Sometimes life happens. Maybe you or your spouse lost a job, experienced a health challenge or had a business fail. Or maybe the economy tanked and when the dust settled, you were left in an impossible financial position.

If you or somebody you know found themselves with a credit score that offers them very few options for securing any kind of credit, it’s time to begin the rebuilding process. If you’re patient, practice perfect financial habits and don’t get ahead of yourself, it won’t take long to see significant improvement in your credit score.

Likely, you will start with a credit card. Your credit limit probably won’t be high and the terms will be, shall we say, confining, but it’s a first step to re-establishing your credit.

Secured Credit Cards

Prepaid credit cards won’t get you anywhere if you’re trying to raise your FICO score, but a secured credit card will. Never heard of a secured card? It’s simple. Your credit limit is directly tied to the balance you have in a certain account. Pay a security deposit and receive a credit line that is tied to the deposit. If you deposit more money, your credit line increases. For more on these cards, read Getting A Secured Credit Card and Secured Credit Cards.

Topping many “best credit card” lists is Capital One. The company’s simple terms and customer-friendly cards are reasons it's one of the most well-liked credit card issuers in the world.

Capital One Secured MasterCard. The required security deposit for this card is as low as $49 and the credit line as high as $3,000, depending on your credit history.

Annual fees on secured cards are often high, but the Capital One card only charges $29. The APR on the card is a high 22.9% but, as you would expect, the APR is higher for those with damaged credit.

The company doesn’t pack on the fees either. If you’re late making a payment (don’t let that happen), the fee is only up to $19 and there is no penalty APR. The company also helps you monitor your score with free unlimited access to your credit score along with other free tools.

DCU Visa Platinum Secured Credit Card. If you’re looking for a lower APR, look at this card. Not only is the APR a low 11.5%, there’s no annual fee.

Unlike most other cards, there is no fee or higher APR for cash advances or balance transfers, and the card includes many of the perks that come with rewards credit cards such as free auto rental collision damage coverage, Visa travel services, and an extended warranty on most purchases.

However, if you make a late payment, you will pay up to $35 per occurrence for a late fee and your APR may jump to the 18% penalty rate – still lower than many other secured cards, however.

Once you prove to the card issuer that you’re a responsible borrower, ask the company to upgrade you to an unsecured credit card. Unsecured cards at this credit card level may still come with less-than-attractive fees and APRs, but you won’t have to keep a balance in another account.

Unsecured Cards

Most credit cards are unsecured, but when your your credit is still considered damaged, your only alternative to a secured card is likely to be an unsecured card in the category known as subprime. Expect a low credit limit and less-than-attractive terms, including more fees than most cards charge, such as a fee when you sign up for the account. Use this card responsibly and you’ll see your credit score rise. Eventually, you will be able to qualify for a card with better terms.

There is very limited choice in this category.

Total Visa Credit Card. This is one you’ve probably never heard of. The Total Visa card comes with an initial credit limit of $300, a 29.99% APR and an $89 processing free to open the account.

The card also comes with a $75 annual fee the first year. Since it’s assessed before you use the card, your available credit limit is actually $225 until you pay the fee. After the first year, the fee is $48 annually. There is also a $6.25 per month service fee after the first year and an up-to-$37 late fee if you don’t pay on time.

Credit One Bank Credit Card. This product is similar to the Total Visa card, but with a potentially lower APR and higher credit limit, the reason we've included it on this list. If your credit isn’t as damaged as it could be, you may qualify for an APR as low as 17.9%, but for those with very poor credit, it could be as high as 23.9%. There are also hefty membership and signup fees, according to credit card reporting sites.

However, unlike most credit card issuers' sites, this card's site provides very little information on its terms and rates until you actually start signing up for this card and the company has your name and other information about you. This is not a best-practices way of treating consumers; be wary.

If You Have Fair to Average Credit

For those with severely damaged credit, the perks that come with credit card use aren’t available. Once your credit improves to what is considered fair, rewards points, travel perks and more become a real possibility.

Credit One Credit Card with Gas Rewards. Once your credit score reaches the mid-600s, you can get this card with unlimited 1% cash back gas rewards. The APR is 17.9% to 23.9% and there's an annual membership fee of $35 to $99 based on creditworthiness and credit score monitoring services. Card holders with an outstanding payment history can receive credit-line increases. There is, however, a signup fee, which, like the annual fee, is billed when you first use the card.

Capital One’s QuicksilverOne® Rewards. This card for people with average credit offers 1.5% cash back on every purchase. The introductory APR rate is 0% until December 2015, then it goes up to 22.9%, but the $39 annual fee without any of the other maintenance fees or security deposits make it a much better deal even if the APR is roughly the same as some of the cards offered to people with poor credit.

This card won’t be easy to get until you get a score in the mid-600s, according to Credit Karma, but once you rebuild your credit enough to qualify for this card, you can count yourself among people who have a trustworthy credit status in the eyes of financial institutions.

The Bottom Line

There are no magic remedies for rebuilding your credit. Despite the advertisements that claim to rebuild your credit rapidly, it’s not going to happen overnight.

The playbook goes something like this: First, get a secured credit card. Charge only as much as you can pay on time at the end of the month. As your credit improves, look at an unsecured card and later, at cards for people with improving credit.

If you always pay on time, your score will improve because most of these cards report to the three major credit bureaus each month. Read What Is A Good Credit Score? to see what you're targeting.

Finally, be honest and ask yourself what got you into the position of having poor credit. Sometimes life events are out of your control, but if the trigger was overuse of credit cards, perhaps a card with a very low limit or no credit card at all is the best way to protect your financial future. For more, see Credit Cards For People With Bad Credit and (even if you haven't been through it) Bankruptcy Consequences for information on rebuilding your credit.

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