Dear Creditnet: I got a secured credit card from Capital One over a year ago so I could finally begin rebuilding my bad credit. Since then, my FICO scores have risen from the low 500s to around 675, but I still don't have any other credit cards or loans in my name. My question is how much longer should I continue to use this secured credit card? Is it time to finally try to get a better card? -Ryan P. from MI
Answer: Congratulations on the huge increase in your credit scores Ryan! You're certainly not stuck in the "bad credit" range anymore, so give yourself a big pat on the back for all your hard work. In fact, if your FICO scores are really in the upper 600s, you've moved well into the "fair credit" range now and are getting dangerously close to reaching the good credit threshold of 700.
Nice work! I'm going to assume that this Capital One secured credit card you're referencing has an annual fee. If it does, I would seriously consider closing the card and moving on as soon as you're able to get approved for a fair credit credit card with better terms, a lower annual fee, and perhaps even a rewards program. Based upon where your current FICO scores stand, I don't think getting approved for a better card should be a problem for you at this point. Also, don't be alarmed if your credit scores take a minor hit after you close the secured credit card.
This could happen, but don't let it bother you, because your scores should bounce back and hopefully continue to improve in the long run. Just focus on continuing to do what you've been doing right with the secured card for the past year. Keep your credit utilization low, always pay on time, and never carry a balance. If you can continue to do those things, your FICO scores could very well rise into the 700s quite soon. Good luck!