Can I Build My Credit With A Secured Credit Card?
Many times our clients inquire about secured credit cards. If you are trying to build credit after filing for bankruptcy, it can be difficult at first. Only limited credit options are sometimes available. You may be able to use a secured credit card in order to safely rebuild your credit when other options are not available.
How Do I Get A Secured Credit Card?
You can get a secured credit card by applying for a secured credit card online. Many major credit card providers such as Discover, Citibank, and Capital One offer a secured credit card program. In order to obtain the secured credit card, you will be required to provide a deposit that will “secure” whatever limit the credit card company will allow. This will allow you to quickly and safely rebuild your credit history.
These credit card companies have very little risk of default. The company will hold your $500, $1000, or greater deposit as a “security” for the credit card. If you stop paying, they will eventually take your deposit to cover their losses. Therefore, it is much more likely that you will be accepted into a secured credit card program before you can get a regular credit card with your credit history.
How Does the Secured Credit Card Build Credit?
Although these credit card are different because they are secured with a deposit, a secured credit card operates as a regular credit card in every other aspect. The credit card company is required to report your credit history the same as a regular credit card. This can quickly rebuild your credit.
After you acquire a secured credit card, the best way to build credit is to set up an automatic monthly repayment. Attempt to make your automatic payment to pay more than the minimum amount. Also, to achieve maximum results, do not retain a balance of more than 75% of the credit card limit.
What Are Other Ways to Build My Credit Score?
After you have automatically paid your secured card balance for six months, attempt to get a normal credit card. Use the same strategy of limited balances and automatic payments whenever you are able to get the regular credit card. You can also eventually seek affordable and reasonable automobile and mortgage loans after you get farther into rebuilding your credit. Remember, the key to credit success is automatic payments and getting loans that you can easily afford to repay each month. If you do not set up automatic payments or get into too burdensome of loans, you will risk damaging your credit.