Credit cards to build your score.

2min read
Posted 10 April 22

Depending on your goal in taking out a credit card, there are many options designed to help build your credit history and gain better access to credit. These options can be a real boost if you’re just starting your credit journey or have a lower than average score.
 

Zero-interest cards.

Zero-interest credit cards are one option that removes the risk of added interest fees for a set period. With zero-interest cards, however, you’ll still have to consider your application and credit limit, as the amount you spend will have an impact on your credit history. 

When using a zero-interest card or any card to build your score, you should aim to make only a few new credit applications. So if you think you’ll need more than one card, space your application for a second card out by around six months. 

You might get two or more cards to keep a low credit utilisation level and still spend more than you normally would on one card. You might even decide on a purpose for each card, to keep your payments in order.

 

Secured cards.

Secured credit cards work like traditional cards, except that you make a deposit upfront to access a credit limit. Your deposit then becomes your monthly limit, with the original deposit acting as collateral (security) in case you fail to make a repayment.
 

Credit-builder loans.

These can be taken out on a credit card or as a general personal loan option for those with a low credit score. The bank acts as the third party with a credit builder loan, holding the money you requested to be paid off with added interest. 

Credit providers feel more secure about this option because the borrowed amount is with the bank and not you personally, making it easier to collect if you’re unable to repay. Your credit score will also climb with a credit-builder option, which means over time, you’ll be able to take out a new loan or credit card option without the extra security.


 

Stop! Disclaimer!

Info and tools on the Yonda website are to be used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.