Secured Credit Cards
Looking to rebuild your credit? A smart move can be to get a secured credit card.
What is a secured credit card? It is a Visa or MasterCard credit card issued by a bank where you make a deposit equal to your credit line as security that you will pay back the amount you charged. They are a great tool in building credit for someone who has recently had a credit challenge such as a bankruptcy.
What is the downside? They are often expensive, and they usually have small credit lines. Application fees, and annual fees are normal. And don’t expect to get a 0% rate on your card.
You need to demonstrate that you can make a small amount work, pay it on time, and soon creditors will be willing to take more risks again. Offering you small credit lines without a securing balance, and so forth. My advice, look at them as a tool to build your credit. Buy gas, or a gallon of milk with them each month, that is it. Pay it off right away, in full, even before the statement comes. You don’t want to be tempted to leave a balance on the card. You don’t want to use the card to much as one part of your credit score is how much of your credit you are using. The last thing you want is your brand new card maxed out. Under 10% of your available credit will help you the most score wise, and after all improving you credit is why you got the credit card in the first place.
