What Is Exactly A Credit Repair Credit Card?

Banks Editorial Team · September 30, 2019

You may have heard the term credit repair credit card. But do you know what exactly refers to? Your credit score is one of the most important things in your life. It’s often what determines whether you get approved for an apartment or a home loan, it can set your rate on a car loan, and it will determine the sorts of rates and credit lines you can open in the future. If your credit rating isn’t very good, though, you might find there are a lot of doors closed to you. Given that it only takes a few bad decisions or some unfortunate luck to leave serious black marks on your credit history, it’s important to make sure that you repair as much damage to your credit as you possibly can.

And that’s where credit repair credit cards come into play.

 

 

 

What Is A Credit Repair Credit Card

What Is It?

While the name might make you think this refers to a specific, niche type of credit card, that isn’t actually the case as Bad Credit points out. Rather, a credit repair credit card is a card that you use specifically to help build up your credit, and to boost your score until it’s reached a level that you can get a better card, with better benefits.

The way credit works is fairly simple, at least in theory. You make a purchase on credit (a pack of gum, a tank of gas, what have you), and then you pay that credit back in a timely manner. The more often you can prove that you can be trusted to cover your debts, the better your credit rating becomes. Why? Because it shows that you are someone who is responsible with their money. The idea behind a credit repair credit card is that you start with a fresh card and a fresh line of credit — a blank slate. You keep it in reserve and only use it for specific purchases that you can pay back quickly without worrying about the balance or interest payments.

What Kinds of Cards Are There?

There are all kinds of credit cards out there, but if you have poor credit then you may find you have significantly fewer options to choose from. However, you’ll generally have two kinds of card options; secured, and unsecured.

A secured card, as the name implies, is one you’re going to have to make a down payment in order to use. This is ideal for those who have managed to secure their financial position, but who are still haunted by bad credit decisions. These cards typically give you some fringe benefits, like cashback on certain purchases, and the initial limit is often set based on your down payment.

An unsecured card, by contrast, is one that you don’t have to pay anything to use. While these are easier for those who can’t afford to make a down payment in order to get a new line of credit, it’s important to read the fine print. Often unsecured cards meant for those with bad or no credit offer no fringe benefits, and they typically have both higher interest rates and less forgiving grace periods. It’s important to make sure you know how the card works, and that you make no assumptions, otherwise you might end up hurting your credit score rather than improving it.

 

 

How Long Does This Kind of Credit Repair Take?

Credit repair is more of an art than it is a science, but generally speaking the few mistakes there are on your credit history, the faster you’re going to see results. And if you have no credit, as opposed to bad credit, then using this method of credit repair is going to show results relatively quickly. If, however, you have a long stretch of bad credit, then you can’t just get back on the wagon for a few months and expect it all to go away.

Building fresh credit (since that’s really the process you’re going through) is not something that happens overnight. Even if you make every payment, always stay within your means, and do everything right, you’re trying to cancel out your old, bad credit with fresh, new credit. But to do that you need to establish a new pattern of behavior, and to maintain it.

Think of your credit repair credit card like a gym membership. In the past, you haven’t been all that disciplined, and now your credit score has gone to seed. You want to whip it back into shape, so you get this new card to help you do it. But you can’t just go to the gym once or twice and expect to be back in fighting form. You need to go regularly, you need to maintain that form, and you need to change your habits. And it takes time. Generally, you’ll see some results in the first few months, but it can take a year or longer for the big, important gains you’re looking for.

These cards aren’t a quick fix… but they will get you where you want to be.

 

 

You may also like

  • Subprime has become a buzzword in the financial world over the last decade. When it comes to subprime credit cards, there's some good, bad, and ugly that you'll want to know.     Subprime Credit…

  • What credit score is needed for a credit card? The short answer is, it depends. Nearly any credit score will qualify you for some type of credit card, though a lower score may prevent you…

  • Credit card rewards programs seem to be getting better and better and better. These days, incentives like free trips, free checked bags, cash back, and sizable discounts can be alluring to even the savviest of…

  • Pursue effective credit repair to improve your credit score is one the best possible things you could do for your financial planning, debt, and budgeting for the future. A higher credit score can mean qualifying…