SECURING CREDIT

Part II

     In my last post we began talking about Secured Credit cards.  I am sure there are still a lot of questions about them.  

     Where can I get one?

     If you are a member of a credit union, ask them first.  At least half of the credit unions offer secured cards for their members and don't charge as much for them.  There are other options for getting secured credit cards.  The website BankRate.com has a list of secured credit card issuers ,  Not all banks offer secured cards.

What will it COST?

     You will need to put $300 to $500 as a security and then there will be fees as well.  Look for a card that does not require an application fee.  Most will require an annual fee. you will want to look for the lowest one.  look closely at the fine print, you don't want to be surprised by hidden fees down the road.  A good company will treat you like a REAL customer not like a bum.  They will not smother you with fees or require an "insurance policy".  They will also make it possible for you to graduate to an unsecured card after making on time payments over a period of time.

How long will it take to improve my credit?

     If you use this line of credit wisely your score will get a little better each time you make an on time payment.  If you make smaller purchases and pay off the balance each month it will be best for your wallet. if you can't pay the entire amount be sure to keep your balance LOW.  Your credit score reflects how much OPEN credit you have.  If your limit is $300 and your balance is $298 it will show that you have only $2 AVAILABLE credit.  After you make on time payments the bank will graduate you to an unsecured line of credit.  They may do this by increasing your limit in small amounts to see how well you handle this or they may go straight to an unsecured card.  This process should take no more than a year.  

Summary

     A secured card will show that you are rebuilding your credit if you use it wisely.  Once you have had one for a few months a lender can see how well you are doing and it may make a big difference in the type of car loan you will get.