How A Secured Credit Card Helps Your Credit Report & Score

Your credit score is the reflection of your credit worthiness and how you interact with financial institutions.  In other words, if you have no credit cards or have never applied for credit, you will have no credit report and score.  If you just went through a bankruptcy and you want to build your credit history back up, a secured credit card is the perfect way to prove your worth again. Your credit report begins by documenting your first loan, credit card or automobile loan.  The score measures your payment history.  When you pay your bills on time, you will have a good credit score, and when you are delinquent or stop payment on a loan or credit card, your score will be on the lower side.

When you have a low credit score or no credit score, there are other ways you can start your credit history and bump up your score. We highly recommend opening a secured credit card as a good first step.  A secured credit card begins involves advancing your own money towards the credit limit, and thus are easier to get approved for.  You can use the secured credit card exactly as you would a normal credit card – any recipient or vendor wouldn’t know the difference between it and a traditional credit card. But, to fast track ensuring your credit score is positively impacted, we recommend paying the total monthly bill, or if you choose to have a balance, it needs to be very low.  For example, if you have a $300 dollar secured credit card and have maxed it out, when the bill comes, you should pay the entire $300 balance or at minimum, $275.  This way, your credit report reflects the balance of that credit card as $25.  Keeping a low healthy balance on your secured credit card is very important. The healthier the balance, the higher your score will be.

There are a few secured credit card on the market.  We highly recommend the following:

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