Using secured credit cards – Can this help to restore the credit score?
Paying down your debts and your activity on cleaning up your credit report is supposed to help you with improvement of your credit. Some of the activities that have a negative effect on your credit score are like those of the missed payments, defaults, high balance on credit cards, judgments and liens, hard pulls and so on. After paying off the debts, and working on your credit so as to remove the negatives as much as possible, the credit improves by some levels. However, in addition to this, it is also important for you to take out a secured credit card, as it is said to help with improvement of your credit. Even if you opt for credit consolidation, and follow the proper tips on credit card consolidation, it is important for you to work on credit improvement at the same time.
Secured credit card and your credit
Secured credit cards are supposed to help you improve your credit if used wisely. Now, you must be wondering that if you have bad credit, how it would be possible for you to obtain a new credit card. Unlike the credit cards in general, it is much easier for you to take out a secure credit card just because it is secured.
In order to use a secured credit card to improve your credit score, it is important for you to be aware of the basics of secured credit cards. A secured credit card is the one, that requires you to keep some cash as collateral which is used as a credit line for the account. Like, if you deposit $500 into the account, you will have the option to charge up to $500. You will also be able to add more to the previous deposit in order to add credit.
Rebuilding credit by using secured credit cards
After you are able to totally pay off the previous debts you have, may be through the debt relief options like that of, settlement or consolidation, go on continuing with the payments on the existent debts. Other than that, take out a secured credit card. While taking out a secured credit card, it is important for you to consider if the creditor actually reports to all the credit bureaus. Otherwise, even if you use the secured credit card and make on-time payments on it, you may not be able to see any significant change in the credit score.
Only after you use the secured credit card for at least 8 to 9 months, responsibly, you may be able to see some improvement in the credit score. In order to do this, you will be required to spend only small amounts against which you can afford to make the payments. Rather than waiting till the end of the due date, pay the dues well before the time. Avoid carrying high balances on the secured credit card or cards.
Some secured credit cards you can take out
Some of the secured credit cards that may be good for you are:
- USAA secured credit card – The USAA secured credit card provides different options, but the two best options are the MasterCard, and another from American Express. Both these cards are said to have different benefits for betterment of the consumers.
- Citi Secured MasterCard – The Citi Secured MasterCard has a really low annual fee of around $29, but the purchase APR is quite high – 18.24%. This card also has the option for you to get the card upgrade into an unsecured credit card, after you are able to establish good credit score using this card.
- Secured cards from Navy Federal Credit Union – Navy Federal Credit Union has some secured credit cards which have been tailored to suit the needs of the members, mainly for the members of military. These secured cards have low rates and almost no annual fees. The rewards available are flexible too. These have been made easier for those in the Army, Navy, Marine Corps, Air Force, and so on.
- Applied Bank Secured Visa Gold Credit Card – This secured card is available in spite of you having bad credit history. The deposit limit can be in the range of $200 to $5,000. The APR is fixed and low too like 9.99% and isn’t supposed to change even if you make late payments.
- Capital One Secured MasterCard – With regards to this secured card, you should know that there is no processing fee involved. Moreover, they report to all the three main credit bureaus and credit line increases are possible without further requirement for security.
So, these are some of the good and quality secured credit cards that you can take out. These are supposed to be the most effective option which can help you reestablish your credit score fast enough.