How to Improve FICO Score with a Secured Credit Card

When your FICO credit score is low, you might have a hard time finding a credit card company that will approve your application. One strategy is to get a special type of card called a secured credit card. To get this card, you must put down a deposit, usually a minimum of about $500, to get a credit line of an equal amount. The credit card company holds your deposit as security in case you fail to pay the bills. A secured credit card will gradually improve your credit score if you use it responsibly.

Instructions

1

Research secured credit cards by looking online or visiting your local bank to inquire. You want to find a card with a low application fee and low annual fee. Most importantly, you want to find a credit card company that reports your payments to all three credit bureaus. Only reported payments will help your credit score.

2

Apply for the secured card you have selected. Only apply for one card, because each application and each new credit card lowers your score slightly.

3

Multiply the amount of your credit line by 0.3. For example, if your credit line is $500, multiply it by 0.3 to get $150.

4

Use the credit card each month to make charges that total no more than the amount you calculated, which is 30 percent of your credit limit. Using more than this can begin to hurt your credit score.

5

Pay your bill in full every month by the due date. When you do this, you will not have any interest charges or late fees. Most importantly, your credit report will show a consistent on-time payment history.

6

Continue using and paying off your secured credit card each month. You should begin to see positive effects on your FICO score after a few months, and after a year, you might even qualify to have your secured card converted to an unsecured card.