What Exactly Is A Secured Credit Card?
Secured credit cards are cards that help you establish or rebuild your credit history. Unlike prepaid cards, secured credit cards give you a credit line, and your payment activity will be reported to the major credit bureaus. Please note: before any secured card can be activated, it MUST be funded with a security deposit equal to the credit line.
Why Do I Need To Give Security Deposit?
Secured Credit Cards require a refundable security deposit because it is held as collateral for the account. Unsecured Credit Cards do not require one simply because the applicant applying for one has a higher credit score and history of paying lenders on time. The great news is that no interest is applied to the security deposit.
How Much Of A Security Deposit Will I Need?
It really depends on the card issuer and your credit worthiness. Most lenders have a ranking system that allows some consumers to pay 25% or 50% of the security deposit. Some lenders only allow 100% of limit to be fully applied from the security deposit. Average amount that is needed can be between $50-600 minimum.
How Fast Will This Increase My Score?
After receiving the card, swiping for small purchases, paying the balance in full or keeping the balance under 10% of the limit, and never being late on any monthly payments, your score will increase in less than 2-3 months. The longer you keep these good habits up, the more your score will increase over time.
Can I Still Be Declined For A Secured Credit Card?
Absolutely. As with any credit card, there are certain conditions that could cause your application for this credit card to be declined. For example—because a bank account is needed in order to fund your card, you will be declined if you don't have one.
How Can I Increase My Credit Line?
To increase your initial credit line, simply deposit more than your minimum required security deposit before your account is opened. You can raise your initial credit line by the amount of your additional deposit. You may also earn a credit line increase later based on your payment history and creditworthiness.
How Can I Find The Right Secured Credit Card For Me?
There are many Secured Credit Cards to choose from. I recommend seeing a list of them all at once and you can do that by clicking here.
The Bottom Line
As you can see, a Secured Credit Card is the fastest way to increase a super low credit score. This card is easy to get approved for and will give you an opportunity when other credit card companies won't because they don't offer this type of card. For more topics similar to this one, please join our mailing list.
Calvin Russell Jr is a Certified FICO Professional and the CEO & Founder of Simply Professional Credit Consultation. SP Credit Consultation has helped hundreds of people increase their credit scores, qualify for homes, cars, and lower interest rates with their personal, Step-By- Step Action Plans. Contact us today to learn more or email us at info@gosimplypro.com.
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