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Rebuilding Credit

Rebuilding is KEY to obtaining a healthy credit

Rebuilding is KEY to obtaining healthy credit. But how do you rebuild when you have no credit and/or bad credit?  There are banks that do provide individuals with secured lines of credit to help rebuild.  To save you time, energy, and aggravation, make sure to ask the following questions to the issuers of the secured credit cards.

Do they pull credit?
There are banks that DO NOT pull credit. These banks do not judge you by your credit profile or score. However, be prepared to speak to banks about your credit by pulling a copy of your own credit report with your FICO score. This will avoid the need to pull your report if they request a minimum credit score and you know you don’t have it. It will also avoid multiple hard inquires on your credit report. By pulling a copy of your own credit report, you are in control of your own situation and this makes you a knowledgeable consumer.

Is this going to be a hard inquiry on my report?
In the FICO scoring model, hard inquires have a 10% effect on a person’s credit. Pulling too many inquires can bring your score down especially if you do so multiple times within a short period of time.  

What is the difference between secured and unsecured credit card?

A secured card requires a cash collateral deposit that becomes the credit line for that account. For example, if you deposit $300 into your secured account; you can charge up to $300. Many times, you can deposit more funds into the account which increases your credit limit and has a positive reflection on your credit profile. An unsecured credit card is a card linked to an account that is not protected by cash collateral; there is nothing tangible to guarantee payment other than your written promise. If you cannot obtain an unsecured card, secured cards show the same benefit for your credit profile as long as they report to the bureaus. Remember though not to use more than 30% of your credit limit (no more than $90 on your $300 line of credit).

Do the credit card companies report to all three credit reporting agencies?
Though this is not the first question on this list, it is the most important question to ask when you are looking to rebuild your credit. Obtaining a secured credit card is one of the main vehicles in helping an individual build good credit history. If the issuer doesn't report, you've lost a major benefit. Always ask before applying for any credit cards if they report to the three reporting agencies (Equifax, TransUnion, Experian). If they don’t, move on to the next.

What are the fees?

It is important to understand if there are any annual and/or monthly fees in maintaining your secured credit card. You do not want to put yourself into a financial strain and use more than a third of your credit limit. This will have a negative impact on your credit if you overspend and max out your card. For maximum benefits to your credit score, keep the utilization of your credit limit versus your balance owed at or below 30%.      

What is the process for a secured credit card?

The process should be very simple. Some issuers allow you to complete an online application.  Once completed, the issuer follows up with you to verify your identity. After verification of your identity is completed and funds are deposited with the issuer, a card should be mailed within a few business days. You don’t even need a bank account to qualify for a secured credit card.

There is a credit friendly credit card for everyone, even if someone has no credit and/or bad credit.   Visit to obtain more information on obtaining your secured credit card without pulling your credit.

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