Looking for ways to rebuild your subpar credit? You may be advised to obtain a secured credit card from a major issuer. To open a secured credit card, you’ll need to make a cash deposit to serve as collateral. This amount usually determines your available credit.
Sounds simple, but what happens if you’re not approved? Do you throw in the towel or seek other alternatives?
For starters, don’t give up. Receiving a notice of denial from a single credit card issuer doesn’t necessarily mean you won’t have success elsewhere.
The Next Step
Don’t panic! Contact the creditor to learn why you were denied. The federal law requires the creditor to send you a letter that includes your FICO score and the grounds for denial.
Next, visit AnnualCreditReport.com to retrieve a copy of your credit report. (If you want to see your score, that’s going to cost you).
Don’t get hung up on your credit score; your primary concern should be the accuracy of the contents in your credit report. A Federal Trade Commission study, revealed that 20 percent of consumers had an error on at least one of their credit report, so your credit score may be taking a hit due to inaccuracies.
If you spot an error, file a dispute using the guidance provided by the Federal Trade Commission (FTC). Otherwise, you’ll need to explore other options.
Secured Options From Your Financial Institution
Your financial institution may be willing to bend the rules and issue a secured card based on your history with them. While at the brand, also inquire about other secured options that may be available to you. These include secured personal loans and credit builder loans that operate like secured credit cards and come with a competitive interest rate.
Still no luck? Credit unions are worth considering, plus their offerings usually come at a more affordable rate since they are nonprofits with lower overhead. Credit unions typically also offer secured credit cards, secured personal loans and secured credit builder loans. If you aren’t successful, pay local community banks a visit.
Other Online Options
Online options to explore include the Citi® Secured MasterCard®, Capital One® Secured MasterCard® and the First Progress Platinum Elite MasterCard® Secured Credit Card,
There are some online creditors that offer “no credit check” secured cards, like the OpenSky® Secured Credit Visa® Card.
To see a list of these options, ReadyForZero curated a list of the best credit cards to rebuild credit.
How to Evaluate Secured Cards
Consider the following when researching secured credit cards:
- Fees: Select cards are riddled by exorbitant interest rates and a host of fees. Steer clear of these products and search for more affordable options.
- Minimum Deposit: The required minimum deposit varies by the card. If the amount is more than you can comfortably afford to spare, don’t waste your time applying.
- Reporting: Avoid secured credits cards that don’t report to the three major credit bureaus as the sole purpose of applying is to improve your credit rating.
- Conversion Options: Will you be eligible for an unsecured card after an extended period of responsible use?
A Final Thought
Poor credit doesn’t have to haunt you forever. Even if you’ve been denied for a secured credit card, there are several other options to help you get back on track.