Tip #1 – Contrary to popular belief, you don't need to carry a balance to improve credit. What's reported to the credit bureaus is the monthly statement balance, regardless of whether you pay in full or not.
Tip #2 – Having a high balance is not better. A small portion of your credit score is based on what percentage of your available credit limit you are using. It's best to never use more than 30% of your credit limit at any given time, according to advice given by FICO.
Tip #3 – After your card is open, setting up automatic e-payments is recommended. That ensures payments will always be on-time.
2014 Secured Credit Cards to Rebuild Credit
(constantly updated with featured offers from our advertising partners)
Capital One® Secured MasterCard®
The Capital One Secured MasterCard has proven itself to be an effective tool at rebuilding credit, as evidenced by the many stories in our card forum section. This card also offers solid value to those with little credit history. It comes with a very reasonable annual fee of $29 and, unlike some secured credit cards, there are no application or processing fees. You can start with a minimum security deposit as low as $49, $99 or $200 (based on your credit). Once you establish a track record of managing your account and other credit responsibly you can earn credit limit increases over time without having to increase your security deposit.
- Apply toll-free by calling 877-525-5805
- Build credit with responsible use
- Regular reporting to the 3 major credit bureaus
- Your security deposit can get you a line up to $3,000
- You may qualify for a credit line increase based on your payment history and creditworthiness
- Build a financial foundation you can stand on with a card that gets you started
- Use it like any MasterCard credit card, accepted at millions of locations worldwide
- Get free access to your monthly credit score and credit tips using Capital One® Credit Tracker
First Progress Platinum Elite MasterCard®
Although you may not have heard the name before, this card is issued/managed by Synovus (a parent company for dozens of banks in the S.E. which operate under local names). They were founded in 1888 and have $26 billion in assets, so this is not some fly-by-night bank. It has a $29 annual fee and the minimum security deposit is $300.
- Not available to NY, IA, AR, and WI residents.
- Credit limit is equal to your security deposit (deposit can be from $300 to $2,000)
- Account is reported to major credit bureaus
- APR of 19.99% (Variable)
USAA Secured Card
Don't consider this unless you're in the military and even then it might not be the best idea since its annual fee is higher. The application process first requires you to qualify for USAA membership. Only military personnel qualify for full USAA benefits. Unfortunately they'll put your deposit in a 2 year CD so it will be locked up during that time... a drawback because if you manage credit responsibly you can probably qualify for an unsecured card before then.
- Before starting the application, USAA will ask you questions to establish online access and eligibility with USAA.
- Security deposits are held in a 2-year CD account. A penalty will apply if you close the CD before before the 2 years is up.
- A minimum $250 initial deposit is required.
- $35 annual fee.
Think your credit might be good enough for an unsecured card? Then try out this tool!
Consider these factors when choosing your secured credit card...
- Reasonable Fees – Fees should be expected, but some banks will rip you off with outrageously high fees. The application fee and annual or monthly fee should be reasonable and when combined, over the course of the first year the fees should cost no more than $120 (and hopefully a lot less).
- Flexible Security Deposit – We all know higher credit limits are better, but maybe you can't afford much for your security deposit right now. The best cards should give you some flexibility. For example, you can start with a $500 deposit for a $500 limit, but later on when you can afford to do so, you should be given the ability to raise that to a $3,000 limit by adding more to your security deposit.
- Reports to Credit Bureaus – Of course it's important that your account is reported to the bureaus. However, banks that offer secured credit cards (or any card for that matter) have to pay to report customer records... for that reason, some unscrupulous banks won't report because they're being cheap, make sure you watch out for them.