If you’re anything like me, your relationship with credit hasn’t always been a good one. Thanks to overdue medical bills, my credit was shot from an early age. I didn’t plan much for the future and never thought I’d be interested in repairing my credit. But now that I’m older, I’ve come to learn how important credit actually is.
If you want to get an apartment, chances are you’ll need credit. When your car breaks down and you need to lease or buy a new one, you’ll probably need credit. And some jobs are even looking to check your credit before they hire you, these days.
Approximately 16% of Americans have “bad” credit. And less than 1% of the American population have a perfect credit score of 850. Most people tend to fall in the middle between these two categories, but wouldn’t we all like a little stronger credit? I think so.
According to LexingtonLaw:
A survey from a loan comparison site suggests as an example that individuals who take out an auto loan of $25,346 with a “fair” credit score could pay up to $3,847 more interest than a person with a “very good” credit score taking out the same loan.
It’s safe to say that most people out there could better their credit. But as I learned, improving your credit score is easier said than done. There are a lot of companies out there who want to make money off of your lack of credit or bad credit history.
Some of this comes with the territory. Nobody is going to lend you tons of money if you haven’t proven you can manage the money you had in the past, at least not until you put down some cash to prove you’re serious. Just how much cash? Well, that amount may vary. And you can save a lot of money by knowing what the benefits and drawbacks are to each type of card and account you might set up while you repair your credit.
Fortunately for you, there’s someone out there like me who’s already gone through the steps and can help guide you through the process by explaining what you can expect.
1. Credit One Bank Visa for Rebuilding Credit
This was one of my first cards when it came to rebuilding my credit. If your credit is really, very bad, you might want to consider this one. The biggest upside is, they’re less stringent than other cards which increases your odds of being accepted. There’s also no security deposit in order to get started, as there is with a secured credit card (where you pay a deposit in order to receive a line of credit you can spend). Now for the details…
The interest rate is variable, between 17.99% — 23.99%, which isn’t too high compared to other credit cards. There’s an annual fee between $0 and $99, so expect to pay that fee upfront, whatever it may be for you. You’ll get some perks, like cashback, but as Investopedia notes, your credit limit may be low, at least at first. But, you receive periodic reviews and they may offer to up your credit line if you qualify.
One thing I personally don’t like about it is the app. The app isn’t all that great and there isn’t an autopay option to pay your bills automatically from your bank account.
2. Self-Lender Self Visa Secured Credit
Self Inc. is an interesting company. It’s an app that you can use to build credit. How it works is, they open up a CD account (certificate of deposit) in your name after you sign up and extend you a loan using the CD basically as collateral. You establish a predetermined amount to pay Self every single month and you pay them (into your CD account).
They take some small fees each month and eventually, your money accumulates and they issue you a check or deposit for the amount you’d saved over the time period you deposited into the CD account.
But after three months, they offer you the Self Visa Secured Credit Card. This takes a certain portion of your savings in your CD and puts it toward securing your credit card, issuing you a secured Visa card with the savings as collateral.
If all of this sounds complex, it isn’t. It’s super easy to sign up and get started, you just need to make your monthly payments on time, and you can even have them suck the money out of your bank account automatically by linking your accounts.
Personally, I love this card and Self’s services because they make it so easy and the app is so intelligible.
The pro is definitely the simplicity of it all. The con is the fact that it’s technically a secured card, so you have to wait three months, and make payments over those three months, before you even have a chance to get the card. But if you’re trying to build credit, Self is a great way to go about it.
More details can be found on their site here.
3. Mission Lane Visa Card
The Mission Lane Visa Card is another excellent option for people trying to build (or rebuild) their credit. As with the Self Visa card, I love Mission Lane’s sleek interface and the ease with which you can use the app. There’s also the fact that you can have it automatically withdraw from a bank account on a date you select every single month, which is handy for me because I don’t want to forget and not pay my bill.
There’s an annual fee of between $0 and $75, which is a drawback to this card, but if you can pay it, the ease of use might be worth the fee. The regular APR, your interest rate, is between 19.99% and 29.99%.
Like Self, Mission Lane specializes in helping people build their credit. Their site has educational courses so you can learn what to do and what not to do. I’ve combined this with another service that isn’t a credit card, Experian Boost (and their other services) that cost $19.99 a month so I can stay on top of my credit and utilize their services to educate myself on how the whole system works. Because credit can be confusing.
With a concerted effort led by these three services, my credit score has been raised 144 points in less than a year and I’m grateful for these services.
It’s important to build your credit (or rebuild it if you have bad credit) and these cards can help you get started if you don’t know where to start. One of my motifs in life that may help you is that small contributions over time will almost always go farther than the occasional great effort.
Thank you for reading. If you enjoyed this story, you may enjoy the one below as well. Feel free to follow me on Twitter or subscribe to my newsletter here. Or if you’re feeling really generous, you can buy me a coffee at Ko-Fi here.
Full disclosure: this story does not contain affiliate links. I’m just a happy customer of each of these services and wanted to share the wealth. All terms are relevant at the time of this writing and are subject to change. Inquire within each company for more details.