Clawing Back from Bad Credit Hell

Written by Stephanie Halligan on August 13, 2013

Are you struggling to qualify for a credit card or boost your credit score? You may feel like your poor credit history or lack of credit history is holding you back, and it may seem impossible to get approved for something as simple as a credit card.

Regardless of your credit past, you still have options. If you’re looking to repair or establish your credit, one of the best solutions is to apply for a secured credit card. Many credit unions and banks offer secured credit cards, and you can use a secured credit card just like a traditional credit card. Secured credit cards are particularly convenient for transactions where cash or debit cards are not accepted, like renting a car.

A secured credit card requires you to deposit cash upfront that is used for your line of credit. The security deposit helps lenders feel confident that you will pay back the money - regardless of your credit history. Most secured credit cards ask for a deposit around $500, and your credit limit will be equal to the amount of your deposit or, in some cases, a percentage above your deposit amount. Some banks allow you to add to this initial deposit and some banks may even add to your credit line if you’ve demonstrated positive payment behaviour.

Beware of fees associated with secured credit cards. Even if your financial institution offers this credit option, it may be wise to shop around. Some secured credit cards charge an application fee and the annual fee for a secured credit card can vary greatly. You would hate to have your line of credit eaten away by fees!

Not only is a secured credit card an easier way to get a line of credit from your bank or credit union, this card can also help you build or repair your credit. Activity on your secured credit card is reported to the major credit bureaus, so any positive usage of your line of credit will be reported positively on your credit report. Be sure that you make consistent, on-time payments with your card. If you default on your secured credit card, as the card issuer could keep part or all of your original security deposit and you could do damage to your credit score. Use your secure credit card responsibly and you may be on your way to a better credit score (and more credit opportunities) in the near future.

Posted Under: Credit
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About Stephanie Halligan

Stephanie is the founder of The Empowered Dollar, a site dedicated to helping millennials to fix their finances and find their stride in money and life. When she's not blogging, Stephanie is designing school curricula and online games to teach students about smart money management.


Aug13

Are you struggling to qualify for a credit card or boost your credit score? You may feel like your poor credit history or lack of credit history is holding you back, and it may seem impossible to get approved for something as simple as a credit card.

Regardless of your credit past, you still have options. If you’re looking to repair or establish your credit, one of the best solutions is to apply for a secured credit card. Many credit unions and banks offer secured credit cards, and you can use a secured credit card just like a traditional credit card. Secured credit cards are particularly convenient for transactions where cash or debit cards are not accepted, like renting a car.

A secured credit card requires you to deposit cash upfront that is used for your line of credit. The security deposit helps lenders feel confident that you will pay back the money - regardless of your credit history. Most secured credit cards ask for a deposit around $500, and your credit limit will be equal to the amount of your deposit or, in some cases, a percentage above your deposit amount. Some banks allow you to add to this initial deposit and some banks may even add to your credit line if you’ve demonstrated positive payment behaviour.

Beware of fees associated with secured credit cards. Even if your financial institution offers this credit option, it may be wise to shop around. Some secured credit cards charge an application fee and the annual fee for a secured credit card can vary greatly. You would hate to have your line of credit eaten away by fees!

Not only is a secured credit card an easier way to get a line of credit from your bank or credit union, this card can also help you build or repair your credit. Activity on your secured credit card is reported to the major credit bureaus, so any positive usage of your line of credit will be reported positively on your credit report. Be sure that you make consistent, on-time payments with your card. If you default on your secured credit card, as the card issuer could keep part or all of your original security deposit and you could do damage to your credit score. Use your secure credit card responsibly and you may be on your way to a better credit score (and more credit opportunities) in the near future.

About Stephanie Halligan
Stephanie is the founder of The Empowered Dollar, a site dedicated to helping millennials to fix their finances and find their stride in money and life. When she's not blogging, Stephanie is designing school curricula and online games to teach students about smart money management.