Rebuild Your Credit With Secured Credit Cards

A bad credit record can make it nearly impossible to get a loan or a traditional credit card.  So how can you rebuild you credit without access to credit?  The answer is a secured credit card.  In this article we'll go over how to acquire one, what it does for you, and what to watch out for.

A secured credit card is the perfect tool for establishing or repairing credit. Anyone can be approved for a secured card, you provide money up front so there is no risk for the lender. A predetermined amount is deposited into an account by the borrower. This is your collateral in case you default on your payments. If you don't pay, the creditor takes the money in the account.

The exact amount you will need to deposit will depend on the terms of the card issuer. Some may require $200 or less while other may need a larger secured deposit. Your credit limit should be equal to the deposit amount you agree to.

When comparing secured cards be sure the issuer will report your on time payments to the credit bureaus. If this is not the case keep looking, this card won't help your credit. You need your payments reported accurately and regularly to see your credit improve.

Make sure you read all of the terms and conditions before agreeing to any card contract. Some companies will charge very high interest and fees to take advantage of you credit situation.

The Truth in Lending Act (TILA) states that by law you are required to receive your all terms and conditions in writing. Read and understand these conditions. Never agree to terms over the phone. Never agree to a card that has a credit limit less than your deposit amount.

After finding a good card be sure to use your card responsibly. Make small purchases and pay off your balance in full each month. This will save you on interest and create positive change to your credit score.

A secured credit card is a great way to build your credit if you have bad or unestablished credit. 6 months to a year of on time payments can be very beneficial to your credit. Just be cautious and be aware that there are predatory lenders out there.

Best of luck.