Sometimes, the answer to fixing our credit scores turns out to be anything but. You might have been denied a secured credit card, for instance. But all is not lost. There are steps you can take:
First, contact the lender
Secured credit cards are usually marketed to borrowers with credit that’s less than ideal, so if you’ve been denied one, it’s important to figure out why. Get in touch with the lender and ask why they refused. Insist that they be as specific as possible – that will help you plan your next steps.
Next, check your credit report
Get a copy of your credit report and go over it with a fine-toothed comb. If you know you’ve messed up with money quite a bit in the past, it might be difficult to relive your mistakes, but it’s vital to figure out exactly which improvements you should focus on making.
Also, be sure that your credit report doesn’t contain any errors; serious mistakes on your credit report could explain why you were denied the secured card. If you find errors, get to work having them corrected, then reapply for the secured card.
Then, try a credit union
It’s worth considering applying for a different secured credit card at a credit union, because they’re usually more sensitive to customers with poor credit than big banks are.
If possible, go to your local credit union and talk to a customer service representative in person. Be honest and explain that you’re trying to improve your finances, but have recently been denied a secured credit card and are looking for other options. He or she will probably have several suggestions to help you find the card or product that will get you on the path to repairing your credit.
Still stuck? Get creative
If you definitely can’t get your hands on a secured card, consider asking about:
- Secured share loans – with this type of loan, you deposit money into a special type of account at your credit union, then borrow from what you’ve deposited.
- Credit builder loans – these are very small ($200-$1,000) loans offered by credit unions to members who are struggling to rebuild their credit.
A few banks also offer another option, known as no credit check secured cards. But this option is very expensive, because the lender doesn’t check your credit before providing you with the card.
The idea behind all of these products is that, after you use them responsibly for several months, you’ll restore your credit enough to quality for a secured card. After using your secured card carefully for awhile, you’ll be able to qualify for an unsecured credit card. Think of it as building credit momentum.
Finally, consider credit counseling
If you’re feeling totally overwhelmed by your finances and can’t manage to sort things out, consider going to a nonprofit credit counselor for help. Be sure that the credit counselor you work with is associated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Those organizations are reputable and have a track record of helping consumers get back on the rails.
The bottom line: Rebuilding credit can be tough and time consuming, but worthwhile. If you’ve been denied a secured credit card, be sure to pursue the options discussed above. Don’t give up! Good credit can be yours again if you take the right steps.
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