Summary
Credit can feel like a double-edged sword—hard to get without history, yet necessary for financial stability. For those struggling to build credit from scratch or who need to improve their credit, secured credit cards fill the gap!
A secured credit card, like our UNITY® Visa Secured Card, is a powerful stepping stone, helping you build or rebuild credit responsibly. They are a useful tool for those who have been shut out from traditional credit cards due to limited or damaged credit history.
Unlike unsecured cards, secured credit cards require a refundable security deposit, which acts as your credit limit. This means that you are the one funding the credit card use.
When used wisely, it can help boost your credit score and open doors to better financial options.
How a Secured Credit Card Builds Credit
With no or a low credit score, many financial instruments are simply out of reach. Unsecured cards may carry high fees or come with high interest rates, and neither of these is good for someone trying to rebuild credit.
Too often, people underestimate the power of secured credit cards to help ramp up to a healthy credit score. Plus, these cards, unlike unsecured credit cards which require a decent credit score, tend to be far more accessible.
Every swipe, payment, and balance decision plays a role in shaping your credit history with a secured credit card.
- Reports to Major Credit Bureaus. Most secured credit cards, including our UNITY® Visa Secured Card, report to all three major credit bureaus (Experian, TransUnion, and Equifax). This means your responsible card use gets noticed where it counts.
- Establishes Payment History. Payment history makes up 35% of your credit score. Paying on time each month shows lenders that you’re reliable—a crucial step toward improving your score.
- Utilization Matters. Credit utilization, or the percentage of credit used compared to your limit, affects 30% of your credit score. Aim to keep your balance low (ideally below 30% of your limit) to show financial discipline.
Tips and Tricks for Credit Growth
A secured credit card is still only as effective as your approach to using it. There are tried and true methods to making the most of it.
- Use It Like a Debit Card. Treat it as money you already have, not as an open invitation to spend. This keeps balances low and payments manageable.
- Charge In Small Amounts. It’s easy to keep a low limit since you’re funding the card, but it’s also wise to charge only what you can afford and pay off the entire balance.
- Limit New Credit Applications. Each new credit application results in a hard inquiry, which can temporarily lower your score. Focus on making the most of your secured card before seeking additional credit.
- Automate Payments. Life gets busy, but your payments cannot wait. Set up automatic payments to ensure you never miss a due date.
Whether you’re starting fresh or recovering from past credit challenges, responsible use of a secured card can help you on your path towards a more secure financial future.
With OneUnited Bank’s UNITY® Visa Secured Card, you also get access to the Rebuild Credit Program, providing guidance on best practices for managing credit and debt.
Ready to get yours? Learn more and apply today!
