How to get a secured credit card
A secured credit card might be a good option for those looking to establish or build credit. Though the approval process might seem a bit more lenient than for an unsecured credit card, there are still some things you may want to know about qualifying for a secured credit card. Note that Chase does not offer a secured credit card.
What is a secured credit card?
Secured credit cards differ from traditional credit cards by requiring a cash security deposit to open an account. This acts as collateral, and your credit limit might be equal to the amount of cash you put down as a deposit. Some secured credit cards may have a minimum or maximum amount.
Anyone over the age of 18 might be able to open a secured credit card, and they might be an option for those with no or low credit. Because of the cash deposit that’s usually required, there may be less risk to the lender. If the cardholder stops making payments, the lender can use the cash deposit to cover the balance. This may allow for more lenient qualification requirements.
If you decide a secured credit card is right for you, you may be wondering how to get approved for one. So, how do you get approved for a secured credit card?
How to get approved for a secured credit card
To get a secured credit card, there are some basic qualifications that you’ll have to meet, in addition to other qualification requirements that may vary based on the issuer. Some of these basic qualifications include:
- Being 18 or older to qualify.
- A social security or individual taxpayer identification number.
- A non-P.O. box address located in the United States.
- Funds available for a security deposit.
How and when you pay your deposit will depend on the issuer, but you may need to have your bank information available at the time of the application or be willing to open an account with the card issuer to pay the deposit.
Additionally, the issuer will likely run a credit check when considering your application, so it’s important to be aware of what’s on your credit report. The credit score required will vary among issuers.
Which secured credit card is best for you?
There are a few factors you may want to pay attention to when deciding if a secured credit card seems right for you.
- Annual fees: Some secured credit cards have annual fees while some don’t.
- APR: It’s important to know your card’s APR, or annual percentage rate. when applying so you know what interest rate to expect if you are unable to pay a balance in full one month.
- Rewards and benefits: Not all secured cards offer rewards or benefits, but some may offer cash back rewards or purchase protections.
- Credit reporting: You may want to make sure the issuer of the secured credit card you choose reports to at least one, or all three, credit bureaus.
- Deposit requirements: Before applying to a card, consider whether you can afford the minimum amount required for a security deposit.
What to do if you’re denied for a secured credit card
Can you be denied a secured credit card? Though secured credit cards might be generally less restrictive about approval than unsecured cards, that doesn’t mean your approval is guaranteed. Yes, you can be denied. There are a few reasons why this might happen, particularly when they run a credit check:
- Bankruptcies
- Missed payments
- Credit score
When the issuer runs a credit check they will likely look for any red flags. Some secured credit cards may have a minimum score requirement and look into your credit score as well. If you’re denied, you could try the following:
- Ask why: The issuer may tell you why you were denied automatically, but if they don’t, you might want to find out. This could help you make improvements to boost your chances for approval next time.
- Build credit: You may want to find other ways to try and build credit and try to boost your score before applying for another card. This may include:
- Becoming an authorized user on a trusted friend or family member’s account, as long as the issuer reports the score.
- Signing up for services that report your rent and utilities payments to the credit bureaus.
In summary
Although Chase doesn’t offer a secured credit card, a secured card may be an option to consider for those with low or no credit score. The use of the security deposit lowers the risk for the lenders, potentially making the approval process less restrictive. However, it’s still possible to be denied a secured credit card, so before you apply, you may want to make sure you’re educated on this type of credit card.
