How to Build Credit the Healthy Way

In the United States, the importance of having credit cannot be underestimated.  Not only is credit worth quite a bit when doing things like applying for a loan or signing a lease for an apartment, it also has many  benefits.

Ultimately, the better credit you have, the less money you pay.  Good credit means that you are capable of repaying a loan or paying for an apartment on time.  You are less of a risk to lending institutions, so they don’t need to protect themselves as much by giving you a high interest rate.  Instead, people with good credit get approved for smaller interest rates.

So how do you get this so sought after “good credit?”

Building credit is all about making good financial decisions.  The key is knowing what you can afford and not buying what you can’t.  Although financing a purchase is not necessarily a bad thing, only do this if you can easily afford the monthly payments.

The traditional first step to establishing good credit is getting a credit card.  Ironically, you need credit to get a credit card.  But there are certain types of credit cards that are made specifically for helping you build credit.  These are called secure cards because you put down a security deposit of between $300 and $500.

Once you pay off this credit card and stop using it, you get your security deposit back.  It acts like a prepaid credit card with an important difference.  You put money on the card, and the amount you put is your limit.  Either you pay your balance off and get your security deposit back or if you can’t pay, your security deposit pays your balance.

But not paying off your balance will negatively affect your credit score while actively paying off your balance in full helps your credit score.

The difference between a secured credit card and a prepaid credit card is that you actively pay off your balance on your secured credit card every month, showing credit bureaus that you are financially responsible and can make payments regularly.

After about a year of properly using a secured credit card, you can apply for an ordinary credit card.  But the same rules apply.  Only buy what you can afford and pay off the entire balance each month.  Otherwise, it’s very easy to lose track and fall behind on your payments, and before you know it, you have massive credit card debt and a bad credit score which is the opposite of what you want, especially because credit cards have very high interest rates.

*If you need to take out a loan but you know that your credit score won’t cut it, consider having someone with good credit cosign loan.  Not only will your chances to get approved increase, it will also help your credit score as long as regular payments are made.

Good credit will really open doors for you, so take the time and make the effort to improve yours.

Take action now!  Here are four secured credit cards that will help you build credit:

  1. Bank of America Bank Americard Secured Credit Card is probably one of the most popular secured credit cards.  With limits ranging from $300 to $4900, this card will surely help you get started.  To apply, visit
  2. Capital One Secured MasterCard is a great option.  With only a small annual fee, this card can be used or not used without any problems.  Capital One also reports to all three credit bureaus to make sure that your credit changes. To apply visit
  3. Wells Fargo Secured Card is a perfect first credit card for anyone looking to build up their credit.  You can deposit anywhere from $300 up to $10,000 with only a $25 annual fee.  After using a Wells Fargo secured card you can graduate to a traditional credit card. To apply visit
  4. U.S. Bank Secured Visa Card allows you to quickly and easily pay your credit card bill online.  And because this card is Visa, it is accepted worldwide in millions of locations.  This card also has excellent fraud protection so that your money is safe.  To apply visit

Additional reading on the topic:

  1. Should I get a secured credit card?
  2. Secured Credit Cards: Not Everyone Qualifies
  3. 411 on secured credit cards



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