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Rebuild Your Credit Using a Credit Card

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Find out how secured credit cards can improve and rebuild your credit history

It is not a myth, you can rebuild your credit using credit cards.  Yes, there is that vicious cycle of needing good credit to access credit cards, but if you look hard enough you can find there are many options available for just this purpose.  So let’s take a look and rebuild your credit.

Use a secured credit card to rebuild your credit history.

There is a difference between a secured credit card and an unsecured credit card.  Identifying that difference is what will help you rebuild your credit.  A secured credit card is different due to the requirement of paying a deposit.  This deposit is your cash collateral in the event of a default payment.

The credit limits for a secured credit card are often set with the amount of your security deposit or a percentage of it.  This insures that the card holder is unable to charge more than the initial deposit can cover.  However, you can add more to your security deposit to access a higher credit limit.  This higher limit is also achieved by remaining consistent with your monthly payments for a 6-12 month time period.  Here are a couple of secured credit cards that will help you rebuild your credit.

First Progress Platinum Select MasterCard® Secured Card

This credit card requires a credit score of 430 or higher.  This card offers its member’s a 14.99% APR. Bonus, it reports regularly to all three major credit bureaus making it a perfect fit to rebuild your credit.

Capital One® Secured MasterCard®

The Capital One secured MasterCard requires a credit limit of 441 or higher.  The regular APR is 24.9%, but there are no processing or application fees involved.

Demonstrate proper usage of your secured credit card.

Using a secured credit card is the best way to rebuild your credit.  However, this is going to require more diligence and effort.  These cards come with drawbacks such as annual membership fees, application fees, deposit fees, processing fees, cash advance fees, late payment fees, and over the limit fees.  Plus, a secured credit card will give you a higher interest rate.  You must use the card responsibly and follow certain procedures to ensure you are benefiting your credit history.

All payments using a secured credit card must be made on time.  Remember, you are trying to rebuild your credit in a positive way, so get rid of those old habits of late payments.  Don’t charge more than you know you can afford to pay.  Using your credit card responsibly is the best way to rebuild your credit history.  Try using it for small purchases once a month on gas or groceries.  When the bill arrives, pay the card immediately.  All of these steps are important and the best way to rebuild your credit.  One you have master the better spending and payment habits you can graduate back to those fun unsecured credit cards.

 

Credit Report: What Information Does it Store?

The Best Credit Cards for Rebuilding your Credit Score

How to Repair My Credit

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