A Secured Credit Card Can Help You Rebuild Your Credit

Online, June 2, 2011 (Newswire.com) - If you've had a rough time during the current economic depression, you may now have damaged credit, making it hard to obtain new credit. Past credit mistakes can be difficult to get past, particularly when no one wants to give you another chance. So what do you do to rebuild your credit?

One of the best ways to rebuild your credit is to get a secured credit card. A secured card works just like a regular credit card, only you are required to make a deposit against the credit limit on the account. The credit limit is usually 50 percent to 100 percent of the deposit amount.

Secured cards often have fees that you won't find with regular cards. This can include application, processing and annual fees.

While the economy is certainly to blame for the damaged credit now experienced by many consumers, damaged credit also is often the result of poor payment habits on past personal loans or other types of credit card advances. If you can't get credit the traditional way because of your less-than-stellar payment history, a secured credit card can help.

But before you apply for a secured card, be sure the issuer reports to all three credit bureaus. If the issuer doesn't report, it won't help you re-establish your credit history and build up your credit score.

Once you've obtained your card, remember that its purpose is to rebuild your credit, not build more debt. So use your card to make small purchases each month that you can pay off in full.

After a couple of years of using a secured card wisely, you'll be able to convert to an unsecured card. If you are turned down the first time, you can apply for a card with another company. But draw the line there - you don't want to look desperate. If you are turned down the second time, wait six months, continuing to use your secured card the right way, and try again.