How to Rebuild Credit with Secured Credit Cards
By WISE BREAD
Whether you’re just coming out of a divorce, filed for bankruptcy recently, or are considering bankruptcy because of your poor credit history, you’ll need a solid credit repair plan to help you get your finances back on track. Rebuilding credit can take several months or years, depending on how bad your track record is and how much debt you’re carrying. The good news is you can rebuild your credit with a secured credit card. Unlike prepaid and debit cards, a secured credit card is reported to the credit bureaus just like your typical credit card and gives you a chance to improve activities on a fresh new line of credit.
Use these tips to rebuild credit with secured credit cards:
1. Analyze your budget. Secured credit cards will require a refundable security deposit to establish your credit line. This can be anywhere from $250 to $5,000 or more, depending on the credit card issuer. You’ll need to take a close look at your personal budget to determine what type of deposit you can, and are willing, to make. Think about how much of an impact you need this credit line to have for your credit repair project. If you have a very low credit score and have had a poor credit history for a few years, you may benefit from a secured credit card with a higher credit line.
2. Comparison shop. You’ll find a number of credit card websites that outline current rates, special offers, and key benefits of certain secured credit cards over others. Take some time to look for unbiased reviews of different secured credit cards and a closer look at the terms and fee requirements of each. Some of the key things to look for when comparing different cards: annual fees, application fees, security deposit requirements, APR, and credit line increase options.
3. Talk to a credit union. Many credit unions offer low-interest secured credit cards and can also be a valuable resource for anyone looking to rebuild their credit. Set up an appointment with a credit union in your area to find out what their current secured credit card rates and terms are, and what options you have for credit repair.