Are you a new credit user? Maybe you have damaged credit?
I have experience with both.
My credit score has ranged from 580 to 680 in the 12 years that I have been borrowing. Good credit habits are easiest way to build new credit or to repair damaged credit. You need time. Time to build a positive credit history; 12 to 18 months of positive credit history at a minimum.
You can use a secured credit card to help build a positive credit history.
To understand a secured credit card, it might be helpful to understand an unsecured credit card. With an unsecured card, the lender depends on your promise to pay. If you decide to break your promise, they do not have an asset that they could seize to pay the debt.
With a secured credit card, an asset is used as the promise to pay. A mortgage is an example of a secured debt. With a mortgage, if you decide to stop paying your bill, the lender can take possession of your home and sell it to satisfy your debt. A secured credit card works in the same way.
When you apply for a secured credit card, you deposit funds with a bank and they issue a credit card in your name. Because the card is secured by an asset, your cash in this case, a lender is willing to approve someone with no credit history or damaged credit history. This is a great way for young adults to start building a positive credit history.
I would recommend looking for a secured credit card with a credit union first. They typically issue cards with little to no fees for their members, if you are not a member with a credit union, you can and should compare credit card fees before opening a new line of credit.
Are you ready to build credit wisely? Click here to see the card I recommend as the best credit card for young adults. The card allows you to get your credit score free each month.
Have you used a secured credit card to help you build credit or repair a damaged credit history?
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