You may wonder can a secured credit card boost my credit fast? The answer is yes, it can. A secured credit card can help you improve credit history. Even only charging just ten dollars a month can help raise your credit rating. To fully educate you about secured credit cards, I am going to share with you some important information about this type of credit card.
One of the benefits of credit cards that are secured is that they report your payment history to the credit bureaus so they will help you repair credit so you can build or reestablish new credit and get a better credit history. You also can get approved for a secured credit card when other credit card companies will not approve you. The reason for this is you pay a security deposit so the card company is not lending you the money like other credit card companies do.You are spending your own money instead of theirs, so there is no risk to them as they are not issuing you a line of credit. Also, your security deposit is kept just in case you miss a payment or two and you will not have creditors call you if you become overdrawn. However, spending more than you have will affect your credit rating just like it would with any credit card. Also, since some secured credit card companies put your deposit in an interest-bearing account, you can incur interest on the money that you keep on your card and even make a few extra dollars.
How to Get a Secured Credit Card
The process of getting a secured credit card is fairly simple. You just give the creditor a deposit which is usually $200 or more. They will keep the deposit as collateral and then they will give you a credit limit that is equal to a number of funds that you deposit. After you pay your deposit, this type of card is like any other credit card. Since your credit limit, balance, and payment information is reported to the credit bureaus, this card can be used for building credit or to fix credit. The main difference from other credit cards is that they can take your deposit and put it toward pay off your credit card balance if you fail to pay your bill on time. The bank can know that they will not lose money and you have the chance to prove that you will use your credit wisely so you can rebuild credit to improve your credit score.
The Best Way to Use a Secured Credit Card
If you have a secured credit card, it is a good idea to charge a small amount every month and pay it off every month. A lot of them even provide you with the option of automatic payments, so your payment can be deducted from your account every month. Subscribing to a credit monitoring service is a good idea because you can watch your credit score and improve your credit history.
Your FICO score will also improve when you make on-time payments. In about six months, your credit score could go up to over 600 and, in eighteen months, it could be a lot higher than 700. A lot of people are able to get a credit card that is not one of the secured credit cards that have benefits like sign-on bonuses and high credit limits. The best way to use a secured card is to keep a small balance, pay your balance off every month and on time, and do not use the card a lot.
The Best Way to Select a Secured Credit Card
One of the best things to look for when selecting a secured credit card to improve credit history is to get one with no annual fee. These secured cards can help you repair credit or building credit. One of these cards is the Discover it Secured Card. The Discover secured card will help fix credit or rebuild credit and it has no annual fee. They also automatically review your account to see if you can get an unsecured card and your FICO score can go up and your credit history will also improve if you make regular payments on this card. This card also provides rewards like 2% cash back at gas stations and restaurants or up to $1,000 in combined purchases every quarter. You also get 1% cashback on all of your purchases with this card. With all of the bonuses and perks, a secured credit card is the way to go when you are in need of a card to build credit or repair bad credit.