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Applying for Secured Credit Card

By George Hauser
Published: Sunday, November 29th, 2009

When you decide to apply for credit, one of the very first things you should think about is your financial readiness. This is because there are costs when you borrow money. For instance, you should at least have a job and a stable source of income so that you can repay the money you borrow from creditors. 

You should also be able to realize the importance of your credit report and your credit score. When you have read up about these things, it helps to consider different credit score tips created to increase your credit score in a legitimate way. Other credit score tips are there to help you when you have bad credit report. As you repair your credit report, you can also save what’s left of your credit score. 

Since the credit score is hugely dependent on the contents of your credit report which is then dependent on your proper handling of credit, there is great significance in being updated with your credit report. You don’t have to worry about the costs of having a copy of your credit report because the three most reliable credit bureaus give consumers a free copy once a year. This is enough to check your credit standing. 

One of the many credit score tips that young credit holders who are just beginning to build good credit says that they should apply for secured credit cards. If your final option is to get revolving credit, here’s why a secured credit card is a good choice. 

Secured credit card

Most credit report tips given to people who have bad credit which they are trying to repair is to open secured credit cards. This special kind of credit card is used just like other credit cards. You can charge items with it. However, it can help you control the amount of money you owe. When you get a secured credit card, you are required to make a deposit against the credit limit. 

The credit limit is usually 50% or 100% of your deposit. When you default on your account, your creditor will have to use your deposit. Your deposit will define your credit limit. Most commonly, there are other fees you have to pay when you apply for a secured credit card. 

Take advantage

Many credit score tips remind credit holders to make their payments on time. A huge factor in the decrease of credit score and the accumulation of debt stems from delinquencies. With a secured credit card at hand, you can improve your payment habits and this is helpful when you are on the way to repair a broken credit report. 

Before you apply for a secured credit card, you should notify your creditors so that they can file a report to the three credit bureaus. Make sure also, that the only reason why you want a secured credit card is to reestablish your credit report by building a positive credit history. 

When to get secured credit card

You can ask your credit card company of the process involved in turning your ordinary credit card to a secured one. Most of the time, providers would allow the transition if you have an account that’s been open for one or two years already. But your current credit card account must be clean in payments. You can also apply for a secured credit card from a different company anytime you need to. 

Remember how most credit score tips go, don’t open too many credit card accounts in a short period of time and especially when you get denied the first couple of times. When this gets to your credit report, creditors can read it as a desperate means to escape current credit.

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