Using Secured Credit Cards To Raise Credit Scores

This BLOG On Using Secured Credit Cards To Raise Credit Scores Was UPDATED On July 18, 2017

Consumers who have bad credit and need to improve their credit scores to re-establish credit, secured credit cards are the best vehicle to the road for good credit. Using Secured Credit Cards To Raise Credit Scores is the easiest and fastest way of improving credit to qualify for mortgage loans.

  • A bankruptcy or foreclosure can easily plummet credit scores by 150 points or more. 
  • One 30 day late payment will drop scores by at least 40 points. 
  • A late mortgage payment will drop credit scores by at least 70 points. 
  • A recent collection account on credit report will drop credit scores by 60 points or more. 
  • Each hard pull credit inquiry will drop your credit scores by 2 points or more.
  • Consumers who have bad credit or no credit should start re-establishing credit with Using Secured Credit Cards To Raise Credit Scores.
  • The easiest and fastest way to reestablish credit and boost credit scores is by getting secured credit cards.

Why Secured Credit Cards?

It is going to be difficult for consumers with under 700 credit scores to get unsecured credit cards. Secured Credit Cards is a great bridge to raise credit scores to get to 700 plus credit scores in a rather short period of time.

  • Secured credits cards are just like any other unsecured credit cards.
  • The only difference is that the secured credit card company will require a deposit from the consumer.
  • Secured credit card companies will issue a credit limit equivalent to the amount of deposit.
  • In the event the secured credit card holder defaults with the payments, the secured credit card company will take the deposit and use that to offset the loss and close out the credit card account.

Re-Establishing Credit With Secured Credit Cards

Secured credit cards are a great way to establish new credit.

  • Consumers who had a bankruptcy, foreclosure, judgments, tax liens, and late payment histories will likely find it rather difficult in obtaining new credit. 
  • They need to re-establish credit and the chances are slim to none in getting approved for unsecured credit with bad credit. 
  • By getting secured credit cards, consumers will be able to establish credit.
  • As time passes and the credit cards age, the consumer credit profile will be stronger.
  • Secured credit cards report the card holder’s payment history to all three major credit reporting agencies. 
  • Consumers who are late with monthly secured credit cards payments, the late payments will be reported to credit bureaus.
  • Late payments will stay on consumer credit reports for 7 years and will drop credit scores.

Where can I get secured credit cards?

There are many secured credit cards available either at your local bank or via an internet search.

  • You can apply for secured credit cards here at www.gustancho.com or another great place consumers can get a selection of recommended secured credit cards is at Credit Fix Advisors 
  • Secured credit cards are the best tool for establishing credit and improving credit scores.

Applying For Mortgage With Low Credit Scores

All mortgage loan programs have minimum credit score requirements. There are minimum mortgage guidelines on credit scores. FHA Loans are the most popular loan programs in the U.S. for home buyers with lower credit scores, previous bad credit, higher debt to income ratio, and low down payment requirements.

Here are the the minimum FHA Mortgage Guidelines to qualify for FHA Loans:

  • For a 3.5% down payment home purchase FHA Loan, FHA requires 580 credit score.
  • Mortgage Loan Applicants can qualify for FHA Loans with outstanding collections and charge off accounts without having to pay out the outstanding balances.
  • FHA allows up to 46.9% DTI front end and 56.9% DTI back end.
  • FHA allows multiple non-occupant co-borrowers.

Cases Where Borrowers Do Not Meet Minimum FHA Credit Score Requirements

There are cases where borrowers or co-borrowers of FHA Loans do not quite meet the 580 credit score requirements.

  • Many borrowers do not understand why they have low credit scores when they have been paying all of their bills timely and make good income.
  • Most times for low credit scores is due to not having active revolving credit tradelines.
  • By getting three secured credit cards with at least a $500 credit limit, consumers can boost credit scores substantially.
  • Secured Credit Cards are the fastest and easiest tool in boosting credit scores to qualify for mortgage loans. 

Home Buyers who want to qualify for a home loan with no lender overlays, please contact us at 1-800-900-8569 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

Related> Minimum Credit Scores For Home Loan

Related> Co-Signing On A Loan

Related> Mortgage Rates And 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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