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How to use a secured credit card to build your credit

Secured credit cards are a great option for people who are establishing their credit history for the first time. However, not all secured cards are created equal.

A secured credit card can help you establish or rebuild the credit you need. Here’s the full scoop on using secured credit cards to build credit.



Will a secured credit card build credit?


Secured credit cards may help build or establish your credit score if you make consistent on-time payments, avoid late fees, and keep your balance low. If you are using a secured credit card for the purpose of establishing or improving your credit score, be sure to confirm that the credit issuer will report your activity to the three credit reporting bureaus.


Most secured cards are reviewed periodically. If the review is successful, you may qualify to move to an unsecured credit card and receive a refund of your collateral deposit. Eventually, responsible credit behavior can help you qualify for lower interest rates on mortgages, cars, and other big-ticket items. When handled properly, using a secured credit card to help establish or rebuild your credit can demonstrate to your credit card issuer and to the credit reporting agencies that you are a responsible consumer who used credit wisely.


How can I help build my credit with a secured credit card?


You can help build your credit with a secured credit card by developing these habits:


Make payments on time: On-time payments are one of the main things that will help you build a good credit score.


Watch your credit limit: Credit score bureaus also closely watch how close you are to using up your credit limit. Try to keep the balance on your cards at less than 30 percent of your total credit limit.


Secured credit cards are specifically designed to help students and other people with no credit history start building a good credit score. They come with bigger restrictions than regular credit cards, but with responsible use, they can help you build up your credit.

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