With responsible use, your credit is a pathway to financing your life goals. Whether you are a young person starting to build your credit history or someone trying to repair damage from over the years, boosting your credit will take some diligence, but making it a part of your financial routine can help you in the long run.
If you’re ready to rebuild your credit score, it’s time to consider applying for a secured credit card.
How to apply for a secured credit card
When you apply for most loans and credit cards, lenders will do what is called a “hard pull” on your credit; this will end up counting against your score. Instead, you can easily apply for a secured credit card like the Green Dot® Platinum Visa® Card without impacting your credit score.
How much can you spend with a secured credit card?
One of the most significant benefits of a secured credit card is that you will make a refundable security deposit when you open the card, which serves as a guarantee for your credit line. If you make a $250 security deposit, your credit limit will be $250. Best of all, you’ll get this money back if you ever decide to close the card—as long as you haven’t defaulted on any payments.
How does a secured credit card help your credit?
Secured credit cards are ideal for anyone trying to change their financial patterns or establish good routines, as these cards are designed to help you get the hang of using a credit card responsibly. A major added benefit of secured credit cards is that lenders will report your activity to the major three credit bureaus, which helps you to establish credit. If you pay your bills on time and in full, you’ll get a boost to your credit score.
Can a secured credit card hurt your credit?
A secured credit card alone isn’t going to hurt your credit, but misusing one could hurt your credit. If you don’t pay bills on time, carry a significant balance, or struggle making payments in full—you’ll have to pay interest on the amount you owe and that information will be reported to the bureaus, ultimately impacting your credit score. Instead, make it a priority to use your secured card responsibly knowing that your card usage is being monitored and graded accordingly.
If you make $2,500 a month and manage to get $3,500 extra from an inheritance or your tax refund, you could put that entire amount down as the refundable security deposit for your secured credit card and enjoy a $3,500 credit limit—as long as it doesn’t exceed your credit line. But, if your monthly income won’t cover payments up to your limit, you run the risk of using more credit than you can immediately pay off—accruing interest that bulks up your balance and does damage to your score.
Look at secured credit cards as a credit-builder, a powerful budgeting tool, you’re your pathway to spending, all in one. Never charge more than you can quickly pay off on your card because you’re still susceptible to paying more than you should with interest. Get a secured credit card from Green Dot today and start to make improvements for your future. Before applying, view Green Dot’s simple fees here.