Welcome back. I hope you enjoyed your weekend. Some of you are at a point in your life where you want to buy a car or your first house. The big question you might have is “Where do I start?” If you do not have any credit and are being denied credit, the best place to start is a secured credit card.

A secured credit card is just like a regular credit card. The only difference is that you are required to put down a security deposit. It is usually from $250 to $500. Why do you have to do this? It provides security to the creditor grantor that you will repay your debt. Your limit is usually limited to the amount of your security deposit.

A lot of people say, “I have a debit card.” They are NOT the same. First and foremost, a debit card does not report to the credit bureaus. It does nothing for your credit score. A debit card is not an extension of credit. A debit card is just a way to access your bank account. A secured card is reported to the three credit bureaus, which are Experian, Equifax, and

TransUnion. These are the companies that report your credit score. The secured credit card is an extension of credit. Your purchases are not deducted from your security deposit. Each time you are effectively borrowing money from the credit card company and are obligated to repay that debt.

What happens from having a secured credit card once you are approved? You will get a credit score and it will affect your score. How it affects you is up to you. It will affect you in a positive manner if you pay it on time. It will affect you negatively if you are late. Please, please , please, do not be late. How can you make sure of that? We will discuss step two in our next time together. Till then.