Making your credit better can be easy, fun, and rewarding altogether. It does not take a long time as many may think for you to start seeing your three digit FICO score number rise.
You can beautify your credit report wit some simple credit habits that will not break you. With that, here is how to get a secured credit card and how it can improve and strengthen your overall credit reputation.
Secured credit card
How and where
Getting a secured credit card through a bank or credit union is one of the easiest ways to get a credit card. All that you have to do is pay the money up front for the amount of the card you desire. Or, you may be required to set up a savings account withholding the amount of money you desire the card to total.
Secured credit cards usually start around the $250 range. If you think that $250 is a lot of money, relax. You do not have to go and get one today or tomorrow. However, if you start saving $21 a month, at the end of the year you will able to purchase your first secured credit card. If $21 a month still seems like much, try putting back $5.25 a week.
When using your secured credit, be sure to only make purchases with it that can soon be paid off. Use it for fun purchases like music albums, your favorite movie(s), favorite book, or a nice meal outside of home.
Making minor purchases as such will enable you to carry a low balance on your secured credit card. A good rule of thumb is to only use up to 30% of the secured credit card's total amount in a single a month.
Keeping a balance at 30% or lower can be easy on your budget when it comes to paying bills monthly. It also helps your credit score by showing that you have a good awareness of credit usage.
On time payments
When your monthly statement arrives, be sure to check it thoroughly. Make sure that you make the minimum payment required, and do so on time. If you are mailing in a payment, make sure you mail it in time for it to reach the bank's destination before the due date.
Ensure that you have enough money in your bank account or on hand to make the minimum payment. If the payment can be made at a bank near you, go to the bank and pay it versus mailing it in.
Making your payment on time will keep you out of the penalty zone. It will strengthen your relationship with the bank of the secured credit card and improve your credit score in the payment history category. Also, when your credit report is reviewed, you will have a lot of good occurrences for on time payments.
Though your balance will be at 30% or less, you do not want to carry the balance for too long. However, you do want to carry the balance on the secured card for a little while.
A good amount of time to carry a balance before paying it off is about 90 to 180 days. This gives you time to build some on time payment occurrences for your credit report.
Paying off your card’s balance also gives you room to ask for a credit increase without having to add more money to the account. However, it is good to wait until you have had the secured credit card in good standing for a consecutive period of 12 months.
Never get rid of your secured credit card. Keep it open and use it periodically. This will increase your credit score on a yearly basis as it will strengthen your length of credit history.