What is a secured credit card?
Unlike regular credit cards (unsecured credit cards), secured credit cards are bankrolled by you, not the card issuer. That means to open an account you’ll have to pay a security deposit that also serves as your credit limit, minus the fees. (If you deposit $400, then your credit limit is roughly $400.)
That makes secured credit cards far less risky for lenders. In turn, they don’t require an excellent credit score to qualify, and are a great tool for building or even repairing your credit history. If you use one correctly, you’ll also improve your credit score enough to qualify for a credit card with a rewards program.
No matter what type you have, always treat your card like cash
It doesn’t matter what type of card you have or what your credit limit is: Don’t spend more than you can pay in full every month. If you carry a balance from month to month, you’ll risk paying a bunch on interest charges and crippling your credit score — both of which can be a severe blow to your financial health.
How can I rebuild my bad credit?
Using a credit card is a great way to start improving your credit score. It takes time, but using your card for small purchases and paying your bill in full every month can rebuild your credit history, a record of your borrowing and repayment history.
Read our guide to building credit for more ways to safely improve your credit score and reach your financial goals.
What is a good credit score?
FICO® and VantageScore are the two most common types of credit scores. (There are several types of credit scores.) Each one has a slightly different rating scale, but a score of 700 and above is generally considered to be good. If your score is greater than 800, then you’re in excellent shape.
Keeping a healthy credit score is incredibly important in today’s economy. Having a low score can impact your ability to qualify for the loan you need to buy your first home or the vehicle you need to commute to work. And if you do qualify, having a low score means you won’t receive the best rate that you could get.
How can a college student build credit?
If you’re a college student without a lengthy credit history, you have two primary options for building credit: secured credit cards and student credit cards.
Student credit cards generally have higher credit limits — and many have rewards programs that allow you to earn cash back, just like some of the top rewards cards on the market. But if you don’t have any credit history at all, you might not qualify.
That’s where secured cards come into play. They’re ideal if you have zero experience managing credit because they present less risk to the lender and have less strict qualification guidelines.
How do I get my credit score for free?
- Exceptional: 800+
- Very good: 740-499
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
How do you check your credit history?
Request a free copy of your credit report from AnnualCreditReport.com. Look for any inaccuracies as well as areas where you could improve.
How soon is too soon to apply for another credit card?
There’s no hard-and-fast rule on when it’s too soon to apply, but six months is a good place to start. If you have excellent credit and a solid payments history, there’s a chance you could be successful in as little as two to three months. If you have fair credit (669 for FICO®), waiting a year or more is your safest play.
How do credit inquiries work?
Every time a lender reviews your credit history because you’ve applied for credit (like an auto loan, mortgage, or credit card), a “hard inquiry” is generated. Unlike “soft inquiries,” such as pre-qualification checks with certain credit cards, hard inquiries can impact your credit score and stay on your credit report for up to two years.
The level of impact varies depending upon several factors, including the time since your last inquiry, how many accounts you have, and the length of your credit history. Some people with a robust credit history might not be affected at all. For others, it could slash five or more points depending upon their credit report.
The more inquiries on your account, the more lenders view you as a risk. For example, FICO says that people with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy.