Your Credit Rating and a Secured Credit Card
Do You Need a Secured Credit Card?
It’s important to understand some key terms when it comes to credit cards, and credit rating and secured credit card are two phrases that people often misunderstand. Unfortunately, misunderstanding these important terms can lead to some serious headaches. Want to make sure you're on top of your game? You need to read this.
Unsecured Doesn't Automatically Equal Good Credit
Consider the following scenario. You want a new credit, so you look online and apply for one that appeals to you. The credit card company notifies you a week later saying that you got an unsecured credit card with a $3,000 limit. You relax and figure you’re on easy street. After all, if you weren’t relegated to a secured credit card, you probably have a decent credit rating, right? That’s not exactly true. Just because your designer wallet isn’t home to at least one secured credit card doesn’t mean you have a good credit rating.
Department Stores Are Getting More Lenient
Another area that confuses consumers in addition to the status of a secured credit card is department store credit cards. If they get a department store card with a $1,000 limit, they assume their credit rating must be good. Department stores will extend credit to many consumers because of the high interest rates they charge. Qualifying for a high credit limit does not necessarily indicate a good credit rating.
Doing Your Research
The only real way to know your credit rating is to order a copy of your credit report along with your credit rating. It’s not a good idea to make assumptions about what your credit rating is particularly if you plan to apply for a mortgage in the near future. Many people who have a secured credit card know that they have a bad credit rating and a shaky credit history. Simply because you don’t have a secured credit card doesn’t mean your credit rating is excellent or even all that good.
Do yourself a favor and order a copy of your credit report from one of the three credit reporting agencies. Then in four months or so order a copy of your credit report from one of the remaining two credit reporting agencies, and a few months after that order a report from the third agency. You can get a free credit report once per year from each agency, but you will have to pay a separate fee to get a copy of your credit rating. Request your credit rating when ordering one of your credit reports and see just what it is. If it is good, you will definitely be able to avoid a secured credit card, but your credit rating might still be less than ideal even if you’ve never been denied a credit card so far.