Rebuild Your Credit History With a Secured Credit Card
If you’re hoping to build or re-establish your credit, consider some of our recommended secured credit cards below. Secured credit cards are perfect for consumers with bad credit because they don’t require an extensive or above-average credit history.
Not only that, secured credit cards report to the 3 major credit bureaus, making them the best (and in some cases, the only) way to build your credit quickly and consistently. But first things first - odds are you’re not totally sure what a secured credit card even is. Let Creditnet.com clear some things up about secured credit cards, beginning with the first question:
What is a secured credit card?
Glad you asked! A secured credit card is a credit card that you “secure” with a security deposit. Basically, you’re guaranteeing your credit line by putting up your own money. In most cases, you can set your own credit limit based on how much of a deposit you’re willing to put up, and your credit line will represent 70%-100% of your deposit.
The security deposit is available for the credit card company in case of delinquency, making them more likely to approve consumers with fair or bad credit. Secured cards also offer low interest for bad credit consumers that plan on carrying a balance (though we advise against it).
How is a secured credit card different from a prepaid debit card?
A secured credit card is just that - a credit card. With a secured credit card, you’re ACTUALLY receiving a line of credit, where as a prepaid debit card is just the act of putting YOUR money on a card and spending YOUR money. So, while both types of cards require the customer to put up some cash, the secured credit card is the only one that extends a credit line to the customer.
This is why we recommend secured credit cards over prepaid debit cards; you can build credit with a secured credit card. While they have their perks, essentially you can’t build credit with prepaid debit cards. (Not any meaningful credit, anyway.) With a secured credit card, you’re showing the credit card companies (and the 3 major bureaus they’re reporting to) that you’re ready to begin using credit responsibly. This is what makes secured credit cards some of the best credit cards for re-establishing credit.
Are secured credit cards good for students?
Actually, yes - secured credit cards are great for students for a lot of reasons.
First, since secured credit cards don’t require an extensive credit history, they’re especially useful for college students ready to build credit. You or your college student can watch credit build since secured credit cards often include credit score access, which is a serious lesson when it comes to building credit 101. (College - it’s all about learning, right?)
Second, secured credit cards for students can be advantageous to other student credit cards because it’s very unlikely that you or your student will get into debt. Since your credit line doesn’t immediately exceed your security deposit (though it can after an extended period of responsible usage), the danger of debt isn’t an issue. If you’re unsure about handing over a credit card to your son or daughter as they head off to college, consider a secured credit card for students to get them started.
OK - last thing: You’re POSITIVE I can build credit with a secured credit card?
YES! The best secured credit cards report directly to the 3 major credit bureaus, so you’ll begin building your credit immediately after paying back your first monthly payment.
Consider the secured credit cards above, or take a look at some more options for bad credit credit cards on Creditnet.com.