What are Secured Credit Cards?
If you’ve been turned down for credit cards in the past, you might think you’re unable to apply to any type of credit card in the present.
There’s a way that you can not only get approved for a credit card but help build up and strengthen your credit.
And that’s by using secured credit cards.
What is a Secured Credit Card?
First off, what exactly is a secured credit card?
Secured cards look and act like traditional credit cards, except you provide a security deposit as collateral for the account. This will be your credit line.
So, if you make a deposit of $500, then your credit line will be $500. Most secured cards require a security deposit of between $200-500.
Secured cards are great for people who are trying to build or rebuild their credit.
Applying for a secured credit card is like applying for a credit card. You’ll need:
To be at least 18 years old
To have a social security number
An address in the US
A US bank account
Provide the requested information asked in the application
Your bank routing number and account number so you can transfer the initial minimum security deposit.
Once you transfer your security deposit into the secured card account, you can use it as you would a credit card, paying off it off in the exact same way.
How Can Secured Credit Cards Help You Credit Score?
Now that you know what secured credit cards are, how do they help build your credit and grow your credit score?
As I said, secured credit cards are just like traditional credit cards. This means you will need to make payments each month to your account.
When you make payments, the use is reported to all three credit bureaus – TransUnion, Equifax, and Experian – and the more on-time payments, the more you build up your credit.
One of the best secured cards you can apply for is the Discovery It Secured Credit Card, however it does require a hard pull on your credit report. But some of the features include:
No annual fee
2% cash back at gas stations and restaurants
1% cash back on all other purchases
Depending on your current credit score, you may want to avoid having a hard pull done. In that case, here are some secured cards that run soft pulls:
Secured credit cards are great for someone who is new to credit, but they can also be beneficial if you’re trying to rebuild your credit as well.
Both of these can help to improve both your FICO and VantageScore, which are both important when it comes to getting approved for credit.
If you’re looking to build or rebuild your credit, we offer a lot of resources and discussions to help grow your credit.
Come check us out.