Secured credit cards can be great tools to help you rebuild credit. This is because your account information is reported, monthly to all 3 credit bureaus.
Providing you with the opportunity to create a record of positive on-time, monthly payments. In other words, it can help you with building good credit.
What Is A Secured Credit Card?
A secured credit card will be issued as a major Visa or MasterCard. The big difference is you will have to make an upfront deposit with the bank, before you are issued a credit card. You can choose the amount of your deposit typically between $300-$5,000.
This money secures the line of credit and minimizes the banks risk. Don’t worry, your deposit is fully refundable. As long as you keep your account in good standing.
You will be responsible for monthly payments and paying an APR%. However, you will have a reasonable APR often around 15%. There is no credit check required for approval. And your deposit is FDIC insured. You will have to pay an annual fee of about $50.
How To Get A Secured Credit Card
Many banks with secured credit cards and credit unions will provide you this offer. You may find it most convenient to inquire about the details with your local bank. It is smart to compare and shop around a few of the competing offers.
We have heard great reviews about the Capital One Secured MasterCard. They have a long history with great brand recognition. It is smart to compare the annual fees, APR%, any additional fees, and double check your account will be reported monthly to all 3 major credit bureaus.
You will be able to find a good credit card to rebuild credit, but make sure to shop around a few. As a result of your account being secure, there is very little risk to the bank.
On a side note, because your credit card is secured, it will be reported slightly different to the credit bureaus. It won’t be weighed quite as much as an unsecured credit card. However it is a much more affordable alternative and will provide you with the opportunity to rebuild credit.
It is advised that you keep your monthly balance at approximately 30% of your credit limit. This is going to show that you are using your credit responsibly. If you have a credit limit of $2,000. You should try to keep an average monthly balance of $600.
Clean Up Your Credit Report
If you are serious about getting good credit then you must also work to clean up credit report items that are damaging your score. This is the negative information such as charge offs, debt collections, late payments, repossessions, etc.
You may need to settle with debt collectors and dispute credit report items directly with the credit bureaus. It is important that you know you don’t have to just suffer with the expense and the embarrassment of having less-than-perfect credit.
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