Many individuals make decisions that lead to difficult periods in their lives. The consequence of past decisions results in some form of a financial struggle or poor credit history. When one has a bad credit history it becomes very challenging to achieve daily activities. One solution to rebuild one’s credit history is to examine the possibility of a secured credit card.
What to consider when looking to apply for a secure credit card. It is apparent that applying for a secured loan to fix credit is a viable option for many individuals. There is much to take into consideration prior to applying for non-traditional credit accounts. Below is a schedule of aspects to think about when applying for a guaranteed credit account.
- What conditions must be met to be accepted for the nontraditional loan?
- How much money will be needed for the deposit?
- Will the deposit be returned if the account is closed?
- Does the creditor report to all three credit agencies?
- How often does the creditor report to the credit agencies?
- Is good behavior (i.e., making on-time payments) reported to credit organizations?
- Is it possible to graduate with an unsecured credit card and remain with the company?
- How long do I need to stay with the company to be considered for a traditional credit card?
Advantages of a Non-traditional Credit Card?
Understanding why one would consider opening a non-traditional credit account to build credit is crucial. Contrary to a traditional unsecured credit card, secured credit cards require a minimum payment that will be set aside in a separate account before the card can be opened. The exact amount that will be required varies depending on the company. Some organizations require a minimum $200 deposit, whereas other loaners require a higher $500 deposit. Most non-traditional credit accounts have lower limits compared to their traditional counterparts. This can be advantageous to those looking to rebuild their credit score.
How Utilizing a Non-traditional Credit Card Can Help Build and Fix Credit
Properly utilizing non-traditional loan and credit services to repair one’s credit score is vital. There are numerous actions that must be executed for the account to work in the individual’s favor. Several of these actions are listed below to increase the individual’s understanding.
- Make all payments on time each month
- Be aware of any charges and fees applied to the account
- Purchase items consciously and with intent
- Each purchase should be small and able to be paid in full each month
- When a large purchase is necessary (i.e., a refrigerator for the home) make multiple payments a month
- When possible make payments larger than the minimum amount
- Be conscious of how the funds are being spent
The Need to Shop Around When Attempting to Build Credit
Every individual hoping to repair his or her credit should examine the numerous options for a secure loan account. Creating a list of the pros and cons will help to ensure that the correct plan is chosen. By comparing the pros and cons of each plan the individual is more likely to quickly build his or her credit. Taking the time to understand each plan in detail will prevent further damage to one’s credit score. As previously discussed, if one does not understand the plan and the necessary requirements to qualify for a specific credit account this can lower one’s financial trustworthiness. Improving one’s credit can be a difficult and tedious task. However, with patience and hard work the individual’s efforts will be rewarded.