1. Payment history- 35%
2. Total debt owed vs. available credit- 30%
3. Length of time establishing credit- 15%
4. Types of credit established- 10%
5. Inquiries and New accounts- 10%

Ok, with all that said, I’ll answer your question.

Secured cards are a perfect way to establish credit. Being that you’re having to place a deposit upfront as collateral in order to secure a line of credit. Now the deposit wouldn’t be used unless the account became seriously delinquent, so whatever is charged on the card would need to be repaid like regular card. I’m going to point out some major advantages with a secured card.

The deposit is usually linked to either a savings account or certificate of deposit, which either way gains interest while you’re building credit. So, your money isn’t just sitting there. Also, by adding to the deposit, you can increase the credit line, which can help your score, because high limits not only show responsibility in using high limits, but it also creates a much-needed cushion between the total debt you have and available credit. So the higher you can get your limit, the better it looks when it reports on your credit.

Now a good way to use the card would be by making a small purchase ($20) that can be easily paid off on time every month. This not only shows activty on the account, but it also minimizes the interest that you have to pay, so the bill won’t get out of hand. I’ll give an example:

You buy like a couple of coffees at Starbuck’s or a CD of your favorite group every month, then pay it off when the bill comes. Then do it again. Also, add to the deposit as much as you can. Even though you would be increasing the credit line, you would treat the card as if it had a $50 limit, but you’re only spending $20. You do this like I said so the balance won’t get out of hand and you don’t get charged boatloads of interest.

Usually after a year or so of paying on time and keeping the balance low, if not 0, the card either converts to a regular card or a better card is offered. And more importantly, the deposit is given back to you with interest attached like I mentioned earlier. Although you’re using your own money, you’re “custom building” a high limit credit card, saving up money and building credit at the same time.

Like one poster said, there are some bad ones to avoid, so I took the liberty of posting links to some of the better ones out there.

As far as how much your score will go up, that will depend because having a credit card is only part of it. There’s 2 types of credit, revolving (credit cards, line of credit) and installment (student loans, auto loans, furniture loans, mortgages). You have to have a balanced mixture of the two to build a good score. But be patient, work hard, and most of all….

Good Luck!