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Do secured credit cards really improve your credit score?

Or do they have no effect like a buy here pay here loan? What about renting from places like Rent-a-Center? If not, what's the point of such loans and lines of credit? You are paying money and fees without the benefit of an improved credit score.

 
keisha613

Asked by keisha613 at 1:53 PM on Sep. 10, 2010 in Money & Work

Level 26 (26,906 Credits)
This question is closed.
Answers (6)
  • Yes it sure can! I used to be a Mortgage Lender and I advised many of my customers to use secured credit cards to improve their score. A good way to get a reputable card is to go through your bank or credit union (most have a secured option). It will only work if you have already paid off the debt or debts that caused your credit score to fall... if you are waiting for them to fall off of your credit report then don't bother with a secured card until you are ready. I advised people to buy gas with it and pay if off every month, that shows good utilization of credit. You can also get a secured loan through your bank or credit union by getting a CD and having a loan against it, make sure the term is for a minimum of 12 months, no risk to the bank, in fact they earn interest both on the loan and the CD.
    Mommy2Gabrielle

    Answer by Mommy2Gabrielle at 2:03 PM on Sep. 10, 2010

  • They CAN! You need to check the fine print BEFORE you open them. A secured card CAN affect and improve your credit, but ONLY if they actually report to the Credit Unions... They don't have to, and not all do. However, many will... You simply have to ask before you join!
    SabrinaMBowen

    Answer by SabrinaMBowen at 1:54 PM on Sep. 10, 2010

  • Not any more than any other credit card. Of course if you have bad credit and can't get one they are good to have. They will improve your credit score if you pay them on time. Pay any card on time and it will help your credit .
    itsmesteph11

    Answer by itsmesteph11 at 2:33 PM on Sep. 10, 2010

  • Yes it can- but some of them have crazy terms. Like charging you interest the moment you swipe, or charging you if you don't swipe. It's true that your local bank or credit union would probably be the best place to get a secured credit card from, but I would still shop around before getting one.

    Also consider why you want to improve your credit score. It is borrowing money so that later you can borrow more money. Kinda weird right?
    Erica_Smerica

    Answer by Erica_Smerica at 4:38 PM on Sep. 10, 2010

  • I use a secure card and a play called RC Willey ( a lot like rent a center but i get to keep my stuff no matter what and cant trade it in)
    It has improved my credit a lot
    mommy_of_two388

    Answer by mommy_of_two388 at 1:55 PM on Sep. 10, 2010

  • If you are considering opening a secured credit card my advice is to go to your bank and speak with a financial advisor. Secured credit cards are mostly for ppl with bad or no credit and it will be a low limit like $300 that you need to put in in order to open. Most store cards do report to the credit bereau bt not all so make sure you read beforehand.
    vjoaquin

    Answer by vjoaquin at 3:38 AM on Sep. 12, 2010

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