Secured Credit Cards To Improve Credit Scores
Secured Credit Cards are the same as unsecured credit cards but secured credit card companies require that you put a deposit and they will give you a credit limit equivalent to the amount of deposit you put down. For example, if you give a secured credit card provider a $500 deposit the secured credit card provider will give you a credit limit of $500. You can use the secured credit card up to the $500 credit limit and the secured credit card company will charge you interest on the amount of the unpaid balance. You will get a minimum payment due every month from the secured credit card company and interest will accrue on the unpaid balance. For example, if your credit balance is $500 dollars and your minimum monthly payment on your secured credit card is $25.00, the interest will be charged on the $500 credit balance you have on your secured credit card even though you gave the secured credit card company a $500 deposit. The $500 deposit is used as collateral in the event you default on your secured credit card payment agreement.
Secured Credit Cards Report To Credit Bureaus
You need to make the minimum monthly payments on your secured credit cards every month because secured credit card companies report your payment history to all three credit reporting agencies: Transunion, Experian, and Equifax. If you are late on your monthly secured credit card monthly payment, your secured credit card company will report it as a late payment on your credit report and that will plummet your credit scores.
Secured Credit Cards: Best Way Of Re-Establishing Your Credit
Secured Credit Cards to improve credit scores are the best tools to re-establish your credit after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. Once you file bankruptcy or have a foreclosure, your credit scores will plummet more than 100 points. By getting secured credit cards to improve credit scores, your credit scores will go up and as your secured credit card payment history ages, your credit scores will improve more. Each secured credit card should improve and boost your credit scores by at least 20 to 30 points. I strongly suggest that you get 3 to 5 different secured credit cards, each with a $500 credit limit for maximum credit optimization.
Credit Limit Increases With Secured Credit Cards
As you develop a timely payment history with your secured credit cards, the secured credit card company will most likely increase your credit limit as time goes by without having to put additional deposit. For example, if you have a $500 secured credit card limit with a $500 deposit with a secured credit card company and have established a good payment history for at least a year, the secured credit card company can boost your credit limit to $1,000 without asking you to fork over an additional $500. Eventually, your secured credit card credit limit will eventually keep on increasing and the secured credit card company may even refund you the initial $500 deposit you gave. Your secured credit card will then turn into an unsecured credit card. After developing a good payment history with no late payments, you can then apply for other unsecured credit cards. Many consumers with a prior bankruptcy and foreclosure have credit scores of over 700 FICO by using secured credit cards as a tool to rebuild their credit and boost their credit scores.