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A common piece of advice for raising your credit score is to get a credit card. But what if you can’t get approved for a standard credit card?
That’s where secured credit cards come in handy. Secured credit cards require a deposit as collateral, are easier to qualify for than unsecured credit cards and can help you build or repair your credit.
Your deposit amount is your credit limit, so the lender isn’t taking on any risk. If you default on your balance, the lender keeps your deposit.
We’re going to cover the ins and outs of secured credit cards here, so if you’re wondering “how much will a secured credit card raise my score,” keep reading!
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There isn’t an exact number for how much a secured credit card may raise your credit score. The improvement of your score depends on how you use your card, how long you use it and the starting point of your credit.
Being approved for a secured credit card won’t improve your score automatically. In order to build your credit with a secured card, you need to use the card responsibly by making payments on time and keeping your credit utilization ratio low.
Responsible secured credit card use combined with other credit management techniques could improve your score by a few points over the course of several months. You may see a larger impact on your score in a year, although this also depends on the state of your credit when you open the secured card.
A secured credit card can help those with no credit or poor credit improve their credit, as long as the card is used responsibly. Here are some pros and cons of using a secured credit card to build your credit.
Pros of a secured card:
Cons of a secured card:
If you can part with some cash, secured cards can be a low-risk option for building or repairing your credit. It’s also a great way to practice credit card responsibility since you’re only working with a small credit limit.
However, secured credit cards function the same way as normal credit cards and typically have higher interest rates, so you can still rack up credit card debt if you don’t use it wisely.
If you have no credit, a secured card may help you achieve a fair score in about six months, as credit bureaus usually gather three to six months of activity before creating a new credit score. After you’ve established a score, you can expect it to be updated monthly.
If you currently have poor credit, it may take longer to increase your score, but you can generally expect to see small improvements in a month or two. This is because gaining a secured card doesn’t erase the negative items on your credit report, unfortunately. You need to prove you can responsibly use a credit card for a long period of time.
Opening a secured card won’t improve your credit overnight, but it can help you make improvements gradually. The amount of time it takes to build your credit will depend on how you use your card and the current state of your credit.
Like we mentioned, the key to improving your score with secured card is to use it appropriately over a long period of time. Here are a few tips for using your card responsibly:
It’s essential to pick a secured card that fits your spending needs and habits. Each card offers different features, so you’ll want to compare them to find the best option for you. Here are a few factors to consider:
Every person’s spending situation is different, so make sure to take the time and choose the card that suits your needs best. You may also want to upgrade this card in the future, so choose carefully.
Still debating if a secured card is right for you? Here are answers to other common questions concerning secured credit cards.
A secured credit card can boost your credit score over time, given you’re using it responsibly. Pay your balance on time and keep your credit utilization ratio low to improve your credit.
Opening any new credit card, including secured credit cards, causes a hard inquiry that lowers your credit score slightly. However, this drop is usually temporary, since hard inquiries are only on credit reports for two years and you can work to boost your credit in the meantime with responsible card usage.
You should generally only open one card initially to avoid multiple hard inquiries on your report. Eventually opening another card might be a good idea if you’re making improvements to your credit.
Secured credit cards typically require a minimum deposit of $200. Keep in mind that your credit limit will be the size of your deposit, but you should only deposit what you can afford. You can still make improvements to your credit without tying up more money in your deposit. Getting a secured card isn’t the only way to repair bad credit. If you have poor credit, CreditRepair.com offers professional solutions to fixing your credit, so you don’t have to figure it out all on your own. We’ll put you on a path to success by analyzing your credit reports and disputing any negative items.
Note: The information provided on CreditRepair.com does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only.
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