Tag: Building Credit

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Credit Cards, Reviews

FS Build Card Review: Build Credit With This Payday Loan Alternative

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Credit cards for people with poor credit scores are few and far between, but FS Card is looking to change that with its first product, the Build Card, an unsecured credit card designed specifically for borrowers with subprime credit scores.

If you’re in need of a couple of hundred dollars and your credit score falls below 600, you’re not likely to get approved for an unsecured credit card. You’re considered a subprime borrower — a lending risk to banks, who worry they won’t get their money back.

But when banks refuse to lend to risky borrowers, those consumers turn to more expensive short-term borrowing options like payday loans, auto title loans, and pawn products. Annual interest rates on those products often exceed 300%, according to research from the Pew Charitable Trusts. Paying a high interest rate and a number of additional fees attached to those short-term products can trap consumers in a cycle of debt.

What is FS Card?

FS Card was founded by former Consumer Financial Protection Bureau Assistant Director of Card and Payment Markets Marla Blow in 2014 to fill what she says was a gap in the credit card industry. Blow says she began FS Card when she noticed — after the housing market crashed in 2008 — banks began “pulling back from subprime consumers in a very directed way,” because they were wary of tougher regulations on the financial industry. As a result, those consumers turned to more expensive products like payday loans, she says.

“I wanted to be able to put that consumer into a place where, rather than having to go out and get a payday loan, they could use a credit card,” Blow says. She designed the Build Card to offer subprime consumers access to something that “a lot of our economy assumes is already present” — a rotating line of credit.

Build Card overview

The Build Card is an unsecured credit card for borrowers with subprime FICO credit scores in the 550 to 600 range (on a scale of 300 to 850). The invite-only card charges a variable 29.9% APR. The rate is high for a credit card but about 10 times less expensive than some payday loans. However, it’s not a card you’d want to open unless you are seriously in need of the funds and are looking to build your credit score.

What we like about the Build Card

Payday loan alternative

Ideally, a payday loan is used to meet short-term borrowing needs — to hold you over until you receive your next paycheck. However, Pew research shows the average borrower uses them for five months at a time on average and has to pay an average $55 fee ($95 online) each time they extend the loan, which is what makes these loans so expensive. That’s $275 spent renewing a loan that’s on average $375. Furthermore, Pew research found seven in 10 borrowers use them for everyday expenses like groceries, rent, and utilities.

With access to a rotating line of credit, borrowers can extend the amount of time they have to repay borrowed money without having to pay renewal fees for a payday loan.

Unsecured credit card for subprime consumers

The Build Card is a rare unsecured credit card for those with poor credit scores. Most cards you can qualify for with a score lower than 600 are secured cards, which require a deposit to secure a credit line. For people who have a few hundred dollars on hand, a secured card is a great way to get access to credit, but many low-income Americans are not in a position to spend that kind of money.

Build your credit score

FS Card reports your activity to national credit bureau TransUnion so you can use the Build Card to improve your credit score if you maintain good credit management habits. Negative activity — like late payments and high credit card balances — will also be reported, so be sure to pay your balance on time and in full each month for best results.

Quick and easy approval process

Because you must be invited to apply for the Build Card, you are prequalified for approval. There is an excellent chance you will be approved for the Build Card, unless something on your credit report has drastically changed between the time FS Card mailed your invitation and when you apply.

No foreign transaction fees

The Build Card doesn’t charge you for using it overseas, so you don’t need to worry about racking up fees for swiping your credit card on vacation.

What we don’t like about the Build Card

Invite-only

As of this writing, the Build Card is invitation only and has more than 50,000 cardholders, Blow says. You’ll have to wait to receive a code in the mail before you can apply for the card online, which is unfortunate for anyone who is in need of short-term funds now.

FS Card selects borrowers using an algorithm to prequalify borrowers with subprime credit scores and sends invitations to potential customers monthly. The algorithm sifts through consumer credit reporting data to identify consumers who have recently done something that reflects better borrowing habits like paying off a payday loan or an account in collections.

Blow tells MagnifyMoney FS Card will offer an open application for Build Card in 2018.

Many fees

This card carries a lot of fees. If you’re trying to build your credit and have the funds to get a secured credit card that doesn’t charge an annual fee or has an interest-free period, you’re better off going that route, as it will be significantly less expensive.

  • Startup & membership fees: It costs Build Card customers $125 simply to open the account. FS Card charges the initial start-up fee ($53) and annual membership fee ($72) on your first statement. Although the card begins accruing interest immediately, Blow tells MagnifyMoney FS Card does not charge Build Card users interest on the start-up fees assessed to the credit card.After the first year, the annual membership is paid in $6 monthly installments, charged to the Build Card.
  • Authorized user fee: If you authorize another person to use your Build Card, you’ll be charged a $12 fee per authorized user.
  • Late/returned payment fee: Don’t miss a payment on this credit card, or you’ll be charged a whopping $35 fee.
  • Cash advance fee: Try your best not to take cash from this credit line — in addition to paying 29.9% interest, you’ll be charged the greater of $10 or 3% of the amount you take.

A $500 limit

If you need to borrow more than $500, you’re out of luck with this card. Everyone who opens a Build Card account starts off with a $500 limit. But remember, that limit is immediately reduced to $375 once you open the card and are charged $125 in fees. That also doesn’t leave you a lot of room to spend, considering it’s bad for your credit score to carry a balance close to your credit limit. Blow says the company may soon offer starting lines above and below $500.

Right now, FS Card checks every month to see if you’re managing the card wisely (read: making payments on time). If you are, you could qualify for a credit line increase to $750 in as soon as seven months. Blow says 59% of Build Card customers have gotten increases so far.

No 0% interest period

This card doesn’t come with an interest-free grace period. It will begin charging a 29.9% APR to your purchases immediately.

No balance transfer

The Build Card doesn’t come with a balance transfer offer, so you won’t be able to use the card as a debt consolidation tool. If you are in a large amount of credit card debt, you could try applying for a personal loan through online lenders like Lending Club or Prosper, which offer personal loans to people with credit scores below 600.

Who is the Build Card best for?

The Build Card is worth opening if you:

  • have a credit score between 550 and 600,
  • are ready to start rebuilding your credit score, and
  • want an alternative to payday loans in the event of an emergency but don’t have the cash on hand to open a secured credit card.

Beware: If your poor credit history resulted from poor spending habits like spending more than you could afford or making late payments, ask yourself if you’re ready to make a change. Opening this credit line won’t help your credit score any in the long run if you don’t.

How to apply for Build Card

You must be selected to apply for the Build Card. When you receive your invitation to apply, you’ll be given an offer code and application ID to enter into the application form on the Build Card website. Enter that information, your ZIP code, and the last four digits of your Social Security number to apply for approval. You should know if you’re approved or not within a few minutes.

Source: thebuildcard.com

Alternatives to the Build Card

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Self Lender Review: Building Credit History with an Installment Loan

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Taking the first step in your journey to building credit isn’t always easy. The dilemma is you need credit to build credit. But companies and financial institutions are hesitant to offer credit unless you’ve already proven yourself. Self Lender is a platform that seeks to solve this dilemma.

Self Lender provides resources you can use to monitor your credit history and score. Beyond monitoring, there’s a credit-building aspect of the platform as well. In partnership with Austin Capital Bank, Self Lender offers a credit-builder account to help you improve your credit history.

The credit-builder account is a CD-secured installment loan. This works similar to a secured credit card in the sense that your certificate of deposit (CD) is providing collateral against your loan. Since the loan is secured by a CD the qualifying criteria is less stringent than a typical personal loan. After getting approved, you’re given a small loan that’s held in the CD account until you repay it.

The purpose is to build credit history by making loan payments. In this post, we’ll discuss what the Self Lender service is and whether what it offers is a viable method for you to build credit. Read on for:

  • How Self Lender works
  • How much Self Lender costs and the terms
  • The pros and cons
  • Other methods of building credit

How Self Lender Works

Signing up on the Self Lender site gives you access to credit monitoring and credit score tracking resources via TransUnion for free. The credit-builder account is an optional service you can sign up for within the Self Lender platform.

The credit-builder account is a small loan with fixed payments. There are three loan amount options, and each loan term is 12 months. Austin Capital Bank will lend you $550, $1,100, or $2,200.

Interest on the loan is 10.57% or up to 14.77% APR. The fixed payment for each loan amount is:

  • $550 — $48.50 monthly payment
  • $1,100 — $97 monthly payment
  • $2,200 — $194 monthly payment

Once you pay off the loan, you get the original amount of the loan ($550, $1,100, or $2,200) plus interest earned. The APY (annual percentage yield) on the CD is 0.10%. Here’s how much each CD should earn in interest by the end of the loan term:

  • $550 — $0.55
  • $1,100 — $1.10
  • $2,200 — $2.20

Self Lender Costs and Account Terms

Self Lender allows you to have only one credit-building account open at a time. Starting a credit-builder account doesn’t require a hard inquiry on your credit report. You don’t get access to cash from the loan while it’s in the CD account, so this product won’t be useful if you need money right away. You can, however, pay the loan back early without penalty.

Now, let’s talk about costs. The basic Self Lender service, including credit monitoring and credit score tracking, is free. However, the credit-builder account has a $12 administrative fee on top of the installment loan interest.

If you make a payment over 15 days late, the late fee is 5% of the payment due. A payment over 30 days late will be reported to the credit bureaus. If this happens, it will defeat the purpose of opening an account to build your credit. Fortunately, there’s an automatic payment feature to help you avoid making late payments.

Pros and Cons

Pro: Self Lender can help your credit score. Making on-time loan payments will help you build a positive payment history, which is the most important component of your credit score. An installment loan also adds account diversity to your credit report and can have a positive impact on the credit mix aspect of your credit score. Applying for an account doesn’t require a hard pull, so as a bonus, Self Lender won’t hurt your score either.

Con: The cost. The cost of this service is a red flag. Let’s take the $550 credit-building account for example. You make 12 monthly payments of $48.50, which equals $582 and makes the total cost of the loan $32. Add the $12 administrative fee and you’re spending $44 for credit building.

Pro: The cash windfall at the end. You do get a lump sum of cash from the account when you complete the loan term. If you have trouble staying disciplined enough to save, the money you get back could be used to start an emergency fund or to meet other financial goals. (Although, on the flip side, you can make scheduled payments to yourself without this product or its fees by setting up automatic transfers into a savings account each month. You can compare savings accounts here.)

Con: It encourages you to take out a loan you may not need. Building credit isn’t a good enough reason to take out an unnecessary loan. This loan isn’t free, and there are other ways you can build credit without it costing you.

Pro: Credit monitoring. Besides the CD-secured installment loan for building credit, Self Lender offers basic credit monitoring through TransUnion. Credit monitoring and score tracking are always worthwhile to have for free.

Other Ways to Build Credit

Here are a few other methods you can use to build credit from scratch:

Secured credit cards are credit cards that require an initial deposit for your credit line. You can find secured credit cards that require a deposit as low as $50. This does mean you need to fork over cash upfront, but the benefit is you can find a secured card with no fees, and the deposit is refundable (if you pay the credit card bill).

You can also avoid interest altogether on a card by paying off your balance in full each statement period. The credit card issuer usually sends you the deposit back after a set amount of time. You may even get a credit line increase after you prove your creditworthiness. Compare secured cards here.
Finding a co-signer is another option that can help if you can’t qualify for a credit line on your own. Since the co-signer takes on some responsibility for the debt, a financial institution or company may be more willing to approve your application. Eventually, your co-signer may be able to apply for a co-signer release if the account is in good standing, and you can get approved for other credit on your own.
Credit piggybacking is a credit history building shortcut you may be able to use if you know someone who has credit cards in excellent standing. Credit piggybacking is when you become an authorized user on someone else’s account. As an authorized user, the account shows up on your credit report to improve and lengthen your history.

Who Will Benefit the Most from Self Lender

Self Lender shouldn’t be the very first tactic you use to build credit because it’s not free and it makes you take out a loan. There are other free methods, including the ones above, that can help you build credit instead.

The most important aspect of your credit history and score is paying your bills on time. Before taking on a new debt payment, you should focus on keeping up with current bills first (rent, cable, utilities, etc.) to establish a payment routine. Afterward, a secured credit card could be a more affordable and less cumbersome way to build credit on your own.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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4 People With Perfect Credit Scores Tell Us How They Did It

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Perfect Credit Scores

After 25 years working in the credit reporting industry, I’ll admit it — I’ve become fairly obsessed about my own credit score. I track my credit scores about as diligently as my doctors track my weight and cholesterol.

Intuitively, I know having an 850 credit score isn’t really all that important. In fact, the real “perfect credit score” is closer to the 760 mark. That’s about as high as your score needs to be to get the best treatment from lenders. In 2015, less than 20% of U.S. adults could say they earned a FICO score greater than 800. And a mere 16% of adults managed an 800+ VantageScore, which is another widely used credit score.

Despite all this, I couldn’t help but fantasize about hitting 850. And, last month, I finally did it.

Since there’s still so much interest in achieving perfect credit, I decided to track down a few other people who have perfect (or darn near perfect) credit scores. I wanted to hear what they were doing, credit-wise, to achieve such impressive scores.  To keep things fair and consistent, we asked everyone to run their FICO score using the free Discover credit score tool. (This FICO score is based on data from Experian, one of the three major credit bureaus.)

What I found were four very different pictures of perfection…and what it takes to achieve it. (Want to share your perfect credit score story with us? Send us a note at info@magnifymoney.com.)

Dominique Brown Dominique Brown
32 years old
Alexandria, Va.

His score: 850

His credit stats: Dominique has 25 revolving credit accounts on his credit report and another 14 in the form of installment loans (as a REALTOR, he invests in real estate properties). Overall, the average age of these accounts is just under 15 years. Dominique has one hard and fast rule about how much available credit his family uses: “We never go over 20% utilization ever in any billing period.” He’s not kidding. His credit report shows a super low utilization rate of 2%.

How he uses credit: Dominique’s credit card habits begin and end with his budget. “In my house, we plan every dime that we make before the month starts,” he says. “For every purchase that we can, we put it on the credit card and just pay it off in full by the due date.” Since he pre-plans his monthly earnings and spending, Dominique never worries about needing enough to afford a certain bill. And by using credit almost exclusively, he earns tons of rewards points.

His secret: Dominique credits his mother with instilling good financial habits in him at an early age. “She would give me an allowance every two weeks for chores and I had to manage my money for savings, fun and goals just like an adult,” he says. She also gave him three rules to live by: save 10% of his money, always stick to a budget and never spend more than he earned.

Thoughts on hitting 850: “This may sound weird to some, but to have an 850 credit score was not a milestone for me financially,” he says. “I realized a long time ago that your credit score is only half the battle … cash flow management is what matters the most.”

BrendaBrenda Vaughn
44 years old
Athens, Ga.

Her score: 825

Her credit stats: Brenda has 6 credit cards including 3 general use credit cards (cards that can be used anywhere) and 3 retail store credit cards. Her credit history is 25 years old. She has a mortgage loan with a balance. And, she has borrowed money to buy cars and to pay for tuition.

How she uses credit: Brenda still has the first credit card she opened at age 19, at her mother’s urging. She admits it took her a while to get the hang of it. “I didn’t always [pay my bill on time] and it was out of control a couple of times,” she says. Nowadays, she uses her cards primarily to earn cash back and pays them off every month. “My parents gave me a set amount of money each month while I was in college and said if I needed more then I needed to get a job and so I did.”

Her secret: Even with her history of missed payments on her accounts, Brenda’s score is still incredible. She has time on her side there. Since she hasn’t missed a payment in the past 15 years, those old negative marks have long been removed from her credit report. Negative marks can only stay on your credit report for up to 7 years.

Jim Jim Droske
51 years old
Willowbrook, Ill.

His score: 830

His credit stats: Jim has 9 credit cards and as of last month a total of $7,720 on those cards. That balance seems pretty high but because he has such a high total available credit across all his cards — $88,000 — his utilization rate is super low. He’s using only 9% of the credit he could be using, he says. Jim’s credit history is 32 years old and the average age of his accounts is about 10 years.

His secret: To put it simply, Jim is the perfect credit customer. He’s never missed a payment and he’s never had an account go to collections. At age 24, Jim was thrown into a job in finance, running the lending department at an auto dealer. He saw firsthand how important credit scores were when it came to getting the best finance rates from lenders. “I read a lot about how credit and credit scores work and still do,” he says. With Jim’s super long credit history and perfect payment record, it’s no wonder his credit is stellar.

How he uses credit: Jim is steadfast about what he charges — and what he doesn’t. “I only use credit for bigger purchases that can not reasonably be paid for in cash,” he says. “I do not charge for points and always pay much more than the minimum payment due until it is paid off.” He only carries a balance on three of his 9 credit cards just to keep them active, he says.

johnJohn Ulzheimer
48 years old
Atlanta, Ga.

My score: 850

My secret: Like most of the people I spoke with, I have one huge advantage here. I’m kind of old! And that means my credit history is older than average — 22 years and counting. Fortunately, credit scoring models take age into account when they calculate scores. The older your credit history, the higher you score will be.  I also have a stellar payment history. I can say I haven’t missed any payments since 1991, when I graduated from college and started working at Equifax.

My credit stats:  I have 13 credit cards and a total of 19 accounts, active and inactive on my credit report. As of last month, I carried a total of $9,500 on those cards with a total credit capacity of $133,000. That makes my utilization rate a low 7%.

How I use credit: I pay my cards in full each month and have never carried a balance. The beauty of not carrying a balance is that I never have to pay interest, no matter what my APR is. In fact, I have no idea what my APRs are because they’re irrelevant to me. I don’t shy away from applying for credit but only do when I actually need it.  I learned about credit from my years working for Equifax and FICO.

So what’s the real secret to scoring 850?

Here’s what all of us have in common…

None of us avoid credit. In fact, we all have a TON of credit cards. But we use them wisely. None of us have negative marks on our credit reports and we keep our monthly balances low relative to our total credit limit. Last but not least, we all have credit histories that are at least 15 years old, which makes up 15% of our FICO score alone.

John Ulzheimer
John Ulzheimer |

John Ulzheimer is a writer at MagnifyMoney. You can email John here

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Building Credit, Life Events

5 Practical Ways to Improve a Low Credit Score

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Improve Low Credit Score

When you’re dealing with a low credit score, chances are pretty good that you’ve had questionable advertisements show up in the mail claiming to be the cure all for creating healthy credit. These ads contain cheesy one-liners such as, “This one easy fix will set you on your way to a perfect score.”

If only that were true. Unfortunately, there is no one magic bullet for fixing a low credit score. It takes time and a bit of effort to improve a low credit score.

Check out these five real-life stories of regular people who were able to make drastic changes in their financial life by taking steps to improve their credit. You can use their practical, actionable steps to join the members of the 700+ credit score club.

1. Establish a line of credit

Kacie Shantz of Fairfax, VA, shares why establishing a line of credit is important and why your credit score matters.

“I grew up in a family that didn’t believe in debt. Unless you had the money to pay cash in hand, you didn’t buy it. My parents never had credit cards, and I thought I never would either. It seemed like a straightforward and simple finance plan to me. While staying out of debt is a good thing, I learned the hard way that not having a credit history can actually do harm. I applied for a government position but was rejected because of my lack of credit history.

I never knew that employers could even see my credit history or that it mattered. After that rejection, I decided to take out a low-limit secured credit card through my local bank. I’m still not a big fan of credit card debt, but I see now how establishing a line of credit can help you. It has been two years since that job rejection, and I now have a good credit score of 690.”

Kacie learned the hard way that having an established credit history is essential. Living “off the credit grid” can negatively affect your chances of being hired for that position of your dreams. A staggering 47 percent of companies reported checking the credit history of potential candidates, according to Forbes.

Even if you don’t particularly like credit cards, it’s a good idea to establish a line of credit in your name to boost your credit score. Having a good credit score can open up opportunities to you such as better employment offers and lower interest rates on home loans.

You also don’t need to carry any debt to build a healthy credit score. Just make one small purchase each month – thus keep your credit utilization low – and pay off your card on time and in full. You won’t pay a penny of interest to the banks.

2. Catch up on late payments

Evan Brown of Portland, Oregon, shares how paying off overdue payments helped him go from having bad credit to fair credit in just a year.

“I made some really poor choices in college, spending too much on my music, things for my band, and drinking with friends on the weekends. I didn’t always make monthly payments on time, either. I was too carefree to bother with my credit score. Unfortunately, that lifestyle left me with a terrible credit score of 530 and made it next to impossible to find a decent apartment when started looking for my own place out of college.

I was finally able to find an apartment complex in a less expensive area of town, but I knew I needed to improve my situation. For the next 12 months (the length of that first lease) I worked as hard as I could to pay off those credit debts from college. Building a positive payment history through a year of on-time payments and catching up on all of my overdue balances helped my score shoot from that low 530 to a fair 610. I was finally able to get approved for a nicer apartment. I learned my lesson…neglecting your credit card payments can have practical consequences. Don’t make the mistake I made.”

Outstanding debts and overdue payments are going to lower your score drastically because payment history accounts for 35% of your credit score. If you have a bad score like Evan did, do everything in your power to at least make your minimum monthly payments. Ideally, though, you should try to pay off those outstanding debts as quickly as possible. Getting up to date on your payments will improve your score, and prove that you are willing and able to manage your credit debt.

3. Lower your debt-to-income ratio

Angela Delgado, Los Angeles, shares how lowering her debt-to-income ratio improved her credit score over the course of a few years.

“After four years of expensive student loans for a state school, my credit score was suffering because my debt-to-income ratio was so high, especially since I didn’t get a job right away as planned. I was almost to the point of defaulting. That was a pretty scary financial place to be in, so I resolved to pay off my student loan debt as quickly as possible.

I cut off extraneous expenses and worked…a lot. I took side jobs nannying while also working full time in a preschool as a teacher’s assistant. I was very frugal, so I could make payments on my student loans with the highest interest rate first, and then I paid off the lower interest rates and subsidized loans. It took me four and a half years, but I can proudly say I’m debt free, and my score has improved dramatically. Now to keep my score high, as soon as I make a purchase with my credit card, I make sure to pay off the balance before the interest payments kick in. There is still room for improvement in my score, but for now, I’m pretty happy with a score in the high 600s, and my debt-to-income ratio is at a healthy 25 percent. With my loans paid off and having a reasonable debt-to-income ratio, I’m now looking at buying my first home.”

Keeping a low utilization ratio and making payments on time across all your loans and credit cards is an important strategy for keeping your credit report healthy and your score high. Never carry a balance on your credit card month-to-month and make sure you pay at least the minimum due on loans by the due date. Defaulting on loans can cause a lot of pain to your credit report and score.

If you’re interested in buying your first home, either to live in or as an investment property, you need to have a low debt-to-income ratio. Most mortgage professionals won’t even look at you seriously unless your ratio is below 35 percent.

4. Check your credit score (and dispute inaccuracies)

The following is my own story about why checking your credit score is absolutely essential for improving your credit score.

“About a month ago, I decided to get my free annual credit report to check my credit score. I’m so glad that I did. There were three outstanding medical bills that were reported to the credit bureaus. Bills that, due to our having moved and the bills not being forwarded correctly, I had no idea were outstanding. Luckily, I caught them early on, was able to get the bills taken care of, and now those dings are erased from my credit report. Simply taking care of those reports and disputing the claims after they bills were paid in full raised my score 30 points.”

Checking your score annually will help you improve your score by keeping false, negative information from inaccurately reflecting your credit history. It also helps protect your identity by making sure no one is falsely using your name or credit cards

You can easily keep tabs on your credit score and reports for free. Remember, you should never pay for your credit report since, by law, you are able to receive a full report from each of the credit bureaus once a year by going to annualcreditreport.com.

5. Establish an on-time payment history

Jason Butler, who maintains his own blog The Butler Journal, shares his story of how he raised his score in less than a year by establishing an on-time payment history.

“I raised my credit score by 168 points in 8 months. The first thing that I did was get current on every bill that I had. It didn’t matter if it was a student loan or credit card bill; I made sure that I got up to date with each and every one of them. I also set up automatic payments for a couple of my bills. That was huge for me. I’ve never had the discipline to do that in the past, but I was focused on making this happen. 35% of your credit score is your payment history. I had to make sure that my payment history was getting better.

The next thing that I did was that I stopped using my credit cards. By just paying on them, my credit utilization ratio started going down. I’m not at the recommended 30% yet, but…with hard work, I should be under 50% by the end of the year.

I’m proof that even if you have thousands of dollars of debt, you can still raise your score. If you have a low credit, score I want you to realize that you can raise your score too.”

As Jason mentions, 35 percent of your credit score is determined by your payment history. One 30 days late payment can affect your credit score for two years, and one 60-90 day missed payment can affect your score for up to seven years. Even if you have a bad payment history affecting your credit score, you will be able to improve your score dramatically by paying your bills on time and re-establishing a positive payment history.

Like Jason realized, after just eight months of paying bills on time, paying off his outstanding debts, and using less of his available credit, he saw 168 point jump in his credit score.

Simple changes make a big impact

These changes are simple to implement and have a lasting impact on your credit score. If you’re ready to get into the 700+ credit score club, then be sure to:

  • Establish a line of credit if you don’t have one.
  • Make all of your payments on time.
  • Pay overdue bills.
  • Lower your overall debt by paying it off as quickly as possible.
  • Establish a positive payment history.

Fixing a terrible credit score won’t happen overnight, but it can happen. All you have to do is take those first steps towards proving your credit-worthiness.

Kristi Muse |

Kristi Muse is a writer at MagnifyMoney. You can email Kristi at kristi@magnifymoney.com

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Review: Secured Primor Gold Card by First Choice Bank

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A secured credit card provides people looking to build (or rebuild) their credit a simple and safe way to do so. It’s safe in the sense that you can’t get into too much trouble with the card because the limits tend to be low. It’s also safe for lenders because you have to put down a security deposit that will be forfeited if you don’t pay your bill.

 

As your credit score begins to improve, so does your opportunity to graduate from the secured to a regular, unsecured card.

 

Much like when analyzing an unsecured card, not all secured cards are the same. You need to consider the interest rates, amount of the required deposit, whether there’s an annual fee and if the lender reports to the credit bureaus. You need the lender to report your behavior because that will help increase your credit score (assuming you behave well). Finally, it’s important to analyze all fees and fine print about the card and the issuing institution.

 

The Offer

The Secured Primor Gold card by First Choice Bank is the premier secured credit card offered by First Choice Bank. First Choice Bank was founded in 2007 and only has physical branches in New Jersey and Pennsylvania. However, the card is offered to any U.S. citizen by applying online.

In order to open a Secured Primor Gold Card, you need to open (or already have) a savings deposit with First Choice Bank. Your credit limit will be the amount in your savings account with a $200 minimum and $5,000 maximum. It does come with a $49 annual fee.

Applicants can opt for either the Visa Gold or the MasterCard Gold. MasterCard and Visa are only payment networks so it doesn’t matter which one is chosen and most merchants typically accept both.

The Pros

First off, it’s easy to apply for this card. It can be done online, printed and mailed or printed and turned into a branch. There is no processing or application fee. Furthermore, there is no credit check with this card. If your income is at least $100 more than you expenses, you’re guaranteed approval. Even if you have no credit history or bad credit history, you’ll get approved. A credit check typically results in a ding on a credit score. While this should not stop you from applying for a card (read #4 on this helpful list about credit score myths), it’s nice to keep a score as high as possible.

As discussed earlier, this card does report to all 3 credit bureaus. The interest rate is 9.99% APY which is low for any type of credit card. Pay the card off in full each month and never worry about the interest rate. The due date is always at least 25 days after the close of each billing cycle.

The credit limit can be raised by $50 increments after the initial deposit has been made. The security deposit is placed into a savings account that earns .15% APY. The FDIC insures the money in the savings account.

This card has no monthly fee, but there is an annual fee.

The Cons

The card has a $50 liability policy. Meaning, if the card is lost or stolen and used by someone else, the cardholder is only liable for $50 of the purchases made. This is similar to a debit card or other secured credit cards. Many unsecured cards have a zero liability policy.

The card has an annual fee that’s higher than First Choice Bank’s lower-tier secured credit card. The annual fee for the Primor Gold card is $49. There are options for no annual fee secured cards. The card has a foreign transaction fee of 3%, which is an industry average.

Balance transfer is not an option. Graduating to an unsecured card is what many people wish to do. However, the transition can be cumbersome as this card does not offer an unsecured counterpart. You’ll need to apply for an unsecured card and then close this account.

Fees and Fine Print

Cash advances accrue interest from day one. All fees, except the mandatory annual fee, get charged cash advances. A replacement card is $29. The additional card fee is $29. The expedited payment fee is $10. The credit limit increase fee is $49.

The card must remain open for one year to receive interest on the security deposit. Cardholders must keep at least $200 in the account at all times in order to receive interest.

Pulling money out of the attached savings account can’t happen without the bank’s consent. This makes it tricky if a member has thousands in a security deposit and wants cash for something. It takes time before the withdrawal of funds can be available.

Who Should Consider This Card

This card is a relatively competitive option for those looking to rebuild credit. However, you can find options without the annual fee.

primor® Secured Visa Gold Card

The Competition

Secured Primor Classic Card by First Choice Bank

This is First Choice Bank’s lower tier secured credit card. Despite being the little brother, the annual fee is actually $10 less. However, the interest rate is higher at 13.99% but that doesn’t matter if the balance is paid in full each month. Approval is also guaranteed.

Secured Primor® Classic Card from First Choice Bank

Harley Davidson Visa Secured Card from US Bank

Non-bikers can still apply. This card has no annual fee, a rewards program and you even receive a gift – $10 in HD Genuine Rewards certificates. But rewards shouldn’t be a reason to open a secured card. The interest rate is very high at 23.99% APR (variable) so don’t carry a balance. There is also a $300 minimum deposit, which may be steep.

Harley-Davidson Visa Secured Card from US Bank

Capital One Secured MasterCard

This card has no annual fee, a security deposit as low as $49 and many neat credit tracking tools via the Capital One website. Such tools include credit score monitoring and a what-if simulator. This card reports to all 3 credit bureaus.

Capital One® Secured Mastercard<sup>®</sup>

APPLY NOW Secured

on Capital One’s secure website

Find other secured card options here.

Will Lipovsky
Will Lipovsky |

Will Lipovsky is a writer at MagnifyMoney. You can email Will at will@magnifymoney.com

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Won’t impact your credit score

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Building Credit, Reviews

The LAUNCH Secured Visa by Baxter CU

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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The LAUNCH secured Visa credit card is designed for those with limited or damaged credit.

To use the card, a member first secures a line of credit via a Baxter Credit Union savings account. It only takes $150 in the savings account to get started. As a person deposits more money into their savings account, they can request a higher line of credit. With this card, additional credit line increases can be earned by other ways such as by making on-time payments and setting up regular deposits.

Benefits of a Secured Credit Card

There are two basic types of credit cards: unsecured credit cards and secured credit cards. Unsecured cards have no collateral protection for the card issuers. This means that if you, a cardholder, doesn’t pay, the card issuer may never get its money. It’s a risk. But card issuers that offer unsecured credit cards have analyzed you, often with your credit report and score. The company deems you financially secure enough that no collateral is needed.

A secured card is for someone who is unable to provide a strong history of credit trustworthiness. With these customers, card issuers want to see collateral. Getting a secured card is not something to be looked down upon. It just may not have as many perks as an unsecured card. Getting a large line of credit is more difficult. But it’s a way of building credit and it’s the gateway to an unsecured credit card.

Fees, Benefits, and Application Process

Most secured credit cards have an annual fee. The LAUNCH card by Baxter CU is not one of them. The Annual Percentage Rate (APR) for purchases is 18%. Keep in mind interest rates are usually higher for secured cards. Balance transfers and cash advances are also 18%. If you pay the entire amount due each month, no interest will be charged. So be sure to pay on time and in full.

Fees:

  • Cash advance fee: $5.00 or 3% of the amount of each cash advance, whichever is greater. The maximum fee is $50.00.
  • Currency conversion fee: 1% of each transaction in US dollars
  • International transaction fee: 1% of each transaction in US dollars
  • Late payment fee: None
  • Over-the-credit-limit fee: None
  • Returned payment fee: Up to $25.00
  • Statement copy fee: $2.00
  • Rush fee (next business day): $30.00
  • Rush fee (second business day): $20.00

Benefits:

  • No annual fee
  • No penalty APR
  • No balance transfer fee
  • 24-hour member support
  • Free annual summary when you make at least 120 purchases in a year

Application Process

You can apply online or at a branch. Note that Baxter CU will do a card credit inquiry upon reviewing your application. If you do not give consent, your application will be terminated.

Who’s Eligible to Apply?

To apply, you must be a Baxter Credit Union member. This credit union is far more reaching than most others. Baxter CU is based in Vernon Hills Illinois and has many charter areas surrounding the Great Lakes and in Puerto Rico.

The credit union has three methods for becoming eligible for membership: community-based, employment-based, and family-based. The list of membership-eligible companies is vast. There are about 75 companies on the list. Eligibility can also be obtained through family relationships, such as being an immediate or extended family member of an existing BCU member. This includes those related by blood, marriage, fostering, or adoption. Eligible family members include spouses, children, parents, domestic partners, grandchildren, grandparents, aunts, uncles, nieces, nephews, aunts, uncles, and cousins. Please visit the BCU membership eligibility page for more detailed information about eligibility requirements.

The Fine Print

You must have a checking account to use this card. It takes a $5 nonrefundable deposit to open a checking account. There are 70,000 free ATMs nationally. If the credit card is lost or stolen, it is free to replace. However, it takes 7-10 days for a replacement to arrive. Rush shipping costs $20.

After being 10 days late on a payment, a late fee of $25 (or amount of minimum payment, whatever is less) is charged. After 30 days, a late payment gets reported to the credit bureaus. After 45 days, it goes into collections.

Other Cards to Consider

Capital One Secured MasterCard

This card also has no annual fee. The initial deposit can also be cheaper at $49 instead of $150 as with the LAUNCH card. But the deposit is based on creditworthiness and Capital One may ask for up to $200. The purchase APR is higher at 24.99% variable, so it’s important to never carry a balance.

This card also offers a credit-tracking tool, which is really neat for those aiming to improve their credit score.

Capital One® Secured Mastercard<sup>®</sup>

APPLY NOW Secured

on Capital One’s secure website

Please visit our complete list of secured credit cards. There you will find many other credit union credit cards.

Secured Cards Are Only Temporary

No one enjoys paying high deposits, annual fees, and high interest. However, a secured card is usually only a temporary situation. Within a year or two of responsible use, you can apply for a secured card. These cards often have fewer fees and far greater rewards. What’s important right now is to begin improving your credit score.

Will Lipovsky
Will Lipovsky |

Will Lipovsky is a writer at MagnifyMoney. You can email Will at will@magnifymoney.com

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Best of, Building Credit

Best Secured Credit Cards When You Don’t Have Any Credit History

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

storecard - lg

Updated: June 1, 2017

There is a difference between “no credit” and “poor credit.” No credit means you’ve never taken out a line of credit. It’s common with recent college graduates who didn’t take out student loans or 18 year olds leaving the nest and entering the workforce. Poor credit is typically the result of a slip up: missing a credit card payment, defaulting on a loan, a medical bill going to collections.

A secured card offers a solution to building credit from scratch. Because you don’t have any credit history, a lender isn’t inclined to trust you. A secured card is a way to prove to a lender you can be responsible while the lender minimizes risk.

[Make sure you understand HOW to use a secured card before you get one.]

In order to open a secured card, you put down a deposit and the lender gives you a line of credit – typically the same as the amount you put down. Not all secured cards operate the same way. Some secured cards charge an annual fee while others require steep deposits.

Before you start applying haphazardly, see if your local bank or credit union offers a competitive secured card. With no credit, you may have an easier time being approved with a financial institution you’ve already established a relationship with. If the fees and deposit required from your local bank or credit union seem to steep, be sure to check out the options below.

Below, we’ve outlined secured cards with a variety of conditions, but all of which tend to approve people with no credit history.

If you’re a current college student looking to build credit, then apply first for a student credit card instead of a secured card.

Discover it® Secured Card – No Annual Fee

Discover it® Secured Card - No Annual Fee
Discover has a market leading secured credit card and even if you don’t have any credit history at all, it is still possible to get approved. This card is best for people with no credit, or scores of 670 or less.

There is no annual fee, but you need to make a security deposit of $200 or more to establish your credit line. Our favorite feature is the automatic review process. Discover offers automatic monthly reviews starting at 8 months to see if you can be transitioned to an account with no security deposit.

You also get to earn earn cash back: 2% at restaurants and gas stations (on up to $1,000 in combined purchases each quarter). Plus, you get 1% cash back on all your other purchases. To avoid paying interest, pay your balance in full and on time every month.

APPLY NOW Secured

on Discover’s secure website

State Department Federal Credit Union

EMV Visa Platinum Secured Card from State Department Federal
SDFCU’s EMV Savings Secured Visa Platinum Card sounds elite, but you can be eligible for as little as $5, as long as you have the $250 for the deposit.

You are eligible to join the SDFCU if you’re an employee of the Department of State or one of the extensive organizations with ties to the credit union (all listed here under “who can join”). If you don’t work for the Department of State, you may also be eligible through the American Consumer Council. You can join the ACC for only $5 if you’ve used any major consumer product or service within the past 12 months – and you probably have.

USAA Secured Card

USAA Secured Card Visa Platinum<sup>®</sup>
The comes with one big catch, you have to be a USAA member or have military affiliation personally or through family in order to become a member.

USAA’s secured card comes with a $35 annual fee and you must put a deposit of $250 – $5,000 into a CD in order to open the secured card. This deposit will be your credit limit. The APR can range from 9.9% to 19.90%, so never carry a balance on the card.

Navy Federal nRewards Secured Card

nRewards Secured Credit Card from Navy FCU
Navy Federal Credit Union also requires military affiliation to be eligible for it’s nRewards Secured Card. It also comes with the hefty deposit of $500. There is no annual fee and a variable APR starting at 8.99%.

While there is a rewards aspect of this card, we recommend ignoring it and focusing on building your credit score above 700 so you’re eligible for a truly competitive rewards credit card.

DCU Visa Platinum Secured Card

DCU Visa Platinum Secured from Digital FCU The Visa Platinum Secured Card comes with a hefty minimum deposit of $500, but doesn’t have an annual fee. However, you will need to pay to join this credit union if you aren’t already a member.

  • Cost to join – $5 to join DCU + membership costs to join eligible organization if you aren’t eligible
  • Minimum deposit – $500

Just like with USAA and Navy Federal, you must be a member to be eligible. Except with the DCU, it’s easy to become a member. You can be eligible to join DCU if a relative is already member, if your employer offers membership or your community is included within field of membership. If none of these apply, you can join an organization with member privileges. Joining these organizations range in membership cost from $25 to $120. Once you join DCU, you have a lifelong membership, so you could cancel a membership with the other organization after joining.

Capital One Secured Mastercard

If you can’t afford a hefty deposit of $110 – $500, consider the Capital One secured card.

Capital One® Secured Mastercard<sup>®</sup> Capital One offers a secured card with a $49 minimum deposit for a $200 line of credit.

Unfortunately, the $49 deposit isn’t a guarantee because it’s based on “creditworthiness.” It is possible Capital One will ask for a deposit of $99 or $200, especially if you have no credit history.

APPLY NOW Secured

on Capital One’s secure website

 

Harley Davidson Visa Secured Card from U.S. Bank

Harley-Davidson Visa Secured Card from US Bank
We know it seems a little strange, but the Harley Davidson Visa Secured Card from US Bank offers a good option for those not interested in paying to join a credit union and trying to avoid an annual fee (aren’t we all?).

Here are the details:

  • 22.99% APR – so don’t carry a balance
  • Minimum deposit – $300
  • No annual fee

View other options on our Secured Credit Card Comparison Table

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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