• Credit cards can help rebuild credit.credit cards image by Aleksandr Lobanov from Fotolia.com
  
  Credit cards are beneficial when it comes to rebuilding credit history. When your credit is damaged, proving your financial stability can be a challenge. Fortunately, credit cards for people with bad credit allow individuals the opportunity to prove themselves as credit-worthy consumers. When used properly, credit cards can help reestablish credit and lead to more lines of credit in the future. There are several credit card options for those seeking to improve their credit score.
  
  

Cards for Those With Bad Credit

• Multiple credit card companies are willing to extend credit to people with bad credit. Usually the interest rates are higher and the credit limits are lower than traditional credit cards. These credit cards typically require an annual fee or monthly maintenance fee. When trying to rebuild credit, it is important to be careful of a low credit limit. A major factor in a credit score is credit utilization. If the goal is to increase a credit score, customers should avoid charging too much on the card each month. It is a good idea to also pay the balance in full to avoid costly interest rates.
  
  

Secured Credit Cards

• Sometimes credit is too damaged to be eligible for an unsecured credit card. When this is the case, secured credit cards can be the solution. A secured credit card works just like a traditional credit card, except the customer secures the card. The cardholder deposits a desired amount into an account set up by the credit card company. The credit limit is often equal to the deposit. If the cardholder defaults, the money in the account will be used to cover the credit card balance. Secured credit cards tend to have interest rates similar to credit cards for bad credit. You can also expect to pay an annual fee, monthly maintenance fee and sometimes an account setup fee. Before obtaining a secured credit card, make sure the card reports to the credit bureaus.
  
  

Cards With Co-Signers

• Before seeking credit cards designed for individuals with bad credit, it may be a good idea to apply for a traditional credit card with a co-signer with an adequate credit history. A co-signer accepts responsibility for the account if the cardholder defaults. Customers trying to rebuild credit benefit from the lower interest rate and higher credit limit.