shape.
Why Credit Matters
1. Your future job opportunities may depend on it.
Once you graduate, you will be applying for jobs that will kick-start your career, and your goal is to land a job that not only makes you good money but is enjoyable as well. If you’re not careful, though, a poor credit score could keep you from getting that dream job.
Many employers run credit checks before they hire a candidate. A good credit score tells an employer that you are an organized and responsible person. You may have all the qualities they are looking for and your skill set may fit every description to land the job, but if your credit score is in bad shape, your opportunity may be given to another candidate with the same skill set and a better credit score.
2. Good credit could help you land your first apartment.
You may decide to live at home with your parents for the first few years after graduating college. This temporary arrangement can help you save up enough money to get yourself out on your own and into your first apartment. But keep an eye on your credit during this period, as it could impact your ability to get an apartment down the line.
Even if you have enough money for the deposit, your future landlord wants to be assured that you will be a responsible tenant that pays the rent on time, so they may check your credit report. If your score is low and your credit report shows that you aren’t paying your creditors on time, you may not get approved to rent the apartment.
3. You usually need solid credit to secure the best interest rates on loans.
Lenders will base your interest rate on multiple factors, but your credit score will often carry a lot of the weight in that determination. If your credit is pristine, you have the upper hand—with a better chance to negotiate in your favor. Shopping around for the best interest rates on loans is easier with an excellent credit history and score.
Once you understand why your credit score is important, you’re ready to start building and maintaining it.
How to Start Building Credit
If you are starting from scratch as a college student and don’t have any credit history, a secured credit card is the safest and best option. A secured credit card is one of the best ways to build credit because an up-front refundable cash deposit is required to serve as your credit line. The cash deposit also serves as collateral in case you default on payments. In some cases, you might qualify for a credit line that’s higher than your deposit, but you can always expect to put some money down for a secured card.
While you never want to default on any credit card and should avoid it at all costs, that deposit does provide a way for you to pay off the card if you come upon unfortunate financial circumstances. However, even though the credit card company may be able to recoup the amount owed with your deposit, your late payments will still be reported to the major credit bureaus and you may still incur interest and late fees.
If you make purchases and pay the balance in full and on time consistently, you will create a positive credit history, and at that point, you will be able to apply for an unsecured credit card. Just keep in mind that if you are under 21 and do not have proof that you are employed, you will need a parent to co-sign your credit card.
How to Keep Your Credit in Good Shape
It may be tempting to treat yourself to something you want when you first receive that credit card, but you should try to steer clear of making purchases that are not necessary. Understanding your wants versus your needs is key to keeping your spending habits in check.
It’s important to live within your means and to keep your credit card balances well below your credit limit. It’s also crucial to pay your credit card bills on time consistently. Having a budget and cap on your spending each month will also help you maintain positive financial habits and make good decisions before buying. And once you have built credit and established a good credit history, you’ll still want to continue these steps to keep your score healthy and robust well into the future.
Credit is a big deal. Whether you’re just starting to build credit or have been working to build your score for a while, regularly checking your standing is a great practice—it’ll give you insight into your credit habits and alert you to any fraudulent activities that might be hurting your score. You can check your credit report for free at Credit.com.
Credit cards for people with poor credit scores are few and far between, but FS Card is looking to change that with its first product, the Build Card, an unsecured credit card designed specifically for borrowers with subprime credit scores.
If you’re in need of a couple of hundred dollars and your credit score falls below 600, you’re not likely to get approved for an unsecured credit card. You’re considered a subprime borrower — a lending risk to banks, who worry they won’t get their money back.
But when banks refuse to lend to risky borrowers, those consumers turn to more expensive short-term borrowing options like payday loans, auto title loans, and pawn products. Annual interest rates on those products often exceed 300%, according to research from the Pew Charitable Trusts. Paying a high interest rate and a number of additional fees attached to those short-term products can trap consumers in a cycle of debt.
What is FS Card?
FS Card was founded by former Consumer Financial Protection Bureau Assistant Director of Card and Payment Markets Marla Blow in 2014 to fill what she says was a gap in the credit card industry. Blow says she began FS Card when she noticed — after the housing market crashed in 2008 — banks began “pulling back from subprime consumers in a very directed way,” because they were wary of tougher regulations on the financial industry. As a result, those consumers turned to more expensive products like payday loans, she says.
“I wanted to be able to put that consumer into a place where, rather than having to go out and get a payday loan, they could use a credit card,” Blow says. She designed the Build Card to offer subprime consumers access to something that “a lot of our economy assumes is already present” — a rotating line of credit.
Build Card overview
The Build Card is an unsecured credit card for borrowers with subprime FICO credit scores in the 550 to 600 range (on a scale of 300 to 850). The invite-only card charges a variable 29.9% APR. The rate is high for a credit card but about 10 times less expensive than some payday loans. However, it’s not a card you’d want to open unless you are seriously in need of the funds and are looking to build your credit score.
What we like about the Build Card
Payday loan alternative
Ideally, a payday loan is used to meet short-term borrowing needs — to hold you over until you receive your next paycheck. However, Pew research shows the average borrower uses them for five months at a time on average and has to pay an average $55 fee ($95 online) each time they extend the loan, which is what makes these loans so expensive. That’s $275 spent renewing a loan that’s on average $375. Furthermore, Pew research found seven in 10 borrowers use them for everyday expenses like groceries, rent, and utilities.
With access to a rotating line of credit, borrowers can extend the amount of time they have to repay borrowed money without having to pay renewal fees for a payday loan.
Unsecured credit card for subprime consumers
The Build Card is a rare unsecured credit card for those with poor credit scores. Most cards you can qualify for with a score lower than 600 are secured cards, which require a deposit to secure a credit line. For people who have a few hundred dollars on hand, a secured card is a great way to get access to credit, but many low-income Americans are not in a position to spend that kind of money.
Build your credit score
FS Card reports your activity to national credit bureau TransUnion so you can use the Build Card to improve your credit score if you maintain good credit management habits. Negative activity — like late payments and high credit card balances — will also be reported, so be sure to pay your balance on time and in full each month for best results.
Quick and easy approval process
Because you must be invited to apply for the Build Card, you are prequalified for approval. There is an excellent chance you will be approved for the Build Card, unless something on your credit report has drastically changed between the time FS Card mailed your invitation and when you apply.
No foreign transaction fees
The Build Card doesn’t charge you for using it overseas, so you don’t need to worry about racking up fees for swiping your credit card on vacation.
What we don’t like about the Build Card
As of this writing, the Build Card is invitation only and has more than 50,000 cardholders, Blow says. You’ll have to wait to receive a code in the mail before you can apply for the card online, which is unfortunate for anyone who is in need of short-term funds now.
FS Card selects borrowers using an algorithm to prequalify borrowers with subprime credit scores and sends invitations to potential customers monthly. The algorithm sifts through consumer credit reporting data to identify consumers who have recently done something that reflects better borrowing habits like paying off a payday loan or an account in collections.
Blow tells MagnifyMoney FS Card will offer an open application for Build Card in 2018.
This card carries a lot of fees. If you’re trying to build your credit and have the funds to get a secured credit card that doesn’t charge an annual fee or has an interest-free period, you’re better off going that route, as it will be significantly less expensive.
Startup & membership fees: It costs Build Card customers $125 simply to open the account. FS Card charges the initial start-up fee ($53) and annual membership fee ($72) on your first statement. Although the card begins accruing interest immediately, Blow tells MagnifyMoney FS Card does not charge Build Card users interest on the start-up fees assessed to the credit card.After the first year, the annual membership is paid in $6 monthly installments, charged to the Build Card.
Authorized user fee: If you authorize another person to use your Build Card, you’ll be charged a $12 fee per authorized user.
Late/returned payment fee: Don’t miss a payment on this credit card, or you’ll be charged a whopping $35 fee.
Cash advance fee: Try your best not to take cash from this credit line — in addition to paying 29.9% interest, you’ll be charged the greater of $10 or 3% of the amount you take.
A $500 limit
If you need to borrow more than $500, you’re out of luck with this card. Everyone who opens a Build Card account starts off with a $500 limit. But remember, that limit is immediately reduced to $375 once you open the card and are charged $125 in fees. That also doesn’t leave you a lot of room to spend, considering it’s bad for your credit score to carry a balance close to your credit limit. Blow says the company may soon offer starting lines above and below $500.
Right now, FS Card checks every month to see if you’re managing the card wisely (read: making payments on time). If you are, you could qualify for a credit line increase to $750 in as soon as seven months. Blow says 59% of Build Card customers have gotten increases so far.
No 0% interest period
This card doesn’t come with an interest-free grace period. It will begin charging a 29.9% APR to your purchases immediately.
No balance transfer
The Build Card doesn’t come with a balance transfer offer, so you won’t be able to use the card as a debt consolidation tool. If you are in a large amount of credit card debt, you could try applying for a personal loan through online lenders like Lending Club or Prosper, which offer personal loans to people with credit scores below 600.
Who is the Build Card best for?
The Build Card is worth opening if you:
have a credit score between 550 and 600,
are ready to start rebuilding your credit score, and
want an alternative to payday loans in the event of an emergency but don’t have the cash on hand to open a secured credit card.
Beware: If your poor credit history resulted from poor spending habits like spending more than you could afford or making late payments, ask yourself if you’re ready to make a change. Opening this credit line won’t help your credit score any in the long run if you don’t.
How to apply for Build Card
You must be selected to apply for the Build Card. When you receive your invitation to apply, you’ll be given an offer code and application ID to enter into the application form on the Build Card website. Enter that information, your ZIP code, and the last four digits of your Social Security number to apply for approval. You should know if you’re approved or not within a few minutes.
Are you avoiding a credit card application because you’re afraid of being rejected? Want to see if you can be approved for a credit card without having an inquiry hit your credit score?
We may be able to help. Some large banks give you the chance to see if you are pre-qualified for cards before you officially apply. You give a bit of personal information (name, address, typically the last 4 digits of your social security), and they will tell you if you are pre-qualified. There is no harm to your credit score when using this service. This is the best way to see if you can get a credit card without hurting your score.
What does pre-qualified mean?
Pre-qualification typically utilizes a soft credit inquiry with a credit bureau (Experian, Equifax, TransUnion). A soft inquiry does not appear on your credit report, and will not harm your credit score.
Banks also create pre-qualified lists by buying marketing lists every month from a credit bureau. They buy the names of people who would meet their credit criteria and keep that list. When you see if you are pre-qualified, the bank is just checking to see if you are on their list.
A soft inquiry provides the bank with some basic credit information, including your score. Based upon the information in the credit bureau, the bank determines whether or not you have been pre-qualified for a credit card.
If you are not pre-qualified, that does not mean you will be rejected. When they pull a full credit report or get more information, you may still be approved. But, even if you are pre-qualified, you can still be rejected. So, why would you be rejected?
When you complete a formal credit card application, you provide additional personal information, including your employment and salary. If you are unemployed, or if your salary is too low relative to your debt – you could be rejected. There are other policy reasons that can be applied as well.
When a full credit bureau report is pulled, the bank gets more data. Some of that incremental data may result in a rejection.
Timing: your information may have changed. The bank may have pre-qualified you a week ago, but since then you have missed a payment. Final decisions are always made using the most up-to-date information.
Even with these caveats, checking to see if you are pre-qualified is a great way to shop for a credit card without hurting your score.
Where can I see if I have been pre-qualified?
Most (but not all) banks have pre-qualification tools. In addition, some websites (like CreditCards.com) have tools that let you check across multiple banks at once. Here is a current list of tools that are functioning:
CreditCards – CardMatch is a very good tool developed by CreditCards.com that can match you to offers from multiple credit card companies without impacting your credit score. This is a good first stop.
Below are credit card issuers that do not always have the pre-qualification tool live:
American Express – We have reports that this does not work for everyone. To find the pre-qualification page, click on “CARDS” in the menu bar. Then click on “View All Personal Charge & Credit Cards.” At the bottom of the page you will find a section called “Do More with American Express” – and you can click on “Pre-Qualified Credit Card Offers.”
Barclaycard – unfortunately Barclaycard has taken down their pre-qualification tool. We will keep looking to see if it comes back.
Consider A Personal Loan (No Hard Inquiry and Lower Rates)
If you need to borrow money, you may also want to consider a personal loan. A number of internet-only personal loan companies allow you to see if you are approved (including your interest rate and loan amount) without a hard inquiry on your credit report. Instead, they do a soft pull, which has no impact on your credit score. Personal loans also tend to have much lower interest rates than credit cards. If you need to borrow money, personal loans are usually a better option.
We recommend starting your personal loan shopping experience at LendingTree. With one quick application, dozens of lenders will compete for your business. LendingTree uses a soft credit pull, and within minutes you will be able to see how much you qualify for – and the interest rate – without any harm to your credit score. (Note: MagnifyMoney is owned by LendingTree)
Not pre-qualified but still want to apply?
We still believe that people are too afraid of the impact of credit inquiries on their score. One inquiry will only take 5-10 points off your score.
If you pay your bills on time, do not have a ton of debt (less than $20,000) and want to apply for a new credit card, an inquiry should not scare you. The only way to know for certain if you can get approved is to do a full application.
Secured cards are great if you have little to no credit history or have poor credit history. With proper credit behavior they are a great way to build credit. The Discover it® Secured card is an excellent secured card that lets you build credit while also earning cash back. There is no annual fee associated with this card, making it easier to put your money where it’s needed.
The Discover it® Secured card is meant to help you rebuild or establish credit. You need to make a $200 security deposit that will become your credit line. If you want a credit limit that is higher than $200, you will need to put down a larger security deposit.
Discover reviews your account monthly starting at eight months to see if you can be transitioned to an unsecured card. This is a feature that makes the Discover it® Secured card unique. If you have responsible credit management, you may benefit from this feature and be transitioned to an unsecured card. If moved to an unsecured card, you will receive your security deposit back. This is hassle free and another reason the Discover it® Secured card is a great option.
This card offers 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases. This is a great bonus, but the main goal of a secured card is not to earn rewards, but to be responsible and build credit. Don’t let the prospect of cash back lead you to overspending. That will only defeat the purpose of this card.
To get the most benefit from your secured card, keep a low utilization rate and pay your statements in full and on time every month. Utilization is the amount of your total credit limit you use. It is calculated by dividing your statement balance by your available credit. A low utilization is not spending more than 20% of your credit limit. So if you have a credit limit of $200, that means don’t spend more than $40.
To qualify for the Discover it® Secured card, you need to be at least 18 years old, have a Social Security number, U.S address, and U.S bank account and provide all the required information in the online application. Be sure to have your bank routing number and account number ready when you apply as they will be needed for the $200 security deposit. Don’t worry if your credit history is nonexistent or unfavorable — this card is great for people who are new to credit or are looking to rebuild credit.
What we like about the card
Earn cash back
You will earn 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases. This is a great added bonus that most secured cards do not offer. Discover will automatically match all of the cash back you earned at the end of your first year as a cardholder.
Automatic monthly reviews after 8 months
Discover takes the guessing out of wondering when you will qualify for an unsecured card by reviewing your account monthly starting at eight months. If you have responsible credit management across all of your credit cards, you may be transitioned to an unsecured card. This is hassle free and another reason the Discover it® Secured card is a great option.
Free FICO Score
It is important to monitor your credit score and each month you will receive your FICO Score for free. If you practice proper credit behavior, you will see your score increase.
What we don’t like about the card
This card, like most secured credit cards, has a high APR. If you pay your statement balance in full and on time every month, the APR will not matter (because no interest will be charged). And if you do that every month, your credit score will improve over time — making it cheaper to borrow money (if you need to) in the future.
Who the card is best for
This Discover it® Secured card is best for people looking to rebuild or establish credit. In addition to an easy transition to an unsecured card when the time is right, the Discover it® Secured card provides a cash back program and has no annual fee. By using this card coupled with proper credit behavior you can see a boost in your credit score.
The Secured MasterCard from Capital One is made for people who want to rebuild credit. There are lower security deposit options than the Discover it® Secured card, making it a good alternative if you can’t afford a large security deposit. However, it’s important to note that the lower security deposit is not guaranteed. This card also has no annual fee and offers your free credit score; however, there are no rewards. Just remember: A lower security deposit also means a lower credit limit.
The Visa Classic from Georgia’s Own Credit Union offers a competitive APR that is lower than Discover. There is no annual fee associated with this card and no rewards, making this card strictly for rebuilding credit. Keep in mind you will need to join the credit union, and the application process is more complicated compared to Discover. This card is a good alternative if you prefer to have an unsecured card and don’t mind working with a credit union.
If you pay your balance in full and close your credit card account, your security deposit will be refunded. This can take up to two billing cycles plus 10 days. Also, during Discover’s monthly automatic reviews of your credit card account starting at eight months, they will see if they can return your security deposit while you continue to enjoy your card benefits.
The maximum credit limit is $2,500. This will be determined by your income and ability to pay. Keep in mind your security deposit must equal your credit limit, so you will have to deposit $2,500 if approved for this credit limit.
The OpenSky Secured Visa secured credit card can be helpful for those who have bad or no credit history. This card is designed for consumers who want to rebuild or create a credit history. OpenSky does not require a checking account or credit check when you apply, which makes the application process simple. Take note that this card does come with an annual fee, unlike other secured cards. With responsible use, you could see an increase in your credit score and move to an unsecured card.
Since this is a secured card you will have to make a security deposit. This money will become your line of credit and must remain in your account while your card is open. There are four options to make your security deposit and fund your account. The first is using a debit card. Simply provide your debit card information on your application, and OpenSky will process your transaction right away. You can also complete a wire transfer to Capital Bank. If you don’t have a checking account, you can use Western Union or mail a check or money order. An email with instructions on how to fund your security deposit will be sent after your application has been approved. Note that, depending on the method of payment that you choose, it may take up to five business days for your security deposit to clear.
If you’re looking to improve your credit score, the best way to take advantage of this card is to start off with a low credit limit and find a recurring expense you can put on the card. For example, you can put your utility bills on the card. Make sure that you pay this on time and in full every month. To ensure it’s paid on time, you can enroll in their auto pay program, which will guarantee you never miss a payment. Once you enroll in auto pay, the credit card company will make a scheduled monthly payment automatically on the day you choose. This way, you will have a purchase every month that OpenSky can report to all three major bureaus.
How to qualify
To quality for this credit card you do not need to have credit history, but you do need a job. By having a job you will show a stable source of income, which shows credit lenders you are responsible and can pay your bills. In addition you will need a security deposit. That means if you want a $1,000 credit limit, you’ll need to have $1,000 deposited at account opening. The online application is four simple steps that can be completed in 10 minutes. They request basic personal and financial information, have you choose the starting credit limit you prefer, and fund your security deposit. Your requested credit limit is subject to approval based on your creditworthiness.
What we like about the card
No credit check
OpenSky does not check your credit history during the application process. This is great if you lack a credit history or have poor credit, therefore improving your approval odds.
Simple application process
The application process takes place solely online, making it easy to apply at your convenience. It only takes 10 minutes according to OpenSky to complete the application. There are four easy steps: provide your personal and financial information, customize and fund your card, review your information, and accept the terms and conditions.
No checking account needed
OpenSky does not require you to have a checking account to apply for this card. This is great for those who want to establish credit but don’t have a bank account. The majority of credit cards require bank accounts, so this is a good option if you don’t have a bank account.
What we don’t like about the card
OpenSky charges cardholders a $35 annual fee. Be sure to review your credit options, because you can find other secured cards that do not charge an annual fee. However, note that those cards may require a checking account, so make sure to review your options.
Foreign transaction fee
Make sure this card remains at home when you travel abroad since there is a high 3% foreign transaction fee. This will increase your bill if you make purchases abroad, so it’s best left at home.
No option for an unsecured card
If you’re ready to move onto an unsecured card, there is no option with OpenSky. That means you’ll have to look to another company, which could be a hassle because of the process of applying for the card, getting a credit check, and closing your current card.
Who the card is best for
If you’ve struggled with being approved for credit cards in the past due to bad or nonexistent credit history, the OpenSky Secured Visa may be right for you. With no credit check during the application process, you have good approval odds. This card is also for those who do not have a checking account but want to build credit, as you won’t find many credit cards that are offered to people without checking accounts. However, the annual fee and lack of transition to an unsecured card can make you think twice about this card. You can find MagnifyMoney’s ranking of the best secured credit cards here.
This credit card doesn’t require that you have your security deposit equal your credit limit. You can make a deposit as low as $49, unlike the OpenSky card, which is $200. However, this card will check your credit history and will determine your deposit requirement based on your creditworthiness. There is no annual fee associated with this card, unlike OpenSky.
This card has no annual fee, unlike OpenSky. It also features 2% cash back on up to $1,000 per quarter on gas and restaurant purchases and 1% on other spending. In addition, after eight months you may be eligible for an unsecured credit card, which you can’t do with OpenSky. These are great benefits that make the Discover it® Secured card a good alternative.
There is also no annual fee for this card, as well as no cash advance or balance transfer fees. The APR is lower than OpenSky, which is beneficial if you think you might carry a balance month to month. According to a DCU representative, the maximum credit limit is $2,000. However, it is determined by your overall creditworthiness. Also, you’ll need to be a member of Digital Federal Credit Union, which may be difficult to get into. You can learn about eligibility requirements here.
A security deposit is the amount of money you deposit into your account and acts as collateral. It also becomes your line of credit. That means if you make a $1,000 security deposit, you’ll have a $1,000 credit line.
There are four options to make your security deposit.
Debit card- Simply provide your debit card information on your application, and OpenSky will process your transaction right away.
Wire transfer to Capital Bank
If you don’t have a checking account:
Mail a check or money order
An email with instructions on how to fund your security deposit will be sent after your application has been approved. Note that, depending on the method of payment that you choose, it may take up to five business days for your security deposit to clear.
For people with “average” or “fair” credit, Capital One offers QuicksilverOne Rewards.Every credit card issuer has a different definition of what “average” or “fair” credit means. Generally speaking, it means a FICO score between 580 and 669.
The QuicksilverOne Rewards card gives you an unlimited 1.5% cash back, which is a pretty sweet opportunity for consumers with less-than-perfect credit.
Just beware of the two catches: There’s a $39 annual fee and a high purchase APR.
The QuicksilverOne Rewards program is low maintenance.
Unlike other programs with revolving categories and spending caps, this card doesn’t hold you to either. You will earn 1.5% cash back every time you swipe.
You can redeem cash back at any time for a check, account credit, or gift card. Cash back you earn never expires.
What We Like About This Card
We like that the cash back program terms are uncomplicated. There are no preset bonus categories that you have to adapt your spending to each month. You can also redeem cash back at any time without having to wait for the balance to reach a certain threshold.
Low credit score requirement.
The QuicksilverOne is one of the only cash back rewards cards around town for average credit. If you’re having trouble getting approved elsewhere, this is a card you need to seriously consider.
What We Don’t Like About This Card
The annual fee.
Since this card costs $39 per year, you need to spend at least $2,600 per year (or $217 per month) for the cash back to break even with the fee. Ideally, you’ll want to spend more than just the bare minimum for the rewards card to be worthwhile.
This is a high interest rate. Avoid carrying a balance at all costs if you choose this card.
Who This Card Is Best For
Again, the QuicksilverOne is our top unlimited cash back pick for consumers who have trouble getting approved for other cash back cards.
According to Capital One, you may qualify for this card if:
You have defaulted on a loan in the past five years
You have limited credit history
You have had your own credit card or other credit for less than three years (this may include students, people new to the U.S., or authorized users on someone else’s credit card)
Keep in mind, these are just guidelines to give you a general sense of whether you’ll qualify. Your income, debt, and other credit limits are also factors used to make a decision.
Keep an eye out for the Quicksilver alternative while checking offers as well.
Quicksilver Rewards is the “big brother” of the QuicksilverOne card. It has no annual fee, and it’s for people with excellent credit. There’s no harm in checking to see if you prequalify for the Quicksilver card.
Is the QuicksilverOne card good for rebuilding credit?
Despite the lenient qualifying criteria, the QuicksilverOne card is not our top recommendation if you’re rebuilding credit, because of the annual fee.
Your focus should be keeping your credit utilization very low when rebuilding credit. You shouldn’t worry about having to earn enough cash back each month to cover a card’s annual fee.
Travel accident insurance and 24/7 roadside assistance. Travel insurance for death or loss of limbs. You can call in for help if your car breaks down.
Auto rental insurance. Insurance covers rental damage from collision or theft.
Extended warranty. Purchases made on your card will get an extended warranty.
Price protection. You can get reimbursed the difference if you find items you purchased on sale within 60 days.
Fraud coverage. Covered by $0 fraud liability if your card is lost or stolen.
Alternatives to the QuicksilverOne
QuicksilverOne doesn’t have much competition since it’s the best card for consumers with average credit. The following no-fee cash back cards officially require good to excellent credit but allow you to prequalify without a hard inquiry.
The Chase Freedom Unlimited card gives you an unlimited 1.5% cash back on all spending without category restrictions or caps. What’s great about Chase is it’s another credit card issuer that lets you prequalify for offers without a hard pull. Check out offers you may prequalify for here.
You can redeem cash back from your Chase Freedom Unlimited card at any time, and cash back never expires as long as you keep your account open. At times there is an intro APR deal or cash back bonus offer that add benefits to this card, and ongoing rates are sometimes lower than what you’d see on the QuicksilverOne.
The Citi Double Cash card is another good choice for low-maintenance cash back rewards. It gives double cash back on all purchases. You earn 1% cash back when you spend on the card and another 1% cash back when you pay off the bill.
This is a card that members report qualifying for with a credit score in the high 600s. Citi lets you shop for prequalified offers on the website as well. If you’re interested in this card, see if you can get prequalified here. In addition, there are changing intro APR deals for this card that allow you to save interest early on, and ongoing interest rates are sometimes lower than with the QuicksilverOne.
The QuicksilverOne Rewards is a good rewards card for those with average credit. If you have had difficulty being approved for other higher cash back rewards cards, you may be approved for the QuicksilverOne Rewards, which offers unlimited 1.5% cash back. Be aware that this card comes with an annual fee and high APR, so make sure to do your research and see if this card is right for you.
You should not keep a balance on this credit card to benefit from the cash back. The high APR is a large amount of interest to be paying on purchases. If the interest charges you experience on this card coupled with the annual fee surpass the cash back you earn, this card is pointless.
No. You’re free and clear to spend money on anything, and it’ll earn 1.5% cash back. This is the beauty of an unlimited cash back card. However, cash advances and balance transfers will not qualify for cash back.
You can, but not with average credit. The QuicksilverOne card is the best unlimited cash back card there is specifically targeting people with fair credit. Another option you have is working to improve your credit first before applying for a credit card to qualify for a card that gives you more cash back.
The journey to building credit can be long and difficult, but it doesn’t need to be expensive. A good credit score isn’t about how much money you have but rather how well you manage it. A poor man could have the same credit score as a billionaire — all it takes is a little work. Learn how to build credit without spending a ton of money with these tips.
Credit scores can only be created when there’s credit activity to report. When you’re on a budget, it can be tempting to avoid charging anything, but doing so won’t help you build credit. Keeping credit cards active doesn’t have to be costly.
Charge a Little
With credit, it’s not about how much is spent or what it’s spent on, it’s about usage. There has to be enough activity generate a score. Whether you charge your morning coffee or a wild night in Las Vegas, you’ll keep your credit issuer happy if you pay it off and monitor how much credit you have available.
If you can only afford to pay off a credit card charge of up to $30 per month, charge that amount and pay it off. Barry Paperno, a credit card expert who writes for Speaking of Credit, suggests using some credit cards for regular monthly fees, like a Netflix or newspaper subscription. This ensures cards stay active and doesn’t require much thought. Plus, you can keep these cards tucked away at home instead of in your wallet.
Become an Authorized User
The key is finding someone trustworthy who has great credit. Being an authorized user on someone’s card can be a great credit building option. The process to be added as an authorized user is fairly easy and has no application or requirements. (Learn more by reading everything you need to know about authorized users.)
Once someone becomes an authorized user, the card is added to their credit report. If you become an authorized user on an older card, you’ll earn additional points for the length of time the card has been open, an important credit scoring factor. You also receive credit for on time payments. The only potential issue with this is if the primary cardholder starts missing payments or cultivating debt, it impacts the authorized user’s credit score, too. This method is affordable and effective, but can be slow going since some score models don’t give full credit to authorized users, Paperno said.
Try a Secure Card
Applying for a secure card is a great option for those who have poor or nonexistent credit. Secure cards require users to put down a deposit, say $300, which creates a $300 credit limit on that card. The card acts like any other and is reported to the credit bureaus as such, but your spending can’t exceed the amount of the deposit. The card can be paid off as much as you’d like throughout the month, making it a great way to limit spending while showing the credit bureaus your ability to manage credit.
The great thing about secure cards is you’re the primary user, so the credit benefits earned are even greater than being an authorized user.
Report On-Time Payments
While it doesn’t always help your credit to make on time payments for rent, utilities, etc, in some cases it can. “Keep in mind credit scores can only consider what’s on your credit report,” says Paperno. “Your landlord or utilities company has to report it to credit bureau and credit scorers must include it.”
Unless on time payments are being reported, they won’t necessarily help you build credit. Ask your landlord and service providers if they report to credit bureaus. Or, pay rent online to help build credit history or uses services like Renttrack or Rental Kharma.
Set up Automatic Payments
Automatic payments can help ensure on-time payments. This is handy for those who forget to pay bills or travel often. On-time payments help strengthen your payment history, which plays a large role in a good credit score.
Beware, if there’s not enough money in your account for payments. An unpaid balance can be reported to the credit bureaus. Generally, credit bureau information is updated every 30 days so if your payment is only a few days late, you’ll be charged late payment fees but your credit won’t be hurt. Still, it’s best not to risk it.
Keep Accounts Open
If you’ve already got cards open, avoid closing them. Credit history is a major factor in calculating credit scores, so keeping your oldest cards open and active can have major perks. So, keep that card from college, even if it’s only used to charge a monthly Netflix subscription.
Get a Credit Builder Loan
A credit builder loan, a type of installment loan, can be a simple way to build credit. Try for a credit builder loan that reports to all three national credit reporting agencies, so on-time loan payments build up your credit in reports for all three companies. Don’t bite off more than you can chew — late payments or a defaulted loan can cause your credit score to take a huge hit.
You can take out a personal loan for something smaller than a car, like a new laptop or mattress. Take one on out on something you were planning to buy anyway, to avoid spending for the sole purpose of building credit.
Everyone knows paying on time is essential but also so is utilization, the percent of available credit you’ve used. Paperno advises keeping utilization to less than 10% of your credit limit each month. This shows you’re reasonably and responsibly using your credit within your means.
Increase Credit Limit but Not Spending
If you’ve got a decent credit history, you can probably manage to have your credit limit increased. Once your credit limit is increased, keep your spending habits the same. This can help you lower your credit utilization, making your credit even stronger.
Diversify Wisely & Carefully
Diversifying your credit with different types of loans, cards and accounts can help you build credit, but only if you have the means to pay them off. Opening accounts and taking out loans you can’t afford will only put you in the red. Before taking out loans or apply for new cards, ensure you qualify. You can check two of your credit scores for free with credit.com.
Opening new accounts and credit cards can seem like an easy way to increase the credit mix portion of your score, but proceed with caution. Opening a new card impacts the length of time your accounts have been open, a major factor in calculating your credit score. Since this number is the average of the length of time all of your accounts have been open, adding a new account can bring down your total.
As you diversify, monitor credit utilization for each individual card. If utilization is too high on one card, it can cause your entire credit score to drop. Utilization makes up 30% of your FICO credit score while different types of credit make up only 10%.
Discover has just launched a new product, the Discover it® Secured Card – No Annual Fee . Secured credit cards are an excellent way to build your credit with responsible use. With this product launch, Discover has created one of the best secured cards on the market. You do need to make a security deposit of $200 or more to establish your credit line (up to the amount that Discover can approve). If you are unable to afford the $200 deposit, you should consider the Capital One Secured MasterCard, which only requires a $49 deposit. But if you can afford the $200 deposit, this new card is clearly one of the best no fee secured credit cards available.
Key Product Features
Here are the key product features:
No annual fee: There is no annual fee on this card. You do need to make a security deposit of at least $200. If you want a bigger limit, you will have to make a bigger deposit.
Automatic monthly reviews starting at 8 months: After just eight months, Discover will start monthly automatic reviews of your account to see if you can be transitioned to an account with no security deposit. With an 8-month review, Discover has one of the best upgrade policies in the market.
Earn cash back: Most secured credit cards do not offer any rewards. With Discover it, you have the opportunity to earn cash back while earning rewards. You can earn 2% at restaurants and gas stations (on up to $1,000 of combined purchases each quarter). Plus, get 1% cash back on all your other purchases. Earning cash back is not the primary reason to select a secured credit card, but it is a nice option to have available.
Free FICO Credit Score: Discover will provide you with a copy of your official FICO credit score. If you use a secured credit card properly, you should expect to see your score increase over time. And by providing your FICO score for free, you will be able to watch your improvement.
Monitor Your Social Security Number: Discover will monitor your Social Security Number and alert you if they find your Social Security Number on any of thousands of risky websites. Activate for FREE. This is a great feature that will help alert you of possible fraud.
You can learn more and apply by clicking on the link below:
How to Use a Secured Credit Card
A secured credit card is an excellent way to build or rebuild your credit history. In order to gain the most number of points in the shortest amount of time, you need to have a strategy. We recommend the following strategy (and describe how it helped someone build an excellent score in one year here):
Avoid spending more than 10% – 15% of your available credit limit. Yes, that means if your credit limit is only $200, you should not spend more than $20 – $30 a month. Utilization is a very important part of your credit score. To calculate utilization, divide your statement balance by your available credit. People with the best credit scores have utilization well below 20%. Because you want to build an excellent credit score, you should keep your utilization low.
Pay your statement balance on time and in full every month. To ensure your payments are made on time every month, you should consider automating the monthly payments. At the Discover website, you can sign up to have your monthly payment debited automatically from your checking account.
Just continue to repeat Step #1 and Step #2. Your credit score should improve over time, which will help you qualify for a standard credit card.
According to disclosures on the Discover website, you are eligible to apply if:
You are at least 18 years old.
You have a Social Security Number.
You have an address in the United States.
You have a bank account in the United States. Note: You will need to provide your routing number and account number when you apply. If your account is overdrawn, it is highly unlikely that you will be approved.
Your credit history will be reviewed, and not all applications will be approved. The card is best for those with no credit, or scores of 670 or less.
The Application Process
You can apply online and Discover usually provides a decision instantly. You will need to make your security deposit as part of the application, which is why Discover asks for the routing number and account number of your bank.
Please remember that when you apply for the secured credit card, you will have an inquiry on your credit report just like an application for a normal credit card.
Alternate Secured Credit Cards
Discover it has one of the strongest offerings in the market. However, it might not be right for everyone. Here are some other good options.
If you cannot afford the $200 minimum deposit, you should consider the Capital One Secured MasterCard. There is no annual fee and a minimum deposit of $49. You will also be able to receive your FICO score for free. Capital One is known for accepting people with more adverse credit histories. So, if you are rejected by Discover, you might want to consider trying Capital One instead.
You should also consider a secured credit card from your local credit union. MagnifyMoney has a list of some of the best no fee secured credit cards offered by credit unions here.
Build Your Score, Not Your Balance
Secured credit cards are a great way to build your credit score. And, with this product launch, Discover has created an excellent tool. Just make sure you don’t use your credit card to build a balance and borrow money. Keep your balance well below 20% of your available credit, and pay your statement balance on time and in full every month. If you do that, you should start to see real improvement in your score.
The Georgia’s Own Visa Classic card is made for those with low credit scores and helps you rebuild and re-establish your credit. If you’ve struggled in the past with getting approved for other credit cards due to poor credit, you may qualify for this card. By using this card, coupled with proper credit behavior, you will be able to improve your credit score.
There is a balance transfer fee of 3% of the balance transfer; $10 minimum
Due date is 25 days after the close of each billing cycle. No interest if full balance is paid. Interest on cash advances and balance transfers begins on the transaction date.
How the Card Works
This is a relatively straightforward credit card. There is no annual fee and no rewards. Lack of a rewards program makes this card predominantly for rebuilding credit. Look at it this way — there are no tempting rewards to lead you to overspend, allowing you to focus on rebuilding your credit.
The APR for this card is a fair 12.99% to 17.99%. Other cards charge upward of 20%, so this is reasonable. However, a lower APR shouldn’t encourage you to accrue a balance month to month. Always make it a point to pay your balance in full and on time.
A good way to start rebuilding your credit with the Georgia’s Own Visa Classic is to add a recurring payment, like Netflix or Spotify. You can solely have your monthly Netflix or Spotify charge on your credit card statement and increase your credit score as long as you pay your bill in full and on time. This will give you a low utilization (the amount of your credit limit you use), which is a key factor in determining your credit score. For example, if you have a credit limit of $100 and charge your recurring $7.99 Netflix bill, then you will have a utilization of 8% (below 20% is ideal).
How to Qualify
In order to qualify for this card, you need to have a stable source of income, so a job is needed. This will prove that you can afford to make your monthly payments on time and are responsible.
In addition, since this card is provided by a credit union, you have to join Georgia’s Own Credit Union. Don’t worry if you reside outside of Georgia; anyone can become a member regardless of residence. There are four free eligibility options that can qualify you for free membership. Otherwise you will have to join the GettingAhead Association, with a $5 annual membership fee. The best bet is to speak to a Georgia’s Own loan officer (404-874-1166) and see if you’re pre-approved for the credit card. If pre-approved, you can join the GettingAhead Association while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.
A note on the application process for Georgia’s Own — when you apply for a credit card on Georgia’s Own website, you are directed toward an application that is for all the credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the Visa Classic as an option. Therefore if you want to apply directly for the card, the best bet is to speak with a loan officer, who will tell you if you’re pre-approved for the Visa Classic card.
What We Like About the Card
Good chance of getting approved
Georgia’s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.
This card has a fair APR ranging from 12.99% to 17.99%. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 23.99%. Although your goal is to pay every bill in full and on time each month, if you keep a balance this low, APR won’t accrue as much interest as other cards.
What We Don’t Like About the Card
Have to join the credit union
In order to get this card, you have to join Georgia’s Own Credit Union. There are four free eligibility options, and if you don’t qualify for free membership, you will have to join the GettingAhead Association, with a $5 annual membership fee. You will also need to keep $5 in a savings account that must remain in the account while you have the card open.
2% foreign transaction fee
Make sure to leave this card at home when you travel abroad as you’ll be charged a 2% foreign transaction fee on all purchases. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.
No rewards program
There is no rewards program for this credit card. Georgia’s Own offers a Visa Platinum card that has a rewards program, but you may have a harder time qualifying if you don’t have a good credit score.
Who the Card Is Best For
If you’re someone who has a low credit score and doesn’t mind working with a credit union, this card may be right for you. We recommend this no-frills card for people who want to rebuild their credit with a credit card. While you won’t earn any rewards with this card, if you practice proper credit behavior, you’ll be rewarded by a better credit score.
If you don’t want to join a credit union, you might want to consider a secured credit card to help you build credit. With a secured card, you make a deposit – and receive a credit limit based upon that deposit. The good news is that your secured credit card will report to the credit bureaus. That means your good behavior can help you improve your credit score over time. One of our favorite secured credit cards is from Discover.
Store cards are more likely to approve people with low credit scores, and the Walmart MasterCard is known to have approved applicants with scores as low as 520. In addition to promising approval rates for people with bad credit, the Walmart MasterCard has unlimited rewards with up to 3% cash back. Don’t worry if you don’t shop at Walmart since you can earn rewards on any purchase. Be aware that this card has a higher interest rate than the Georgia’s Own card, so compare which card is best for you.
With no annual fee and fair interest rates, the Georgia’s Own Visa Classic credit card is a good option for those with bad to fair credit who are looking to improve their credit score. If you don’t mind working with a credit union, this card is a good option to rebuild credit.
If you don’t qualify for the four free eligibility options, you will have to join the GettingAhead Association, with a $5 annual membership fee. The best bet is to speak to a Georgia’s Own loan officer (404-874-1166) and see if you’re pre-approved for the credit card. If pre-approved, you can join the GettingAhead Association while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.
You should work hard to make sure you make payments on time every month. A missed payment will lead to a late fee and interest accruing on the balance. This will ultimately leave a negative mark on your credit report and lower your credit score. Try not to spend more than you are able to and stick to a budget with these helpful budgeting apps in order to rebuild your credit score.
There is no one way to increase your credit score; rather, there are numerous behaviors responsible cardholders practice to establish good credit history. Good practices include paying all of your statements on time and in full and keeping a utilization below 20%; these will help you rebuild credit.