Improve Credit Scores With Secured Credit Cards To Qualify For Mortgage

Improve Credit Scores With Secured Credit Cards To Qualify For Mortgage

This BLOG On Improve Credit Scores With Secured Credit Cards To Qualify For Mortgage Was UPDATED On July 31, 2017

Mortgage Loan Borrowers who are planning on getting a purchase mortgage loan or a refinance mortgage loan with prior bad credit can now qualify for home loans. Mortgage loan applicants with prior bankruptcy, foreclosure, or charge offs and low credit scores can improve and boost their credit scores with secured credit cards.

  • Depending on how low credit scores are, a secured credit card can boost credit scores by 20 points to 50 points. 
  • The ideal amount of secured credit cards to have is 3 secured credit cards with at least $500 credit limits.
  • Three secured credit cards can boost credit scores by 100 points or more in many cases.

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 credit scores be at least 700 FICO or higher. 
  • Consumers 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 Credit Scores With Secured Cards

Why three secured cards?

  • The first credit card with boost credit scores by 20 to 50 points. 
  • The second secured credit card will probably boost it by 15 to 30 points. 
  • The third secured  card will probably boost credit scores by 10 to 20 points. 
  • The fourth or fifth secured card will probably have a 5 to 10 point boost if that. 
  • Three is the magic number.

How Many Secured 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 all credit cards. 
  • Way to optimize the maximum effect on each credit card is by having an available balance factor. 
  • For example,  a $1,000 credit limit credit card and had a balance of $900, the factor is 0.90. 
  • This available balance factor is derived by dividing the $900 credit card balance by the $1,000 credit limit. 
  • However, if the credit card balance is only $100, then the 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 credit score. 
  • However, if there was a zero balance, the factor will be zero. 
  • Anything divided into zero yields a zero. 
  • There needs to be a number.
  • The smaller the better, as a factor to optimize credit score.

What Cards Are Recommended?

Consumers can search on Google for secured cards.

  • Make sure that the secured card company report payment history to all three credit reporting agencies; Transunion, Equifax, and Experian. 
  • Three secured cards with $500 credit limits is the key to having great credit and re-establishing credit to qualify for mortgages.

Related> How Can I Improve My Low Credit Scores

Related> Improving Credit Scores

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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