Understanding what credit is and how your credit score can be improved is a crucial step toward reaching your financial goals. Your credit score is a measure of factors that may affect your ability to repay credit.
A credit score is dynamic and changes according to how much debt you accrue and how you manage your bills. To build credit wisely, learn how the Five C's of Credit - character, capital, capacity, collateral and condition - can affect your credit score.
Factors to
How you can use these five factors to strengthen your credit.
Use A
Secured Card
Requires an initial deposit. You can only spend up to 100% of that deposit - keeping you within your means. Best for beginners or rebuilding credit.
Unsecured Card
No initial deposit required. You can charge more than you can pay off - higher risk. Best once you're confident in your spending habits.
If you're opening your first credit card account or you're trying to rebuild a damaged credit score, a secured credit card account is one of your best options. The main advantage of a secured credit card is that you cannot use it to spend outside your means. You are required to make an initial deposit to open a secured card, and after that you will only be able to spend up to 100 percent of that deposit amount.
If you consistently make your payments on time, it could be possible to transform your secured card into an unsecured card, boosting your credit score.