If You Have Bad Credit, No Credit or Want to Build Credit Apply for Secured Credit Cards

If you do not have a credit history yet or your credit scores have taken a hit, then it will be difficult for you to get a credit card. Your only option is to get a secured credit card, for which you will have to provide a security deposit. You would be allowed to take credit up to the amount of the security. After taking a secured credit card, if you keep paying on time, then your issuer might give you a higher credit limit without a security deposit for it. You will also have the option of increasing your credit limit by depositing more money. If you are a credit union member, you might be able to get a secured credit card at a lower interest rate and without annual fees.

However, you have to be careful when taking a secured credit card, as some card companies exploit the vulnerability of the customers. They may ask you to take an insurance policy or charge very high fees. That is why you should always check interest rates and fees before you decide to get such a card.

Make sure the issuer reports to credit bureaus

You should ask your credit card issuer if it reports to the three major credit bureaus. If it doesn’t, then it will not show up on your credit report. Your credit history will remain the same in that case. If you get the card from an issuer who does report to credit reporting agencies, then you will find offers of unsecured cards after a few months if you keep making payments on time. Another factor that you should consider is the time after which you will qualify for an unsecured card from the same issuer.

Find out the terms of the deposit

You should also ask for all information relating to the security deposit. You should know the type of account the deposit should be in and the interest that you will get on it. Usually, you would be allowed to keep it in a CD, money market or savings account. Find out how long the deposit has to be kept in the account. Usually, the issuer will want to keep the deposit long enough to cover any charges even after you have got an unsecured card.

If you want to improve your credit history, you should regularly make payments on the card every month instead of carrying the balance forward. The secured credit card will also ensure that you do not spend more than your means, and it will help you in saving money.