Secured credit cards is the best way to improve your credit scores
If you are planning on getting a purchase mortgage loan or a refinance mortgage loan and have prior bad credit, bankruptcy, foreclosure, or charge offs on your credit report and have low credit scores, the best way to improve your credit scores is by getting secured credit cards. Depending on how low your credit scores are, a secured credit card can boost your credit scores by 20 points to 50 points. The ideal amount of secured credit cards to have is 3 secured credit cards. If you play your cards right, the three secured credit cards can boost your credit scores by 100 points or more.
Why secured credit cards?
Why secured credit cards? The reason being is that it is pretty difficult to get an unsecured credit card with bad credit. Most unsecured credit card companies will require that your credit scores be at least 700 FICO or higher. You would eventually want to get unsecured credit cards but the best ticket for an unsecured credit card approval is via the secured credit card means.
Optimizing your credit scores with secured credit cards
Why three secured credit cards? The first secured credit card with boost your credit scores by 20 to 50 points. The second secured credit card will probably boost it by 15 to 30 points. The third secured credit card will probably boost your credit scores by 10 to 20 points. The fourth or fifth secured credit card will probably have a 5 to 10 point boost if that. Three is the magic number.
How Many Secured Credit Cards Should I Get?
I strongly recommend that you get a $500 credit limit or higher credit card and use it periodically but never pay the balance to zero. Always leave a $10 dollar balance on your secured credit cards. How you optimize the maximum effect on each credit card is by having an available balance factor. For example, if you had a $1,000 credit limit credit card and had a balance of $900, the factor you get is 0.90. How you get this available balance factor is by dividing the $900 credit card balance by the $1,000 credit limit. However, if your credit card balance is only $100, then your factor is 0.10; credit balance of $900 divided by the credit limit of $1,000, yields the 0.10 factor. The lower the factor, the higher your credit score. However, if you had a zero balance, your factor will be zero. Anything divided into zero yields a zero. You need a number, the smaller the better, as a factor to optimize your credit score.
What secured cards do you recommend?
You can search on Google for secured credit cards. Make sure that the secured credit cards you get report your payment history to all three credit reporting agencies; Transunion, Equifax, and Experian. If you need a list of secured credit cards that I recommend, they are on my website. Go to www.gustancho.com and click on the RESOURCES icon at the top of the website. Then scroll down and click on CREDIT CARD OPTIONS. There are three secured credit cards and other credit cards that I recommend for my clients.
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