Can a Secured Credit Card Improve My Credit?
Secured credit cards are getting quite popular today, but there are still many people who don’t know what they are. A secured credit card is a specific type of a credit card issued to clients based on the collateral that they pledge to the bank. In most cases, the collateral is a certain amount of money. In the recent period, there are many people who are wondering whether a secured credit card can improve their credit score. Even though the financial situation of every individual is different, generally speaking, this type of credit card can significantly improve your credit and the best part is that it is able to do this quickly.
These credit cards are tools that help people re-establish their credit. However, this doesn’t mean that just getting a secured credit card will solve all your problems. Namely, you can expect to witness improvement of your credit only if you keep a low balance and make payments in a timely manner. So, just like in the case of ordinary credit cards, discipline is a key factor. If you are able to achieve this, your credit score will be changed drastically.
We should not forget that the amount of your first deposit will directly affect the credit score too. Obviously, if you deposit more money into the bank account of the provider of secured credit cards, you can expect to get a better position at the credit bureaus. Keep in mind that most secured credit cards are not reported as secured to the credit bureaus.
The specific period of time in which the secured card is opened also affects the final outcome. For example, a secured credit card must have at least half a year of timely payments to get noticed and acknowledged by creditors. In addition, mortgage brokers and lenders focused on big loans set this length of time even higher (at least two years) and they also want to see a low balance on these cards. The fact is that secured credit card holders can witness huge increases in credit scores in case they stick to these tips and advice.
There are cases when individuals who use these cards have witnessed an increase of up to 50 points. Of course, we should not forget that any other negative items to your credit profile can have a negative impact on your credit too.
When trying to re-establish good credit, it is crucial to keep your cards balance low, pay your secured credit card in a timely manner and avoid filling applications for additional accounts.
Unfortunately, there are too many people with bad credit today, but the good news is that there is more than one way to solve this problem. Secured credit cards have already helped thousands of people after they were given a second chance. If you feel prepared to get a new start, then opt for a secured credit card. The effects that you will witness and the level of your credit improvement, depends on your financial discipline.