When it comes to rebuilding your credit (or establishing credit for the first time) one of
the most effective methods is opening a secured credit card. A bank, just like any other
type of credit card, issues secured credit cards. The consumer is required to make
a deposit with the bank and the bank will issue a card with a credit limit of an equal
amount. As long as the secured card is reported to the credit reporting agencies the
consumer is well on his way to rebuilding credit.
Secured cards are not good long-term “plastic” options because of their fee and ratestructures. Because of that, they should be used strategically for the purposes of
populating your credit reports with positive trade information. In fact, if you never
used the card that would be fine because you’ve still accomplished the goal of getting
something good on your credit reports.
Credit scoring systems want to see positive information on your credit reports after
some sort of credit disaster. This lets them see that you’ve 1) not given up on the credit
environment and 2) learned your lesson. Populating a bad credit report with good
information will result in accelerated score improvement. This strategy will be much
faster than simply doing nothing for seven years while you’re waiting for the negative
information to fall off of your credit reports.
Secured cards allow you to essentially “buy” a new account, because of the deposit/
credit limit exchange that occurs when you open the account. You can open a secured
card for as little as a few hundred dollars. And, because of their affordability some
consumers may even opt for opening several secured cards. This will further accelerate
their credit rebuilding efforts as they will have successfully balanced out the “good credit
versus bad credit” equation.
Michael B. Citron is an internationally known public speaker and author. He lectures for professional associations worldwide. Michael is a serial entrepreneur who is dedicated to living the American dream, and helping others to do the same. His role at DisputeSuite.com has placed him in the spotlight of the credit repair industry. DisputeSuite is the largest provider of technology and education services to the industry, and has been a catalyst in the forward movement to standardize the credit repair industry.
