Restoring your credit can be an uphill battle, but there are some options available to help you out along the way. You may be surprised to learn that you can use your secured credit card as collateral to finance a car repair or other large purchase that you can’t otherwise afford with your current financial situation. Read on to find out how this option works and what the benefits and drawbacks are to using it for financing.
7 Things To Know Before Applying For A Secured Credit Card
A secured credit card is for people who have poor or no credit and need to start building their credit score. Here are some things you should know before applying for one.
1. Do I qualify for a Secured Credit Card?
If you don’t have any credit, or if your credit history is not good, it can be hard to qualify for an unsecured (regular) credit card. To get approved for most credit cards, you will need a credit score of at least 620. However, certain secured credit cards will approve applicants with lower scores.
2. What Is Credit Restoration?
Credit restoration services help consumers with bad credit improve their credit scores so they can qualify for better interest rates on loans and other financial products.
3. How do Credit Restoration Services Work?
Many companies offer various types of credit restoration services. Some focus on helping consumers rebuild their credit by providing them with new credit accounts while others work to remove negative information from your credit report.
4. All Credit Restoration Companies Are Not Created Equal
When choosing a credit restoration company, make sure you understand how long it will take for them to work on improving your credit score and what type of results they guarantee.
5. Credit Card Minimums Can Hurt Your Credit Score
If you are approved for a credit card with a low credit limit, such as $500 or less, your credit utilization ratio could be too high which can lower your credit score.
The best way to start rebuilding your credit is by establishing good financial habits such as paying bills on time and making regular payments toward any debt that is owed. Credit restoration companies can help you improve your credit score, but they are not a substitute for taking responsibility for your finances.
6. Credit Restoration Companies Can Help You Get Approved for Credit Cards
Many credit restoration companies offer services that can help you get approved for unsecured credit cards even if you have bad credit or no credit history at all.
7. The Right Way to Use Your Secured Credit Card
A secured credit card is different from an unsecured (regular) credit card in that it requires a cash deposit as collateral in case you don’t pay your bill on time.
When using your secured credit card, it’s important to make sure you pay off your balance each month and avoid making purchases with high-interest rates, such as buying electronics or appliances on your card.
Best Secured Credit Cards
Like most things in life, finances are always better when handled with care. This applies especially when you’re purchasing your next car. Having bad credit is no reason to avoid purchasing your next vehicle, however. There are still plenty of loans out there designed specifically for those with less-than-stellar financial histories and for individuals who just need some time to work their way up in terms of financial responsibility. If you’re one of these people, then a quality auto loan may very well be within reach. The trick is finding one that fits your needs. Fortunately, we’ve done all of that legwork for you
How Do I Pick the Right Secured Credit Card?
To pay for your next big purchase, such as your car or motorcycle repair, you may want to get a secured credit card. Secured cards require you to put money down on it upfront as collateral. If you default on your payments or miss any payments then they are entitled to take that money and apply it towards what you owe them. While these types of cards aren’t intended for long-term use they are good if you need some cash quickly and can be used again after paying off your balance in full at which point you will likely be issued a new account number by the bank so that no one else can use your personal information again. There are several things to consider when choosing a secured card including interest rates, fees, annual fees, rewards programs, and customer service. Before applying for a secured credit card read through all terms and conditions carefully before signing anything or giving anyone your personal information.
How Do I Get Started with Applying for A Secured Credit Card?
Getting your first credit card as an adult is exciting—and daunting. What if you charge too much and can’t pay it off, or worse yet—make late payments and damage your score? It’s certainly not easy to get started, but there are some things you can do that will make applying for your first card easier. For example, choose a low-interest-rate, no annual fee option.
Check out all of your options before choosing one. Make sure that you know exactly how much money you want to spend on it each month so that there aren’t any surprises when you receive your statement at the end of every month. You should also consider how you plan on using it and whether or not there is an option for cashback rewards. Once you have done all of these things, apply!
If approved, don’t forget to use your new card responsibly by paying off your balance in full each month.
