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Credit scores are used for just about everything these days. Insurance companies, apartment rentals, utility companies, banks and a number of other businesses pull credit scores to determine if you would be a good risk. Consequently, if you don’t have an established credit history or you’ve missed a few payments and have a bad credit score, you may be losing out on opportunities. For example, a bad credit score could mean you’re turned down for an apartment application. Your car insurance could also cost you more. However, you do have the ability to improve your credit rating with a secured credit card.

Improving Your Credit Score

credit-scoreEven if you’ve messed up in the past, you can get a secured credit card to improve your credit rating over time. The key to improving your rating is to get approved for a card and make consistent payments. Make sure the credit card company you’ve chosen reports to one or all three of the major credit bureaus.

How Secured Credit Cards Work

You’ll apply for a secured credit card online just like you would any other type of credit card. You should be aware that the credit card issuer will likely check your credit score, so be prepared for this.

The main difference between applying for a secured card versus an unsecured card is that you’ll be required to put down a deposit. Typically, the deposit is equal to your credit limit or more. You are free to use the card like a regular charge card. You can make purchases, pay interest if you carry a balance and make your monthly payments.

However, if things go wrong and you are unable to make your payments, the credit issuer will use your deposit to cover the balance due on your card. It is important that you understand missed payments will likely be reported to the credit bureaus, which results in additional damage to your credit rating. In the event that you are able to make your payments in full and on time, your credit score should begin to increase over time.

Researching Secured Credit Cards

It is often best not to jump at the very first credit card offer you find. Even though, you may have a low or bad credit score, you still want to choose a reputable company that reports to the credit bureaus. All companies don’t necessarily report, so make a point of checking.

To give you a couple options for secured credit cards, you might check out these two companies.

Capital One Secured MasterCard

  • capital-one-secured-credit-cardReports to the major credit bureaus.
  • Applicants could be approved for $200 in credit. Your credit score determines the amount of your deposit. Deposits may range from as little as $49 to $200.
  • Stricter credit standards for approval.
  • No annual fee.

Discover it

  • discover-secured-credit-card-reviewsCash-back rewards of 2 percent on $1,000 each quarter.
  • No late fees for missing first payment.
  • No annual fee.
  • Reports to all major bureaus.

It takes time to rebuild credit, but getting a secured credit card is an excellent way to improve your credit.