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Starting a credit journey seems different to everyone. Perhaps you started with opening a university Student Card Or, another type of card designed for No credit history. Perhaps you started by taking a bigger leap and getting a small loan.
Another popular starting point is to open a Secure credit cards. Like any other credit line, secured credit cards set a precedent for credit history length. It is an important factor in your credit score.
Secured credit cards work similarly to standard credit cards, but they require a security deposit to open a credit line, and in many cases no credit score is required. However, if you have been holding it for a while and don’t know when the time to keep your secure card open, you’ll unpack it when it’s time to move on, so keep reading.
How long do I need to store a secure card?
As your credit score increases over time Responsible use of secure cardsyou may be considering upgrading to an unsecured card without more compensation and deposits. However, even if you expand and stop using a secure card, it’s still worth it to keep the card open. This is because the age of your credit account is important when determining your credit score. The longer your credit history, the better your credit score.
Therefore, if your protected card you have is the oldest existing credit line you have, it will at least temporarily Close and close your credit score. That said, some secure cards have an additional fee in addition to your initial deposit. If you need to pay annual or other maintenance fees for your protected card, it may be better to close it down to reduce unnecessary expenses.
How secure cards affect your credit score
Like any other credit card, opening a secure card requires an application and an approval process. When applied, the credit score is Strict enquiries About your credit report. Despite this slight decline, your score will increase over time as long as you use your responsibly protected credit card.
Responsible card usage includes:
Consistent and responsible practices will help you get an immediate upgrade to an unsecured credit card.
How will closing your secure credit card damage your credit score?
If you feel that your secure credit card is no longer in use and are considering closing it, be aware that your credit score can be a temporary hit. Your credit score consists of several factors, including:
- Payment history
- Payment amount
- Credit history length
- New Credits
Credit history length accounts for 10% of your credit score, so if your secure card is the oldest, closing it can reduce your average credit history and reduce your credit score slightly.
Think carefully before closing your secure credit card account
Those with limited credit history may be bound when it comes to deciding whether to leave their secured credit card open. You can close your secure card early and draw your credit score, especially if it’s your first credit line.
Protected credit cards do not have annual fees and you can consider leaving them open instead if you can use them for small, repeated recharges or have the space to leave them in a safe drawer.
There is another option Upgrade to an unsecured card With the same publisher. Upgrading to the unsecured version of a secure credit card will give you the extra perks that come with your unsecured card and will return your deposit, but you will retain the same account. This prevents other harsh inquiries about reports and does not affect the length of your credit history.
When to upgrade to an unsecured credit card
You can start Consider an upgrade Once you have a fair or good credit score, you can get an unsecured credit card. Improve your credit score can take up to a year or more depending on your personal spending habits. The best way to get yourself to work until the upgrade is to pay your bill in full on time. Watch out for your credit report and challenge any errors that could derail your credit building efforts.
Conclusion
Your secure credit card is a tool that will allow you to work on it for you if you use it in the right way. Use your protected credit card responsibly over time Build your credit score. Once you reach a good score from the fair, look at the upgrade options offered by the same publisher if possible. Finally, to increase your credit history and credit utilization, consider leaving your secured credit card open even if you are not using it.
