Applying for Secured Credit cards
Secured credit cards are the cornerstone to rebuilding your credit rating. They allow you to immediately begin rebuilding your credit. A fresh start can be made within 6 to 8 weeks and you can be on your way to a better credit score.
How do they work?
Secured credit cards are just like they sound, secured. You will provide a deposit of between $500 to $5000 dollars which the credit card company holds as security for this credit card. Whatever you decide to put down for a deposit becomes your credit limit.
You provide $1000 deposit and you get a credit limit worth $1000
This cash usually earns some interest as long as it is on deposit. You will not get rich of the interest as it is normally under 1% annually.
It usually takes 6 to 8 weeks for the credit card to arrive. Once it does you activate it and it works just like a normal credit card. You can use it for any purchases anywhere in the world.
Rules to follow
The first rule is: Never go above the credit limit, EVER! This is critical for rebuilding your credit score. In fact, you should try to never go above 75% of the credit limit
The second rule is: Never be late with a payment. The best idea is to pay the minimum payment once the bill arrives. If you can pay more then all the better.
The third rule is: Never, Ever miss a payment. Always make the minimum payment each month.
If you follow these 3 simple rules you will have a better credit score in 6 to 12 months. No guarantees but it will be better than when you applied for the secured card.
The overall plan of using a secured credit card
The reason we use secured credit cards is to help us rebuild our credit so that we can obtain normal credit in the future. Once you have been using the secured card for a year or two you can apply for a regular credit card. After you have a normal credit card you can than pay off the secured card and get your deposit back. You will by then have established your new credit score.
Why would I say that? Because the new credit card company will not send you a new unsecured credit card unless your credit score and past 12 month history has proven you are once again a good credit risk. Once you have proven you are a good risk you will be granted a regular credit card once again.
The best tip you will get
The last thing to remember is that once you are able to get an unsecured credit card you must limit yourself to how many you have from this point one. You should be fine with one or two cards. You do not need more than this as it can get you into trouble once again.
From this point on you must work on a new goal. Paying cash for things you want and need and using credit only when you can pay it off immediately. Try to avoid carrying balances on your credit cards.
Don’t get me wrong its very easy to say this but implementing it is hard. You must have discipline and you must try to remember what happened the last time you let credit take over your financial life.
Lets not let it happen again.
Here is a great secured credit card in Canada you can apply for now!
If you prefer you can send us an e-mail at email@example.com and we will send you a hard copy you can complete and fax in. Please indicate if you are in Canada or the USA