The Best Credit Cards to Reestablish Credit

When you've suffered financial difficulties and have a bad credit score to boot, it can be very difficult to know where to begin to rebuild your credit worthiness. Though there is not a single best way to rebuild your credit, nor a single credit card that will help you to do this, you can improve your credit if you choose a credit card that matches your abilities and spending habits.

Rebuilding Credit

When you suffer financial problems that lower your credit rating, you will have to prove to creditors that you are a reliable borower before you can expect to get favorable credit offers. You don't need a credit card to do this, but a credit card can help. You have to show a lender that you can responsibly manage your debt. If you do, your credit rating will rise and you'll increase your score.

Secured Credit Cards

Many people with bad credit histories are excluded from regular unsecured credit cards, and can only get a secured card. If you get a secured card, you have to give the creditor a security, usually in the form of a cash security deposit. If you then fail to pay back the loan, the creditor can take this money to pay for the debt. Secured credit cards typically come with a very low spending limit, so use these cards sparingly and pay off the balance at the end of each month.

Unsecured Credit Cards

Some creditors with bad history can still get an unsecured credit card. However, if you have a low credit score, the unsecured credit card you get will likely have a much higher interest rate than those offered to consumers with good credit. According to Bankrate, as of March 2011, the best cards for people with bad credit had average interest rates of between 7.9 and 19.9 percent. People with bad credit will more likely have the 19.9 percent rate if they get approved for such cards.

Prepaid Credit Cards

Some consumers seek out prepaid credit or debit cards in an attempt to increase or rebuild their credit. While prepaid cards are a viable option for some consumers, they typically do very little to help build your credit. Because prepaid cards are not really a form of credit at all and are more like a gift card, their issuers do not usually report to the major credit bureaus, according to Bankrate. If the credit bureaus don't record it, it won't help your credit history.