Secured credit card can help build credit history and credit scores


Dear Experian,

A bank has a new credit card for those with poor credit. They say you have to put down a $300 deposit, and after that deposit they’ll give you the card. The bank told me it will help me bring up my credit score. Is that true?



Dear ERL,

You are describing a secured credit card, which can be an excellent way to build credit, particularly for those who have no credit history or are having trouble qualifying for a traditional credit card. It can also be a good way to begin rebuilding your credit history if you have had financial difficulty in the past.

A secured credit card account is typically tied to a savings account. The credit limit for the card is usually the amount in the savings account or a percentage of the amount in savings.

If the lender reports the payment history for the account, it will help you build a credit history. The keys to improving credit scores are to make all your payments on time, every time, and keep your balance low.

In some cases, the lender may not initially report the secured account to the credit reporting companies. However, the lender may be willing to convert your account into a traditional, unsecured credit card after you have demonstrated you can use the secured account responsibly.

Thanks for asking.

The “Ask Experian” team

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