One of the cornerstones of good personal finance habits is managing your credit well. This includes monitoring your credit report and knowing your credit score. I’ve shared how to do that with you previously, and Discover makes it easy by providing your FICO® Credit Score for free on monthly statements, but I know not everyone has good credit. Maybe you had overwhelming medical bills, made some bad decisions, got laid off, or any number of other circumstances could cause your credit to go ‘bad’.
Others have no or little credit history. It may be because of their age, or it may be because they simply haven’t used credit in the past. My son is a prime example. He just turned 18 a few months ago and has literally zero credit history. This summer, after he graduates high school, we’ll help him choose a secured credit card to start the process of building his credit while helping him understand the ins and outs of credit cards. My hope is that by doing so we’ll help him learn to keep his credit spending in check while he learns the benefits of good credit.
Whatever the case, there’s good news. You can always work to rebuild your credit, and while it takes some time and effort, the results are worth it. Not only will your credit score improve (making you eligible for lower interest rates), but you will find that by rebuilding your credit you are also building good financial habits that will last a lifetime.
One of the many challenges you face when you’re rebuilding credit is where to start. While I have plenty of advice on how to establish good credit, getting out of debt, and more; rebuilding your credit starts with facing the music, but ends with you dancing along.
While rebuilding credit with a credit card may seem counterintuitive it makes sense when you consider what credit reports take into account. Paying off debt is a great start, but you also need to demonstrate that you can use credit properly. That’s where a secured credit card comes in handy.
When you have no to little credit history it’s helpful to have a secured credit card to get you started building credit. Opening an account and using it to pay a bill each month, even a small one like your Netflix subscription, can have a huge impact on your credit history and score. Ensuring that your card is paid on time each month puts a positive check next to your name and makes it easier for a mortgage, business, or auto loan company to lend you money.
What is a secured credit card?
A secured credit card is a credit card that is secured by a deposit that the company holds as collateral. This is to ensure that they take on less risk while allowing cardholders the opportunity to build or rebuild their credit.
What’s a good option for a secured credit card?
Discover recently launched the Discover it® Secured Credit Card for consumers looking to build or rebuild their credit. The card comes with the same rewards and benefits as the Discover it® Card, including Cashback Bonus® rewards and FICO® Credit Scores for free on monthly statements and online, all with no annual fee. It’s a great way to keep an eye on your credit score as you build your credit.
The Discover it® Secured Credit Card requires applicants to provide a security deposit, which Discover holds as collateral. After one year as a cardmember, Discover will begin to review Secured Credit Card accounts each month to see if cardmembers can transition to an account that does not require a security deposit. These reviews are based on responsible credit management across all of the consumers’ credit cards and loans.
What are the benefits?
The Discover it Secured Credit Card features 2% Cashback Bonus at gas stations and restaurants on up to $1,000 in combined purchases each quarter, plus 1% Cashback Bonus on all other purchases. In addition, new cardmembers can double all the cashback they earn at the end of their first year as a cardmember.
Additional Discover it® Secured Credit Card offers:
- No late fee on first late payment, and no increase to APR for late payment
- Reporting to all three major credit bureaus
- $0 Fraud Liability Guarantee means cardmembers are never responsible for unauthorized purchases on their Discover card
- Freeze ItSM an on/off switch that cardmembers can access on the Discover mobile app or website to prevent new purchases, cash advances and balance transfers if they misplace their card
- Award-winning 100% U.S.-based customer service available day or night
To find out more on how using a Secured Credit Card can help build your credit visit Discover.
Disclosure: This post is sponsored by Discover. I was compensated for my time as part of the Discover Preferred Blogger Network. All opinions are my own.