cards
There’s an age old saying that, “it takes money to make money.” Well, it also applies to credit cards and credit scores, as you have to have a card to rehabilitate your credit score. Of course, if your score is too low, then you will likely be rejected when applying for a card. So, what gives?

If you are unable to get a regular credit card at even a low limit, you may need to look into a secured credit card. Whereas a regular card is unsecured, meaning that the creditor has no collateral that they can recover if you default on the payment, secured cards have a deposit.

Usually, your credit limit is anywhere from half the size of the deposit you make to 100 percent. You leave that deposit with the credit card issuer, then make your payments each month like you would with a normal card. It’s a good idea to pay off your balance each month. If you near or reach your limit, the creditor can freeze the card and keep the deposit to avoid any losses.

By getting a secured credit card and responsibly making the payments each month, you can start the process of demonstrating to the credit bureaus and future lenders that you are capable of making payments on time.

As a result it is vital that you not miss any payments on your secured card. In addition, it’s important to make sure that the company issuing the card will be reporting to all three of the major credit bureaus (Experian, Equifax and TransUnion). That’s because if they aren’t, those bureaus will have no way to account for your improved habits.

If you are a good customer with your secured card, it will usually be transitioned over into an unsecured card after a couple of years. In addition, after one to two years of establishing good credit habits with the secured cards, you may be able to get offers from other credit card companies.

For now, though, all you need to worry about is getting a secured card and maintaining the account without missing any payments. From there, things will begin to fall into place so that within a year or two, you should be able to be well on the way to repairing your credit score and having a decent shot at getting any new credit cards or loans you need.

There are a lot of options, so I’ve reviewed several cards to help you narrow down the search. Check out my secured credit card reviews to find a card that works best for you.