If you've started the credit repair process yourself, or if you're letting the credit specialists handle it for you, then you've taken a step in the right direction. However, just have the negatives off, doesn't mean you'll have a great score.
One thing to think about -
"Negative accounts will show lenders/creditors what type of credit performance you've done in the past, but getting and having open, current credit accounts (positive accounts) will show lenders how you're performing now." Positive account information in your credit report is essential, and having an open trade-line (credit account) in good standing is one of the best ways to see improvement in your score.
So how does someone with bad or poor credit get approved? By getting secured credit cards that report monthly to the credit bureaus!
If you want to know where to get a secured credit card or where to find the best one, check out the Credit Card Guide.
Here is just a few mentioned, which happens to be CreditMagic.net's Top Picks:
This will require money out of pocket on your part, but it will pay dividends for you in the future.
The thing you need to look into is opening a secured credit card. A secured credit card is really no different than a traditional unsecured credit card except that the bank is holding your money as collateral. Only you and the issuer of the credit card will know it's a secured card. You can use it anywhere a regular credit card can be used, and the best thing about them: some secured credit cards get reported monthly to the credit bureaus.
There are good and bad points to almost all of them, and you should look into several of them before you decide on which secured card you want to go with.
A few of the good & bad points to look for are the fees, interest rate, and whether or not they report to the bureaus. Below are a few examples of some decent secured credit cards. You can visit: CreditMagic's secured cards to find these and more secured credit card options.
Our Top Secured Credit Card Picks
New Millennium Bank Secured Platinum Card By New Millennium Bank
The New Millennium Bank Secured Platinum Visa®/MasterCard® is ideal for those with limited or poor credit who may have difficulty in obtaining a standard unsecured credit card. Unlike most secured credit cards, this card offers benefits such as auto rental insurance, up to $100,000 in travel accident insurance, an extended warranty for purchases, free membership to TheWorldsBestTravelClub.com, and a free companion air ticket, which is awarded to you after you have been approved for the card. These benefits do come with an annual fee of $59, which is slightly above average for a secured card, as well as a one-time processing fee of $99.95. The APR that is applied to purchases is high for a secured card, but this card does apply interest to the deposit amount required to secure the account, which is a nice benefit. It is important to note that there is no grace period for purchases, which means that interest will be applied immediately to any charges made with the card. However, if you are having difficulty in obtaining an unsecured card, this card does have a no credit check and no turn-down policy.
Pros/Cons: New Millennium Bank Card has currently a 19.50% interest rate and a $59 annual fee, plus a one time $99.95 application fee, so the fees are a bit pricey. This card does have benefits, which is a rare find in secured cards, plus you do earn interest on your deposited money. You need to deposit a minimum of $300, which is reasonably low, they report to the 3 major credit bureaus, and basically guaranteed approvals make this an attractive card.
Public Savings Bank Secured Black CardBy Public Savings Bank
The Public Savings Bank Secured Black Card, issued by Public Savings Bank, is ideal for those who are trying to improve their credit. This is because Public Savings Bank reports card activity to all three major credit bureaus every month. Because the Public Savings Bank Secured Black Card is a secured credit card, all applications are accepted, regardless of past credit history, or a lack of credit history. A secured credit card is one that is secured with a deposit. The amount of the deposit then becomes the cardholder's credit limit. The minimum deposit for this card is $200, the maximum is $10,000. The interest rate for the Public Savings Bank Secured Black Card is reasonably low, and the Public Savings Bank Secured Black Card has no annual fee. The application fee is $79.
Pros/Cons: Public Savings offers no annual fees but they do have a one time $79 set up fee. An interest rate currently at 11.24% after an introductory rate of 0% for 6 months. There is only a $200 minimum deposit and according to their website they report to 3 major credit bureaus. We assume that's Equifax, Experian, and Transunion. Public Savings does not require any income verification, employment verification, or credit checks, so it's as close to a guaranteed approval as one could ask for.
Next Millennium MasterCard®By New Millennium Bank
The Next Millennium MasterCard®, issued by New Millennium Bank, is a secured card designed for people who have poor credit or no credit. This secured card establishes an interest yielding collateral savings account on your behalf. You fund the card with every deposit you make. The deposits you make equal the amount of your credit limit, which can be as much as $5,000. As a cardholder, you will be charged an initial $35 processing fee ($49 for two cards) that will be drafted from your account once your identification is verified. This is in addition to the $59 annual fee. If an applicant uses a co-applicant, there is a $10 processing fee that applies. The card has a fixed APR for both purchases and cash advances, which is higher than average.
Pros/Cons: Slightly higher fees but may not be that bad considering you are earning interest on your deposit. Credit reporting, not needing a large initial deposit, and best of all - earn interest on your deposited money - makes this card a good choice.
First Option Visa® Card is another card offered by the same company, very similar rates & fees. We thought we would add them for you to review as well.
First Premier Bank®
First Premier offers several cards under several names, which include: Aventium, Centennial, and First Premier Bank Card. They offer credit cards that are secured and ones that are unsecured, and First Premier Bank tailors to people who have less than perfect credit. The secured card requires a minimum deposit of $200 at 19.9% interest plus a $69 annual fee. One of the best things they offer is monthly reporting to all 4 major credit bureaus. If you take that into account, plus, if you make a commitment not to carry a balance or at least a low balance, the 19.9% interest rate won't matter much. The only negative is the $69 annual fee, but that is a fairly small price to pay for building solid credit history with all 4 major credit bureaus. They do offer unsecured credit limit increases on this card as well, provided you have good payment history with them over time.
Wells Fargo Secured Card®
We haven't yet been able to confirm with absolute certainty which credit bureaus they report to, but they offer a very low annual fee of only $18 and a decent interest rate of 18.99% variable. They do require a slightly higher minimum deposit than other secured credit cards with a minimum of $300. All in all, this is a fairly good option.
Pros/cons: Wells Fargo takes a while before they will turn your "secured card" into an "unsecured card." Based on our research, it is generally taking 12-18 months before they will change it to an unsecured card. Depending on how the new credit card laws are interpreted for 2010, the secured cards from Wells, as well as potentially others, may not convert secured cards into unsecured cards. This could be looked at as a con, but they do have good rates, decent fees, and a fairly low initial deposit requirement. There also may be minimal credit criteria needed to get approved for this secured card.
Citi Secured Mastercard®
Again, we cannot confirm yet which bureaus they report to, they are vague with this information on their site. Based on the wording from their site, it looks as though they report to at least 2 major credit bureaus. The have an annual fee of only $29 and a variable interest rate of 13.24%. A minimum of $200, maximum of $25,000 needs to go into a certificate of deposit. Your credit limit is equal to the amount you place in your CD.
Pros/cons: the secured card may eventually become an unsecured card, but it usually takes 18 months before Citi will even review your credit performance for an increase or offer an unsecured card (based on our research). We have heard a few cases where it's taking even longer then that with perfect payment history. This could be looked at as a con, but they do have decent rates, decent fees, and a low initial deposit requirement. There also may be minimal credit criteria needed to get approved for this secured card.
HSBC®
What we like about both HSBC & Orchard, is they will run a pre-approval on you without pulling a hard inquiry. This is similar to a "promotional inquiry" where you get pre-approvals in the mail. If they can approve you for an unsecured card they will, but if not, they will offer you a secured card. Best of all, there's not a hard pull for them to check your eligibility for an unsecured card. According to their website, the interest rate is a variable rate between 12.99% and 19.99% depending on credit worthiness. There is an annual fee of $35 and we are not sure which credit bureau(s) they report to yet.
Orchard Bank Classic MasterCards®
Orchard Bank ranks best in our picks because of the lower fees and interest, as well as the way they try to first approve you for an unsecured card. As soon as we get concrete evidence on which credit bureaus they report to, we will update this list. Orchard waives the $35 annual fee for the first year, you need a minimum deposit of only $200 and the interest rate is a variable 7.90% (very low for a secured card). The link above or Orchard Bank Classic MasterCards takes you to an all-in-one site. Orchard will try to approve you for an unsecured credit card if possible, if not, you will be offered their secured card, as mentioned above. Best of all, Orchard Bank won't do a hard pull on your credit to see what you qualify for, instead, they do a soft pull to see if you "pre-qualify" for an unsecured credit card. This is one of many reasons we like Orchard Bank. Low fees, low interest, and the way in which they first try to approve you for an unsecured card makes Orchard our favorite pick.
Do note: The unsecured card offered by Orchard/HSBC has different fees, rates, and/or terms & conditions than their secured card. So if you receive an approval for their unsecured card, be sure to read the terms and conditions. Just a reminder: read the terms and conditions for any card you are signing up for.
Another side note: The FICO scoring system likes to see a "credit mix" or in other words, a combination of credit accounts, including at least 2 open revolving accounts (credit cards). So getting 1 secured card will likely give you a boost in your score, but getting 2 cards will likely give you a larger boost.
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