It seems that in the United States we have grown accustomed to easy credit. Want to buy a car? No problem! Time to buy a house? Great get it financed 100% there’s no sense in saving any money towards a down payment. The 90’s and early 2000’s was a time of easy credit that was basically handed out to us, no questions asked. That time has passed.
Fast forward to today you want to purchase a home? Great! Where is your down payment as well as good credit score? Don’t have it? Sorry your not approved. Now that you actually need a credit score to qualify for a loan and things such as a house or car there are things that can be done.
For Americans that have credit blemishes, credit massacres, or no credit at all there is a solution. A way that you are basically guaranteed credit. These are called secured cards. I know, I know you have heard of secured credit cards, and you don’t want the kiddy secured card you want the grown up gold or platinum card right? Well if your reading this and are one of the people with blemished, bruised, or massacred credit your simply not ready for one of those cards. But don’t get down on yourself there are some great secured cards out there that will help you increase your credit score, and it time many can be changed from a secured card to an unsecured card.
Now there are lots of secured cards out there, but which one should you choose? You want to make sure that you choose a card that reports to all three major credit bureaus. What’s the point of working on building your credit if your card only reports to Trans Union but you purchase from a car dealership that pulls an Equifax report? All your hard work will have been wasted. Usually when you get a secured card from a bank they report to all three bureaus. The good thing about using a secured card from an actual bank is that generally with about a year of good standing with them the secured card will roll into an unsecured card with them. So if your looking for a secured card through a bank like Wells Fargo, or Bank of America simply go to their websites and apply.
Of course there are plenty of reputable companies out there that offer secured cards as well. Companies such as Orchard Bank. The good thing about deciding that your going to get your secured card from a card company as opposed to a bank is that they will generally open a card account for less money than a bank will. Generally if your going to open an account through a company you want to keep the account open for approximately a year, and apply for a unsecured card. Once you get the unsecured card you can close your secured account. Remember however never close an unsecured account once its open or your credit score could be affected by your debt to credit ratio.
So lets touch base here with the “secured” part of your secured card. A secured card basically means that you are putting up your own money as collateral. Most banks or credit card companies will open a secured card for somewhere between $200-$300. This means if you open an account and send the bank $300, then your credit limit will be $300. Now this is not a debit card. You have this money in your secured account, but you still have to make payments on your purchases every month. The Secured money is simply to protect the bank or card company. If you fail to make a payment, the money that you owe will be taken out of your secured account, and your card will be closed.
No building credit is not fast. Its something that is going to take time. Its going to take commitment. Commitment to yourself. Because when you build your credit you are building your future. A mortgage rate can vary widely based on your credit score. Someone with excellent credit can easily be paying $500 a month less than a person with poor credit purchasing the same home. And again these days credit is not easy to get, so why not give yourself a little credit with your own secured credit card.