Will secured credit cards build credit history?
Question by deedee: Will secured credit cards build credit history?
How long would it take if I used this method to build my credit history? Will I be eligible for regular credit cards if after this? Im trying to build my credit up and fast! I have no credit history right now.
Best answer:
Answer by Frank
Yes, they will, if you pay on time. Don’t pay late. Don’t pay late.
And don’t think that using them more will make youre credit better. Your credit report shows the number of times you paid late, the amount you currently owe, and the maximum you ever owed on that account.
If you use the card one month and then pay it off and stick it in a drawer for 11 months, that will look exactly the same one your credit report as if you used the card every month for 12 months and never paid late. So don’t fool yourself into buying more stuff to help your credit, because it won’t make a bit of difference.
Add your own answer in the comments!
Yes secured credit cards are a great way to build credit. Once you get the card make sure you use it and pay off the balance each month. Usually after 6-12 months you should start establishing credit as long as you pay the card on time and use it.
The credit limit on most secured credit cards is equal to the amount you have on deposit with the card provider. So, increasing the amount of the deposit would increase your credit limit on your secured card. The typical card requires a minimum deposit of $ 500, but the deposit can be as much as $ 2,000 to $ 15,000, depending on the card issuer.
What you — and most secured credit cardholders — really want is to graduate from a secured card to a credit card. The secured card is helping you build a credit history. You need a good payment history over a long enough time period before the lender will approve your credit card application.
According to the Bankrate feature “10 questions before getting a secured credit card,” the average secured credit cardholder will qualify for the card provider’s unsecured credit card after a year of making timely payments on the secured card. If you want to try to beat the average, call your card provider and ask about their standards.
You want to ask first, because every time you apply for a credit card, your loan application triggers a credit inquiry on your credit report. The inquiry stays on your credit report for two years, but it is only used in calculating your credit score for one year. For more details on credit scoring, download the myFICO.com publication “Understanding Your FICO score.” Also, be sure to order a copy of your free credit report.