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Secured Credit Cards Establish Your Credit, Build Your Score

By Dan Green

Secured credit cards are credit cards that require security deposits. They’re commonly used by first-time credit card holders as a way to establish credit, and by anyone who wants to build high credit scores. You must be 18 to get a secured credit card in your name.

What Is A “Secured” Credit Card?

A secured credit card is a special type of credit card, typically used to establish and strengthen a person’s credit history.

Secured credit cards are readily available. They’re often no annual fee credit cards.

Secured credit cards are similar to other credit cards, with one main difference. Before a secured credit card can be issued, your credit card company will require you to make a security deposit.

The security deposit on a typical secured credit card is between $100-$300.

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When you make a security deposit on a secured credit card, your credit card issuer holds the deposit in a reserve account. The money is their protection against you missing payments or making an overdraft .

Other than that, secured credit cards act like other credit cards.

You can use your secured credit card to buy items such as coffee or food. Then, when the month ends, you’ll get a statement via email or postal mail telling you the amount you’re required to repay.

You can make payment on your secured credit card using online bill pay, direct debit , or by writing a check. Once your payment is processed, it gets reported to the credit bureaus .

This helps to boost your credit score.

A lot of people use secured credit cards as a way to establish credit. It’s cheap, it’s easy, and everyone over 18 years of age can participate.

Even if you’ve been turned down for a credit card in the past, you can get approved for a credit card that’s secured. This is because secured credit cards are secured by your deposit.

Credit card companies are protected from loss.

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Secured Credit Cards: Your First Credit Card

When you turn 18, you can apply for a secured credit card. And, you should.

The earlier you start building your credit, the better your credit score can be when you’re ready to buy a car, buy a home, or start a business.

There are other reasons to have a good credit score, too.

Additionally, when you’re ready to buy a house, having high credit scores gets you access to cheaper mortgage rates and more flexible options. You can also make a smaller down payment when your credit scores are high.

The money you save by having a high credit score can fund your vacations, pay for cool experiences, and can even fund your retirement.

It’s smart to build credit in your own name. When you turn 18, apply for a secured credit card.

Secured Credit Cards: Build And Raise Your Credit Score

Secured credit cards are an excellent way to build and raise your credit score.

Applying for a secured credit card is easy. There are dozens of available cards and many offer online applications. Your card can be approved immediately.

If you’re 18 years of age or older, you’re likely to be approved.

Once your secured credit card is issued, it functions like any other card. There’s a spending limit you must remain within and, each month, you’re sent a statement for the monies you’ve charged.

Every time you pay your statement and make that payment on-time, you’re helping to boost your credit. This is because credit card companies are required to report on-time payments to the credit bureaus, which helps to boosts your score.

Your payment history on credit cards and loans accounts for 35% of your overall credit score. Making on-time payments will do a lot to keep your score high.

And all of this is possible starting when you’re 18.

If you’ve never had a credit card or just want to improve your personal credit, secured credit cards are an excellent first step. They’re simple to get and quick to get started.

Get Your First Secured Credit Card

Secured credit cards are an important part of the credit card market. They’re used by consumers of all ages and credit types, and are an excellent way to support high credit scores.

Whether you’re building your credit history from scratch, or re-building your credit history as an adult, secured credit cards help you do it faster.

Click here to apply for a secured credit card.

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Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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