Would you like to repair your credit? If yes, a secured credit card can help you. On this post, we present practical suggestions on how you can use a secured credit to achieve your goal.

Get approved despite bad credit.

If you have a low score, you may not qualify for standard credit cards as most issuers require at least an average rating. However, a secured card is especially designed for people with bad credit and no credit history. This type of credit card is a special tool for establishing and rebuilding credit.

Prepare for a deposit.

Approval for a secured credit card is not based on the customer’s credit history. Instead, it is based upon the customer’s capability to submit the required deposit. The deposit gives the credit card issuer assurance that in case the cardholder defaults from payments, funds are readily available to pay the debts. Hence, the security deposit also defines the range of the card holder’s limit.

Ensure credit reporting.

How can a secured credit card be a tool for establishing and repairing bad credit? As your payments are reported to the credit bureaus, you are proving your capability to manage debt. This is why it’s important to choose a credit card that provides credit reporting service. Remember that not all cards advertised as a bad credit credit card may include this provision.

Use your secured credit card.

Owning a secured credit card will not be beneficial if you will not use it for payment. Keep in mind that you need to show that you are capable of managing debt. By using your secured card and paying off your charges on time, you can raise your credit score one step at a time.

Submit payments on time all the time.

Payment history makes up 35% of your personal credit score so it’s very important to be prompt in paying your credit card bills. Even a single late payment can hinder your score from increasing or may cause your score to drop even more.

Request for an upgrade.

After six months or a year of using a secured credit card and paying on time, you deserve to have the account upgraded to an unsecured account. This way, you don’t have to maintain a security deposit and you can lower your interest rate. Some secured credit card issuers will give upgrade after 12 months but if you have been consistent for the past 6 months, you can try requesting for an earlier transition.