What’s a secured credit card?

What is a secured credit card?

Have you heard about Amazon’s Credit Builder Card, which was launched earlier this month? You may be wondering if this kind of card is the right choice for your financial situation.  

A secured card is a type of credit card that is designed to help an individual with a low credit score build their credit.  To get one, you must pay a refundable deposit, usually $200 at minimum. This deposit secures the amount of available credit. Credit cards are the easiest way to build credit, and so, if you have a low credit score, a secured card may help you raise your score faster.

How do you use the credit card?

A secured credit card can be used in the exact same way as an unsecured card. You can present the card to a retailer in all kinds of purchases, from renting a car to booking a hotel room.

However, because the limit is typically lower, it’s important to limit your purchases on your card during the month to effectively build credit. If you pay your credit card in full and on time every month, you will build your credit score.

How do you get a secured credit card?

Before you get a secured credit card, it’s important to check your credit report. You can get a free annual credit report from all 3 credit reporting agencies (Equifax, TransUnion, and Experian) at AnnualCreditReport.com.  

Once you know your credit score, you can determine which credit card for which you might qualify, and you can then apply and provide a deposit to your chosen creditor. 

What if I find an inaccuracy on my credit card?

One in five Americans has an error on their credit report. If you check your credit score and find an error, you should get it corrected before applying for a secured credit card.  Credit reporting agencies (CRAs) are required by the Fair Credit Reporting Act to report information as accurately as possible. If you notify them of an error and they do not correct it, you could be prevented from obtaining a secured card and may have to pursue legal action.

Navigating this process can be difficult, and CRAs can be unresponsive. Hire The Consumer Law Firm of Francis Mailman Soumilas, P.C. to help you fight for your rights.  Fill out our form or call 1-877-735-8600 for your free case review.