How to Use Guaranteed Approval Credit Cards to Rebuild Credit

If you don’t have good credit, building and obtaining credit can be tough. You may have a hard time getting approved for loans, credit cards, or any transactions that rely on a good credit score.

Fortunately, there are guaranteed approval credit cards.  These credit cards take the stress out of applying for new credit for those consumers with bad credit or no credit needing to build new lines of credit.  

These cards are best for people with lower credit scores, new to building credit (such as students or people first moving to the United States – who are new to using credit cards.)

The best guaranteed approval cards – secured credit cards

rebuild your credit with guaranteed approval cardsSecured credit cards are often suggested as one of the best starting points for credit-building.   A secured credit card is a kind of credit card that requires a security deposit which becomes your credit limit. 

Since this type of credit card requires a security deposit it is often also called a guaranteed approval credit card.  Banks feel safe in approving anyone who can put down the security deposit.

They know that if the client fails to pay, they will take the delinquent amount from the security deposit. 

Since its guaranteed approval, it makes a great starter credit card.  It’s also used a lot by professional credit repair companies to REBUILD their clients’ credit. 

When using a secured credit card, you should consider the following:

  1. Interest rate.  Not all cards are the same.  Interest rates can vary a lot!   Also, some secured credit cards are now offering “reward” options.   
  2. Make sure the secured credit card you choose will report to at least 1 of the major credit bureaus.  Ideally, they would report to all 3. If the credit card doesn’t report your activity, then you are not building credit.
  3. Make sure you know the rate and fees BEFORE you apply.  There are a LOT of different banks and financial institutions that offer secured credit cards. Rates and fees will vary depending on the issuer.  

Building credit using a secured credit cardquickest way to repair bad credit

Getting a secured credit card is one of the easiest ways to build and improve your credit. It provides a training ground for better financial management since it still operates the same way as a traditional credit card.

Once you get approved, you should develop and practice good spending habits for this will determine your future credit score.

Here are the things you need to take note of when rebuilding credit:

  1. Pay your bills. Remember that you are using this to build credit, not the other way around. Make sure you make all payments on time.  A good way to do this will be to set up automatic bill pay so you don’t have to worry about it. 
  2. If possible, pay in full and in advance. This will be reflected as good financial practice, hence improving your credit score. Also, you will not be charged with interest when you pay in full, so that is always a plus.
  3. Do not max out your card. Although a secured credit card generally has no restrictions when it comes to making purchases, abusing it can negatively impact your credit score. Try to keep your credit utilization ratio low (the percentage of your total credit that is being utilized) and keep your purchases as minimal as possible. 
  4. Track your credit score. The purpose of your secured credit card is to improve your credit score. Invest in a credit monitoring service so you are alerted to any change to your credit score (good or bad) 

Converting to an unsecured credit card

With on-time payments, a secured credit card will often become unsecured after a year.  This is an automatic process done by your issuing bank. And your security deposit is returned to you!

If your bank doesn’t convert your card after a year, you should contact them and see why.  It could be that perhaps they have a record of late payments.  Find out the reason and see what it will take to convert the card. 

guaranteed approval credit card best option to rebuild creditAt the end of the day, guaranteed approval credit cards are a great way to build or rebuild credit.  Their guaranteed approval process has made it the “tool of choice” used by credit repair companies nationwide to rebuild their client’s credit. 

Just remember when you are looking for your secured credit card, that you do your research!  Have a list of features you want your credit card to have.  Make sure you know the rates and fees being charged.

In conclusion, this type of guaranteed approval credit card is a great way to establish credit, pay bills with ease, and have your spending reported to at least 1 if not all 3 credit reporting agencies (Experian, Equifax or TransUnion)

Just keep the following in mind:tips on rebuilding your credit

1) Be responsible with these credit cards, they can be a great tool for building / rebuilding credit.  Or if used un-wisely, not following good credit habits, they can make your credit score drop!
2) There are many different options that offer different benefits.  Do your research
3) Interest rates vary by card issuer, so it’s important to do some research before applying for a card.

Check Out Another Type Of Guaranteed Approval Credit Card – The Catalog Credit Card

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 23+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

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      NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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      NHBS Inc © 2022

      NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

      Privacy Policy Terms of Use

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