One way to start to rebuild your credit is to apply for a secured credit card. With a secured credit card you will be required to maintain a savings account. The credit card company will issue you a line of credit based on the amount you deposit into that savings account. The required savings deposit for a secured credit card may range from a few hundred to several thousand dollars. The credit line for your new secured credit card will be a percentage of your deposit, typically 50 to 80 percent.
You may also may have to pay application and processing fees to obtain a secured credit card. Beware, this can sometimes amount to hundreds of dollars. Before you apply for a secured card, be sure to ask what the total fees are and whether they will be refunded if you’re denied a credit card.
In addition to the application fee, a secured credit card usually requires annual or monthly service fee ranging anywhere from $30 to $50 to $150! A secured card also has a higher interest rate than an unsecured card.
Once you’ve obtained a secured credit card your purchase and payment activity will be reported to the credit bureaus monthly, thus making it a good way to start to improve your credit score and rebuild your credit. When you use this secured credit card for a purchase it is not deducted from your security deposit. You must make a payment to the credit card company for your purchases. Be sure to pay your bill for your purchases on time every month! If you don’t your credit score will be further negatively affected!