The First Step to Rebuilding Your Credit – Secured Credit Cards
The First Step to Rebuilding Your Credit – Secured Credit Cards

Is bad credit keeping you from accessing new credit? It's a vicious cycle, but for those of you who want to rebuild your poor credit rating or are building your credit history for the first time, getting a secured card might be your best (or only) option.

Is a secured credit card right for me?

The biggest difference between a secured and an unsecured credit card is that secured cards require a security deposit from the cardholder, which functions as cash collateral against you defaulting on your payments.

Secured credit cards are especially useful for consumers with poor or little to no credit history who are typically declined for unsecured credit cards. A secured card guarantees approval by the lending institution because, in effect, you are the one taking on the financial risk through your security deposit.

Think of a secured card as your credit line "training wheels" that allow you the benefits of owning a credit card while giving you the opportunity to build a history of responsible credit use with on-time payments. The small credit limits and security deposit requirements are there to protect you from getting yourself into the poor payment history that may have plagued you in the past.

Secured card credit limits are often set at the amount of the security deposit or some percentage of it so that you cannot charge more than your security deposit can cover. Depending on your specific secured card, adding more to your security deposit enables you to access a higher credit limit, or if your payments are on-time and consistent, the credit card company may reward you by increasing your credit line without requiring additional deposits. Many secured cards increase the credit limit of your secured card after 6-12 months of responsible use and on-time payments.

If you can't break yourself from old habits and your monthly payments for credit charges are late or insufficient, the bank or card company will dip into your security deposit to foot the bill. Only good news here is that because of the small credit limit, you probably cannot get into significant debt.

Putting the secured card to work for you

A secured credit card is a great vehicle to build or rebuild your credit history, but still requires regular responsible use and diligence to earn good credit standing. Some guidelines to optimize your credit with secured credit cards:

  • Make payments on time - Always, always pay on time to put your best credit foot forward. Your card is intended to build positive credit history so don't bite off more than you can chew, don't charge purchases you can't afford to pay, and to show your serious commitment to being credit-worthy, never miss a payment.
  • Use your card, responsibly - To build up a credit history, you're going to need to use your secured credit card. Using it once a month for something simple like a tank of gas or a small grocery run is a great way to demonstrate responsible use while building payment history. Most importantly, pay on time when the bill comes - it's one of the largest influences on your credit score.

Secured credit cards can be a very powerful tool to start improving your credit today, but there are drawbacks. Secured cards come with fees of all kinds including annual membership fees, application fees, processing fees, deposit fees, higher interest rates fees, late payment fees, over limit fees, and cash advance fees.

Secured card: the path to greater options

A secured credit card can be a significant stepping stone in managing your credit health. There are many secured cards out there, so shop wisely, read the fine print, and - as always - use the card responsibly and pay on time.

Good credit is somewhere in your future, but improvements to your credit score don't happen overnight. You'll need to show months and possibly a couple years of solid credit history before you'll be ready to graduate to an >unsecured credit card. But have hope; there is light at the end of the tunnel.

Take a look at Credit Karma's recommended secured cards:


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Results 11-20 of 41Results per page: 5 | 10 | 25Page 2 of 5   Previous | Next

CAN SOMEONE PLEASE HELP ME...

Would it improve my credit score to take a student loan and pay off debt???????????????????

Comment by
mm192108

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0 People Helped

It depends on a number of factors. If you have extremely high credit card utilization and lots of debt it may help some. If you have a few hundred or a couple thousand in credit card debt than probably not. It is more important that you pay all your bills on time and get current with any delinquencies.

Review by
CK Moderator

My credit score is in the high 400's- how long would it take to raise my credit score.

How can I establish good credit?

Comment by
Jiadams83

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0 People Helped

Would it make since to take my student loan to pay off my credit card debt? Would that improve my credit?

Comment by
mm192108

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0 People Helped

I need a 100-point increase in my credit score by October 2010. Is that possible? If so, what is the best recommended plan of action?

P.S. I have no foreclosures, liens, bankruptcies, or repossessions. I currently have an auto loan that is being paid on-time (although there were late payments in 2008 when I was unemployed) and a collection account for $240.

Comment by
cherimurr

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0 People Helped

It depends on a number of factors. Try our credit score simulator with on-time payments to see.

Review by
CK Moderator

try credit solutions

Reply by
toro098

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0 People Helped

pay off your account that is in collection,check with your car loan co and make sure all your recent have been paid on time and check your credit score with the credit reporting agency and see if they show any delinquencies your not aware of.good luck

Reply by
EMILIAROSA

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0 People Helped

what is the best way to handle negative/collections accounts? i can pay some of them off but then how can i get them removed or to show positively on my report?

Comment by
npbabb

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0 People Helped

I paid off a Chapter 13 Bankruptcy in Sept 09. I just received word from the court that it will be discharged in 90 days. Will my credit score go up? I repaid all my creditors. Also, my credit report has an address listed that I never had. How can I get rid of that info?

Comment by
barbs724

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0 People Helped

Chap. 7 would have been much better then Chap. 13 but because of changes in the law you may have been forced into 13. Get a new copy of your credit report after it is discharged. It may take 30 days plus to show it's discharged. Whne it is on there look for anything that is wrong or missing. I.E. dischage date, ammount, date of last activity, etc. If any of the information is wrong or missing, challange it as incomplete to try and get it removed. It is always better to send challanges to the credit bureau in the mail and the prefered method cost about $6.00 now. Take it to the post office and tell them you need delivery conformation. They will put it in a larger envelope and give you a receipt with a tracking number. DO NOT EVER SEND IT REGISTERED! They all use a P.O. Box which means no one is there to sign for it. From anywhere in the counrty it takes an average of 3 days for it to get there with conformation. You can check the tracking number at the USPS website and it will tell you what time and day it was put in their mailbox. The 30 days they have to check and respond starts at that time. Best of luck to you.

p.s. I have been using the credit secrets bible also for my and my wifes credit. We are fighting and making slow progress. My wifes score was under 400 and after 4 months she got a brand new car, financed by GMAC with $0 down. It been taking time on mine being out of work due to an injury but mine has gone from the low 400's to the high 500's-mid 600's.

Top Contributor

Reply by
tattoo666

13 Contributions
1 Person Helped

your screw for 7 years

Reply by
dowser227

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0 People Helped

you can go to any credit reporting website. annualcreditreport.com (or something like it) you can get your credit report for free once a year. anyway...transunion, equafax, experian and change your address there. i would look into it because it could mean that saomeone else is using your personal info. if you see things on there that don't look familiar dispute them. you can do it online but it's better if you write the credit reporting agency a letter. Give any info proving it's not yours. About the bankruptcy i don't know wether it will stay on your credit report. i think that it might because you were in the proccess of it. your credit report will show that you were behind on bills which is not good. that will stay on there for 7 years from the date that you first missed a payment. it has to be over 30 days to show on your report.

Reply by
katarzyna19

3 Contributions
0 People Helped

im new to this site. it gave me a 498 score. now im thinking about getting a secure credit card. also i owe 100k in child support. does that go against my credit score?????????????

Comment by
juanmilw

4 Contributions
1 Person Helped

It could if it there is a lien or garnishment

Review by
CK Moderator

Yeah, how about you focus on paying the child support you owe? You brought kids into the world, you have a responsibility. Owing $100K in back child support just tells me you are a CREEP.

Reply by
brockdog

9 Contributions
4 People Helped

Yes, back support will hurt you more then anything else. My wife had 3 sons from her first husband who decided he didn't want to be a husband or father. He was about $15,000 behind and the AG's office never did a thing to the man who owned his own business to make him pay. Now he cannot get financing to buy a new vehicle or house, cannot get a credit card and would probably be turned down for getting into rental property. It has been more then 15 years and I smile ever time I hear his sob story about not being able to get something. From what I hear, even if he paid everything he owed, it will still be on his credit as a dead beat dad. I have not found anyone yet that has found a way to get it removed.

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Reply by
tattoo666

13 Contributions
1 Person Helped

pay off your past bills before you decide to get any more credit

Reply by
katarzyna19

3 Contributions
0 People Helped

what do u reccommend

Reply by
juanmilw

4 Contributions
1 Person Helped

i think there is a lien or garnishment so does this mean theres nothing i can do??

Reply by
juanmilw

4 Contributions
1 Person Helped

Is it better to pay off a secured credit card every month or to leave some type of balance on the card and pay minimum or a little more then the minimum?

Comment by
DLUEVANO

1 Contribution
0 People Helped

Always pay off each month if you have the means. It is myth that carrying a balance helps your score.

Review by
CK Moderator

How do I get my Credit score up And how long will it take?

Comment by
Kily4001

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0 People Helped

I have a Public Savings Bank secured card, and I LOVE it. They've been just great to work with, and FAR cheaper than any of the other secured cards I researched. The only drawback is that the card never converts to an unsecured -- if you keep the card account open, they hold onto your security deposit, period. But since getting the card in January, my score has finally broken above the 600 mark, and continues to creep upward a few points every month.

Reply by
brockdog

9 Contributions
4 People Helped

i was having problems with my credit and still do it's hard to say how long it depends what steps you take. i started my paying on time it was hard to budget. Bills come first everything later. my dad got me a credit card and i make sure to pay on time which brought my credit score up. with paying my bills on time and having the credit card my score went up 50 pts since last june

Reply by
katarzyna19

3 Contributions
0 People Helped

start with capitalone,they are great. unsecured

Reply by
joerios

1 Contribution
0 People Helped

How can you raise your credit score when you have 3 civil judgements against you? I am unemployed and would like to pay them off but it has not been possible. Any advice, can they be negotiated down?

Comment by
paigeme

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0 People Helped

"Mid November through mid December is usually the best time to challange. All the people out of the office for holidays makes it harder to get things verified." --- WOW> THAT is a great piece of advice! I never would have thought of it, but you're absolutely right. I'm going to keep that in mind.

Reply by
brockdog

9 Contributions
4 People Helped

It all depends on who the judgements are from. I had one several years ago and after going a few rounds with their attorneythey came back with an offer to take 40% if I paid within 2 days. I made sure I had it in writing then I paid. Also, anything that is showing on your credit has to be accurate. Even judgements. If anything is worng ( creditor, amount owed, account number, etc.)or if it is missing it can be challenged with the credit bureau. If it cannot be verified as yours and correct they are supposed to remove it from your file. But remember, the credit reporting agencies all use P.O.Boxes so the best way to challange is by mail and send it with "delivery conformation." It cost about $6.00 but you get a tracking number and you can see the date/time it was delivered using the tracking number at the USPS website. The credit reporting agencies are suppose to read your challange, contact the persons reporting the information, verify the information and respong back to you in 30 days. Mid November through mid December is usually the best time to challange. All the people out of the office for holidays makes it harder to get things verified.

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Reply by
tattoo666

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