What happens if i close a secured credit card

No-fee credit cards are good to hold onto because they can continue to lower your debt ratio and lengthen your average account age. Applying for multiple cards means lenders will check on your credit score each time, which negatively affects your overall score. Opening several brand-new accounts also has the unwanted effect of lowering your average account age.

Start by choosing just one, lower interest, no fee credit card and continue building your credit before you open any others. On a similar note Dive even deeper in Credit Cards. Explore Credit Cards.

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For more information, see our Editorial Policy. A secured credit card can be a great option for building or rebuilding your credit. There's no set amount of time you'll have to hold a secured card before your credit score improves and you're able to get an unsecured card—if you choose to.

How long you keep a secured credit card depends on how you manage the account, whether you're enjoying the card's features and, possibly, whether your card issuer offers to upgrade you to an unsecured card. Here's what you need to know. A secured credit card can help you build credit if you have a limited credit history or a low credit score. Either of those factors may make it difficult to qualify for a standard, unsecured credit card. When you apply for a secured card, you make a deposit to guarantee your credit line.

This lowers the lender's risk, because they can use your deposit to cover what you owe if you're unable to make payments. You use a secured card the same way you do an unsecured card, purchasing goods and services on the account and making payments each month.

If you're applying for a secured card, check to see that the card issuer reports your payment activity to one or more of the consumer credit bureaus Experian, TransUnion and Equifax. Lenders will use both your credit report and credit score to evaluate your future credit and loan applications. Payment history is the most important factor in your credit score , so having a history of on-time payments on your secured card can help you improve your credit score and secure future loans or credit cards.

Developing a strong credit history with your secured card can help you qualify for unsecured credit cards that may have higher credit limits as well as more features and benefits. Opening an account with a higher credit limit can also improve your credit utilization, as long as you keep your balance low. That's helpful, because credit utilization is one of the biggest factors in your credit scores.

Even with a secured card, there's really no quick fix to building or repairing credit. The goal with a secured card is to establish a record of on-time payments and keep your balance low. As you do so, you're likely to see your credit improve. Whatever your credit goals are—and they look different for everyone—one of the best things you can do is monitor your report and score regularly.

You'll also get to see the top factors influencing your score, which will give you insights into where you can improve. Once you've raised your credit score, your instinct might be to close the secured credit card account. After all, it served its purpose so it's time to move on, right? Not so fast.

Other issuers may offer an automatic upgrade to an unsecured credit card if you make a certain number of payments on time. In this case, your deposit will be refunded to you and you'll be able to start using your new, unsecured card. If that hasn't happened and you're eager to transition to an unsecured card, you could try applying for an unsecured card to see if you can qualify. If you can't, you may want to hang on to the secured card and continue to work on improving your credit score , then apply for a different card down the road.

Your total available credit also factors into your score as it relates to your credit utilization, so you may want to keep the credit line open to hold on to that available credit, even if you end up opening an unsecured account. Update : Have more financial questions?

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