You can’t get a credit card or loan without a decent credit score. You can raise your credit score without building a strong credit history. You can’t build a history without getting a credit card or a loan. It’s a vicious cycle that many consumers find themselves in. If you find yourself in such a scenario, there is something you can do to build up your credit history. Open a secured credit card account.
You’ll find it very difficult to obtain a typical credit card if your credit score is low, or your credit history is short. However, a secure credit card is different. A secure card requires you to pay collateral to open the account. For example, if you pay $1,000, then that is your credit limit. Since your low score gives little confidence to the creditor that you are able to pay off credit card debt, this deposit acts as security for them.
Other than that, a secure credit card works just like a regular card. Your activity is reported to the card issuer and the credit reporting agencies, so you are able to build up a positive credit history. If you do, then you will eventually be given the opportunity to open a regular account with the creditor.
A secure credit card is a great tool to build or re-build a bad credit report. Just be aware that you must use it responsibly, just as you would a regular credit card, to reap the benefits.