Secured Credit Cards To Rebuild Credit
Filed under Credit
If you have a negative credit score and are looking to improve it fast, there are a number of steps you can follow to bring your scores up. One of the best ways is to apply for a secured credit card. Slowly but steadily, a $200 secured credit card can help you up your credit scores and eventually qualify for a mortgage within a few years. Here is how it works:
Applying for a Secured Credit Card
The first step is to apply for a secured credit card. The application process is easy and can be done on the Internet. Nearly all applications are approved. To get the right secured credit card provider online, compare the rates of different lenders and check their terms and conditions. Also, go for a lender offering affordable rates.
How a Secured Credit Card Works
You can use a secured credit card for normal expenses like purchasing groceries, paying restaurant bills, or buying online. The difference between the card and an unsecured one is that it has a spending limit. You set the limit yourself by depositing money to your bank account, which is a form of security to the lender. When you have exhausted the amount deposited, you cannot use the card again until you deposit more money. In case you fail to pay the money, the lender will deduct the amount from the security deposit in your account.
There are a number of fees you will have to pay for the secured credit cards. These include signup, maintenance and annual fees.
Pay On Time To Improve Your Credit Score
If you are looking to improve your credit score, make your payment on time. When you do this consistently, your credit score will start to improve. Also, make small purchases at a time. This will show the lender that you are learning how to handle money carefully and will help to boost your credit scores.
Secured credit card bureaus usually share their borrowers’ spending information with major credit bureaus. When the bureaus see your spending habits are improving and you are making your payments on time, they can consider you for a loan should you decide to borrow from them. No credit history means they have nothing to compare and judge your ability to repay bigger loans.