The Best Bank Cards for Your Credit Score

Although the credit reporting agencies do not widely publicize this fact, some credit cards are better for building a good credit history and thus, a good credit score, than others. If you are trying to start a credit history, however, you usually can't afford to be picky about your accounts. More important than the type of credit card you own is how you use credit.

Identification

Credit cards from a bank or credit union are the best way to build your credit score. The FICO scoring algorithm dings your score a few points for only having retail or gas station accounts, according to Leslie McFadden of Bankrate. On the other hand, credit utilization -- credit limit used divided by the limit available -- is more important for banks cards than retail accounts.

Name Recognition

Creditors can see which lenders you use. While not having a bank card probably won't wreck your credit score, lenders may consider this when making a credit decision. Thus, it is generally better to have a bank card from a large, national bank than a small, community bank. The thinking is if a big successful company is willing to take a risk on you, then you are probably a good customer.

Considerations

How much debt you carry and if you pay your bills on time has a much larger impact on your credit score than the type of card you use. Also, you want a card that reports to Experian, Equifax and TransUnion -- the three major credit reporting firms in the U.S. As long as your lender reports to the three major bureaus, you can have excellent credit without a bank card.

Tip

If you are starting a credit history, you probably only qualify for retail, gas station and secured credit cards on your own. Secured credit cards are usually the easiest way to get a card from a national bank, because the limit is backed by collateral, so lenders rarely have a reason to reject an application for a secured card. Do not be fooled by prepaid cards that claim to report to the major bureaus. The bureaus do not report prepaid accounts; instead, the prepaid card company sends the payment history to an alternative credit bureau, which a lender may not accept.