An old saying goes "It takes money to make money." Well, it takes credit to build credit as well. If you have no credit history or are looking to rebuild bad credit, you need to practice responsible credit management. And using a secured credit card to build credit may be the perfect jumping-off point.

What is a Secured Credit Card?

Your payment history on credit accounts is the factor that plays the biggest role in determining your credit score. So, if you are looking to build credit, you'll need a credit account in order to establish a strong payment history.

Many experts recommend that you start with a secured credit card. This is because they are easy to get approved for and serve as a great credit starting point.

Almost anybody can get approved for a secured credit card. "Regular" credit cards are unsecured, which simply means there is no collateral that the creditor can recover. But in order to open a secured card, you need a cash deposit to act as the collateral. That safety net gives people with bad or no credit a chance to get approved.

Cash for Secure Credit Cards

In order to get one, you must deposit your own money into an account with the provider. Typically, the amount you deposit then becomes the spending limit on the card. Many secured credit cards have deposit minimums as low as $200, according to

You are free to use the secured credit card just as you would a "regular," unsecured card. The deposit you made will stay with the credit card issuer, but if the account goes into default, they will use it to cover any losses.

Basically, a secured credit card functions exactly like a debit card. But in this case, you can use it to build your credit as long as the provider reports to the credit bureaus. It's very important that the issuing company reports to at least one of the major credit agencies (Equifax, TransUnion, Experian), but it's even better if they report to all three.

Using a Secured Credit Card to Build Credit

Once you get your secured credit card, you'll need to use it in order to build revolving credit. Establishing a perfect payment history with the card will show lenders that you are capable of responsibly handling credit.

However, you do not want to go crazy with it either. Ideally, you only want to charge expenses to it that you know you can afford to pay off each month. Also, you should aim to keep your utilization below 30% of the card's limit.

For example, a good strategy would be to buy one tank of gas per month with the card. Then, you can pay it off in full on or before your due date. This way, you avoid interest charges and keep your utilization low.

Then comes the hard part: remaining dedicated and practicing patience. You need to put together a positive payment history for a long period in order to see real progress. But, as long as you are keeping up with your other obligations, your credit score will start to improve.

When it comes to building credit, there are no quick fixes. Just concentrate on getting a secured card, use it responsibly, and make all of your payments on time.

Moving Forward

Once you establish a good payment history of at least six months to a year, it may be time to advance in the world of credit. This means applying for a regular credit card while keeping up with your good credit habits. You could also apply for an auto loan if you need a car.

An auto loan is another great credit builder. It's a type of installment credit, so it expands your credit mix and gives you a chance to establish responsible payment activity on a larger account balance.

At Auto Credit Express, we make finding auto financing easier and faster for people dealing with imperfect credit. Our free service will connect you with a local dealership that specializes in finding loans for people in unique credit situations.

If you need a car and are looking for another opportunity to improve your credit, then you've come to the right place. Get started by filling out our simple and secure online auto loan request today.