Credit Builder Loan
- You will need $1,000 for a CD (certified deposit) and around $100 for loan fees.
- Ask for a credit builder loan at local banks or credit unions.
- The credit builder loan will require you to use the $1,000 you have to open a CD at the bank.
- The CD will earn interest while it's in the bank.
- The credit builder loan will be secured with the CD in the bank as collateral.
- The loan is almost garunteed to be approved.
- The bank will loan you $1,000 as part of the credit builder loan.
- There will be a fee of around $50 to $100 for underwriting the credit builder loan.
- The CD of $1,000 must remain in the bank until the loan is paid off.
- You can use the $1,000 the bank loaned you at your discretion. This includes using it to pay back the loan slowly.
- Instead of paying off the loan early, make regular payments on time that will count towards your number of on-time payments in your credit history.
- When the credit builder loan is repaid, you can then withdraw the money in the CD along with any accumulated interest.
Secured Credit Card
- A secured credit card needs collateral.
- A unsecured credit card does not need collateral.
- Be wary of banks that offer unsecured credit cards to people with bad credit histories.
- Secure credit cards are a good way to get credit cards with reputable banks and build your credit history.
- Secure credit cards usually have do not have perks or benefits. The secure cards do not have things like 0% intro APR, cash back, travel points or welcome bonuses.
- You will need between $200~$500 (you could use the money received from the credit builder loan if you did that first).
- Sign up for a secure credit card.
- You will be asked to send/deposit the money that will be used for the secured credit card.
- You are highly likely to be approved.
- You will get a initial credit limit close to the amount you deposited.
- Any late payments may delay or obstruct the timetable for getting your deposit back.
- The bank will hold the deposit until conditions for the deposit's return have been met.
- Although each bank has different terms and conditions, you will have the deposit returned after you've established a good history of on-time payments.