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Repairing your FICO score with secured credit

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Repairing your FICO score with secured creditBecause one of the only ways to increase a low FICO score is to use credit properly, consumers are often faced with the paradox of being denied that credit line due to a poor financial history. So how does one boost their score without having access to a major credit card? Look into a line of secured credit.

Secured credit is often the only option for consumers with a bad credit history. This type of card is issued by a bank and requires a cash deposit of $300 to $500, which will serve as the line of credit. Essentially, you are borrowing your own money, but the bank now presides over the account and the balance must be paid each month in a timely manner in order to improve your score.

"People should not get these cards to carry any interest," editorial director of Consumer Action, Linda Sherry, told Bankrate.com. The best way to use them is to purchase small items and pay the balance in full.

Make sure to do research and shop around before applying for secured credit, as some companies have been known to take advantage of their customers by charging high fees, while others have gleaming records. Also be aware of whether the issuer reports to the three major credit bureaus. Avoid companies that do not report your information, as it will have no effect on your credit score.

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