Good Credit Advice

good credit adviceFirst off… let’s discuss what Secured Credit is.

A Secured Card requires you to make a deposit in order to obtain the credit card.  If you are doing this – you are either a parent with a young child that needs a credit card – or you are re-building.

Because there are other ways to obtain cash for a child- let’s assume you fall into the “other” category.

If you’ve gotten into financial difficulty, and you’ve damaged your credit, a secured credit card can help you build your scores back up because they report your payment history to the credit bureaus… and we all know that payment history makes up the largest portion of your score.

Remember that when you get a Secured Credit Card – you are not having your credit pulled, so it will not pull your credit scores down!

A secured credit card operates just like a regular credit card.  As I said, the major difference is that you, the cardholder, are  making a deposit as security in case you default on the credit card payments.

The secured cards that I checked would allow you to borrow between 50% and 100% of the deposit you make – so a $500 deposit might mean you have a card with a $250 limit.  Does that mean you lost the other $250?  NO!  It’s on deposit, earning a tiny little bit of interest.

If you are going this route – also remember that we really need three or four tradelines in order to pull your score higher – so one account is not going to do it.  It’s a nice start -but it’s not going to pull your scores up all by itself.

We see lots of people who apply for Fingerhut Accounts.  They are generally easy to obtain (I don’t get anything for mentioning any of this BTW).  If your credit is strong enough to get a secured card with your bank, as opposed to the ones that pop up when you Google Secured Credit Cards you will have much lower fees. Credit Karma also offers some options for Secured Credit Cards.

The most important thing to remember with WHATEVER kind of secured card you obtain is this:

THEY MUST REPORT TO ALL THREE CREDIT BUREAUS if it’s going to help your score!  Often times Credit Unions do NOT report to all of the Bureaus – so be careful when considering this.

If you are considering a home purchase in NC, and want more information on how to improve your credit score so that you can buy… call Steve Thorne, a Mortgage Lender in Cary 919-694-5058.  We do a ton of No Money Down Home Loans, and we know all of the USDA credit Score Requirements

Comments

  1. secured Credit Cards can be a great way to raise your credit scores.

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