Are secured credit cards to build credit wise?
Let’s say you’re paying off a significant amount of credit card debt with the help of a debt settlement company, and you’re looking for ways to improve your credit score. Is using secured credit cards to build credit wise?
Hear how to use secured credit cards to build credit
Why should you consider a secured credit card to build credit?
On this episode of Queer Money®, we’re explaining how secured credit cards work and what you need to think about BEFORE you apply for one. We discuss the top three factors that impact your credit score, weighing in on just how much payment history, credit mix and credit utilization matter.
We walk you through three important questions to ask yourself before you get a secured credit card, exploring the habits you need to put in place to make good decisions. Listen in to understand how garnishment works (and how it applies to the deposit on a secured credit card) and find out if a secured credit card might help YOU build your credit score.
Topics covered on secured credit cards
How secured credit cards work
- Hold deposit as collateral in case not paid off
- Referred to as credit card on training wheels
What you need to know before applying for a secured credit card
- Not every card reported to credit rating agencies
- Some debt settlement companies prohibit new cards
The three primary factors that impact a credit score
- Payment history
- Credit mix
- Credit utilization
The idea of garnishment and how it relates to secured credit cards
- The company you owe withdraws money from your account
- Secured credit card deposit usually cannot be garnished
3 questions to ask yourself before applying for a secured credit card
- Have I created habits that will allow me to pay off the balance each month?
- Will I only use the secured card to help build credit?
- Could the deposit balance be better used to pay off existing debt?
Our advice to Ricky around getting a secured credit card
- Ask debt settlement company if it’s okay
- Go through our three questions to ask yourself
- Research cards to ensure reporting to agencies
- Save up required deposit (limit to $250 or less)
- Build the habit of paying off balance twice/month