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How to Fix My Credit with a Secured Credit Card

July 8th, 2016 · No Comments · Credit Cards

by Kristy Welsh

(Last Updated On: November 24, 2017)

how to fix my credit with a secured credit cardOnce you’ve done your best to remove negative listings from your credit reports, it’s time to start adding positive ones. And one of the best ways of doing that is with a secured credit card. Here’s how to do it right.

How to Fix My Credit with a Secured Credit Card

1) Apply

Don’t apply for the first one you see or the offer that comes in the mail. You should shop around for a secured credit card the same way you would anything else – comparing your options with an eye on cost and benefits.

When considering a secured credit card, look at:

Cash deposit/credit limit. The amount of your cash deposit is typically equal to your credit limit.

Fees. What’s it going to cost you to get the card and use it? Look at the application fee and annual fee. If you want to a transfer a balance, get a cash advance, or use the card internationally, what’s that going to cost you? And while you don’t want to carry a balance or be late with a payment, you need to know what those fees are too, just in case.

The kind of credit you need to qualify. Not all secured credit card issuers check your credit, but many do. So make sure you apply for one you’re eligible for. Otherwise, you’ll have to apply for another one. That means multiple inquiries on your credit reports, which doesn’t do good things for your credit score.

Whether the card issuer reports to the credit bureaus. You want one that does. Otherwise, any positive payment history you create with your secured card won’t show up on your credit reports or benefit your credit score.

Whether the card issuer will upgrade you to an unsecured credit card. Think of your secured credit card as temporary. What you really want is the real, unsecured credit card that requires no cash deposit. It’s a lot easier to get if you start with a secured card that automatically upgrades. That said, your credit may be good enough by then for you to get an unsecured card with a different issuer, need be.

2) Use it wisely

That means using your secured credit card regularly, making payment on time, and returning the balance to zero every month. The key to making all of this work is never charging more than you can afford to pay back right away.

3) Upgrade

After 12 months of responsible use of your secured credit card, it’s time to try for an upgrade. If that doesn’t happen automatically, call and ask for it. If the issuer won’t upgrade you to an unsecured credit card, apply for one with a different issuer. And either way, be sure and get your deposit back.

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