Money Matters » Is A Secured Credit Line The Best Way To Fix My Credit?

Is A Secured Credit Line The Best Way To Fix My Credit?

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Is A Secured Credit Line The Best Way To Fix My Credit?

Fixing your credit after it drops significantly is not easy. You may want some easy fix, but those do not exist. The best way to build up your credit is to use the tools available to you. One of the most popular options is a secured credit line.


You get this type of credit card by putting down a deposit, which becomes your credit line. Most people can get this type of credit card, regardless of credit history. Nonexistent or awful, this is available to you. It works exactly like a regular, unsecured credit card and affects your credit in the same way. This can help you to rebuild, but is it the best way to do it?

Credit And You

Everyone needs to have good credit. If you want to get a car or home or do anything with your finances, you will need to build your credit. Good credit makes you appear trustworthy to lenders, helping you to get better loans and open doors for you. Through life and various circumstances, however, your credit might have gone lower than you would like.

If your credit is poor, building it up becomes harder. Due to marks against your credit, lenders view you unfavorably. They are unlikely to help you, which in turn makes it harder to prove your trustworthiness and improve your credit. An alternative to the normal unsecured credit card is the secured credit card. When your credit is bad, this can help a lot.


Benefits Of Secured Credit Cards

Almost Anyone can get a secured credit card. It’s usually okay if you have a considerably lower credit score since the amount you put down is your own deposit. These work exactly like unsecured, normal credit cards. You can use them anywhere and the company shares your information with the big credit reporting agencies. Regular and smart use of the card can add positive marks to your credit history.

When your credit is poor, having some sort of regular and positive improvements is necessary. For most people, this is the only way to do that. You can get the card at any point and you can start using them like you would any other credit card. They are not a debit or prepaid card – they are actual credit cards. They are one of the easiest and best ways to build up credit.

Downsides Of Secured Credit Cards

There are things to consider here. Since these are for people with bad or no credit, there are safeguards for the company. They want to make sure they are not at risk financially if they lend to someone who cannot or will not pay, which does mean extra hoops to jump through for you. As stated above, you will have to put down a deposit. The deposit amount depends on your credit and the company, but it can be anywhere from $49 to $500 or more.

You can look into the cards that are right for you. How much you put down is your credit line. If you have a low credit line, you will have to watch out for utilization, as using too much will hurt you. Even if you have a small credit line, you want to minimize the amount that you use it. Never exceed 65% of the credit line that is given to you. For example, if you have a credit limit of $1,000, don’t use more than $650 of it at a time before you pay it off again.

Generally, there are annual fees with these cards. These fees depend on the company, but they will add to the amount you have to pay just to have a credit card. These downsides are inescapable. If you want to build up your credit, you will have to use a secured credit card before you can move on to anything else.

Why Do Banks Turn Down Applications For Secured Credit Cards?

Why Do Banks Turn Down Applications For Secured Credit Cards? - Credit Card Insider

Secured credit cards are a great way to kickstart your credit scores, especially after a default, bankruptcy or foreclosure. Ultimately, you are fronting the credit line yourself, but that means you trust yourself to be responsible. Secured credit cards are not for everybody, but for those looking for a fresh start, they are a great way to get back on the right path fast.


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