Secured Credit Cards Help You Build or Repair Your Credit
A secured credit card is called that because you actually
open a savings account attached to the card, then your spending
limit is related to how much you have on deposit.
Getting a secured credit card for credit repair or credit
You might think that not owing money is good for your credit
rating. In fact the opposite is true. Most lenders, especially
for cars or home loans want to see a record of your payment
history. This is called having "lines of credit"
and is related to "revolving credit" which is what
you have with credit cards. It's called revolving because
you spend it, pay it back and spend it again.
If you have never had credit or have had poor credit in
the past you might find it difficult to get credit. A secured
card or two is a great way to get started. They are generally
easy to get, and do wonders for your credit rating if you
use them correctly because the bank who issues them will report
your use and payment history to the credit reporting companies.
Secured cards may have higher interest rates and fees but
you don't usually need to keep them going for more than 1
year, then you can change them into unsecured cards sometimes
with the same company.
It's important to use your credit wisely, the better your
credit rating the less you have to pay to get car loans home
loans, even credit cards. So spend wisely, pay more than the
minimum payment every month and pay on time!
Building your credit History
First, get a couple of secured cards. These are called "secured"
because you actually open a savings account attached to the
card them your spending limit is related to how much you have
Next, spend small amounts wisely, pay more than the minimum
payment (or pay it all) every month and pay it right when
you get the bill, don't wait for the due date and don't be
Responsible use of a credit card builds a good credit rating,
marking the owner as credit-worthy. For people with poor credit
or no credit, a secured credit card is the fastest, most effective
way to reestablish themselves as good credit risks in the
eyes of lenders. Secured cards are easy to get and the card
issuer reports your payment history to major credit bureaus
Using credit wisely is important for several reasons. your
credit reputation influences the rates that will be paid on
a loan for a house or car, or for a credit card. The better
your credit reputation, the lower the interest you will have
Although secured cards tend to have higher interest rates
and annual fees, they provide a valuable steppingstone to
Establish a sound payment history
Establishing a payment history will help you qualify down
the road for the major credit cards. Using this secured card
appropriately and within the set parameters will help rebuild
After you receive the credit card, make only small purchases,
and pay the bill in full when it arrives and well before the
due date. Doing this regularly over time helps build your
credit history as a prompt payer.
Don't fall into the seductive traps of credit cards-overspending
and/or making minimum payments.
Once you have built a solid credit history over 12 months
or more, you can apply for an unsecured card. Or, you can
talk to the card issuer about converting from your present
card to a regular card.