Credit Approval Comes to Those Who Prepare

Even with damaged credit, you can still get approved for the auto loan that you need. You may be in the process of working to repair your credit rating, but you cant put your life on hold when reliable transportation is immediately necessary. With the right planning and preparation, buying a car right now with your current credit score is entirely possible.

Making Auto Financing Easier

Blindly taking on a task is always a challenge, but when you pursue a goal with the right knowledge, you will know what to expect every step of the way. And buying a vehicle wont be difficult if you are aware of the requirements involved.

  • Gather your necessary documents. This part is especially important if you will be pursuing a bad credit auto loan because you will ideally be working with a lender that is willing to look past your credit score. This means that you should be able to prove that you have a regular income that will support a loan payment, that you have established steady employment, and that you have maintained a stable residence. So, you will need to gather and organize your most recent pay stubs, your tax records, and a few recent utility bills.
  • If possible, have a down payment ready. It may be possible for you to get your loan financed without a down payment, but having at least a little money up front (and/or a vehicle with cash value to use as a trade-in) will be incredibly helpful. By providing a down payment, you will increase your approval chances, possibly be offered a better interest rate, and slow down the accumulation of negative equity. While there is no standard or required down payment amount, 10% of the price of the car is generally considered to be an acceptable sum.
  • Find the right lender. Not every lending source will be able to accommodate your compromised credit, but there are many lenders that are qualified to handle special financing for bad credit car buyers. And, generally, the best way to locate one of these lenders is to work with an auto dealer that utilizes their services. When you buy a car from a dealership that has connections to special finance lenders, you can handle all aspects of your car buying experience in one place, making the process simple and convenient.

Getting Matched with Your Dealership

If youre ready to purchase your next new or used car, truck or SUV, Auto Credit Express is your most direct source for auto finance assistance. If you apply with us, our experts will match you with the dealer in your area that can best serve your needs. And we can help you no matter what your credit situation looks like.

Just fill out our fast and secure online application to get started today.

6 Fees to Look Out for When Buying a Home

Lets cut to the chase. Obtaining a mortgage to buy a home, or to refinance one you already own, is not cheap. No two ways about it, acquiring property is going to cost you some bucks. However, knowing ahead of time what fees lenders charge including both upfront and later in the transaction can help ensure youre getting a fair and competitive loan offer.

Upfront Fees

There are fees you’ll need to pay upfront before the loan transaction commences. This will vary from lender, bank or loan broker, but there are three main fees that lending companies may charge before a loan closes.

1. Appraisal Fee

This fee is probably the most common upfront cost across the board, whether youre working with a mortgage lender, broker, bank or credit union. Nearly every single loan product these days, other than the Home Affordable Refinance Program 2, requires an appraisal (though that may require an appraisal, too). An appraisal will determine the value of the property, and more importantly the loan-to-value, which is a critical factor in determining cost that can’t be known without a valuation. Additionally, the lender requires the appraisal to be paid upfront because if the loan does not move forward, the appraiser still needs to be compensated.

Expect an appraisal for a primary home transaction to be approximately $400-$500. Investment property transactions typically cost an extra $200-$300 because the appraiser has to create an additional operating income statement and rental market analysis for the property. This fee is called POC paid outside of closing which reflects an accounting credit when you receive mortgage loan disclosures noting that the fee is already paid for.

2. Lock Fee

When a lender locks your mortgage interest rate, they effectively are setting aside whatever your loan amount is at a specific interest rate and cost customized to you. If interest rates rise, the lender loses money. For example, if you are locked at 3.875% on a 30-year fixed rate mortgage, and rates rise to 4.125%, your loan becomes less attractive to the end investor. However, a lock fee helps support the lenders profitability.

3. Application Fee

By collecting a fee upfront, the mortgage company can then take this application fee and pay the appraiser. Its quite common that some mortgage providers might call an application fee and appraisal fee the same thing, with the same exact meaning that the appraiser needs to get paid and shouldnt have to wait until close of escrow for services rendered.

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Fees Due at Closing 

Mortgage loan fees can be paid for at close whether financed in the loan amount or paid for in cash at escrow closing.

4. Origination Fee

This is the margin the lender earns by taking a loan application, arranging the loan, procuring funds and subsequently closing. This fee varies across the board, but it typically runs more than $1,000. Also included in this amount: any processing fee, underwriting fee or lender fee. If working with a mortgage broker, the origination fee is also any percentage of compensation you agree to pay to that mortgage professional for arranging financing for you.

5. Discount Fee

Traditionally, a discount fee is an upfront fee you can pay in order to obtain a lower interest rate that will give you a lower monthly payment. Your credit score, loan type, occupancy, down payment/equity and loan size could all affect your rate and any discount fee/points. Discount fees can be anywhere from as little as one dollar to several thousand dollars, depending on the rate and scenario you have set up with your mortgage provider. Additionally, you can choose negative fee/points, which is also known as a lender credit.

6. Lender Credit

Let’s say, based on the day you choose to lock in your interest rate, there is no cost with that particular interest rate, but actually a credit amount. This credit amount is a direct credit in real dollars toward your closing costs, reducing your fees when refinancing or reducing your cash to close when purchasing a home.

For a lender credit, you’ll pay a slightly higher-than-market rate based on your loan and credit scenario – more than you would be if you were paying points, or paying none.

A Word on Loan Disclosures

Keep in mind that a loan disclosure, which shows your total closing figures, is an estimate.

When you’re buying a home, one of the main pieces of information a mortgage provider needs from you is the address of the property you plan to purchase. If you are pre-approved for a mortgage, but have yet to ink a purchase contract, your lender should have given you a pre-approval letter. Only once all parties have signed the purchase contract for an identified property is the lender required to send you loan disclosures within three days of creating an application.

When refinancing, an address, as well as job, income and loan amount numbers can be estimated at this time, and loan disclosures are sent within the three-day window. A word to the wise: Initial loan disclosures during a proposed refinance are subject to change, as is the interest rate and any associated discount costs, based on the appraised value once it comes in.

Your credit plays a big part in how much you pay for your mortgage, which affects how much house you can afford, as a better credit score can get you a lower interest rate. Before you start shopping for a home, you can check your credit to see where you stand and to deal with any problems or errors with your credit. You can see your free annual credit reports from each of the major credit reporting agencies through You can also keep an eye out for changes by getting your free credit report summary, updated monthly on

More on Mortgages amp; Homebuying:

  • Why You Should Check Your Credit Before Buying a Home
  • How to Refinance Your Home Loan With Bad Credit
  • How to Get Pre-Approved for a Mortgage

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Top 7 No Annual Fee Credit Cards Of 2015

There are plenty of different credit cards on the market, many with tempting offers and rewards, so it can be hard to figure out which card is best for you. Some credit card companies charge a fee when you are first approved for a card which is an expense you can avoid if you search for a no annual fee credit card. Credit cards without an annual fee are attractive because you arent paying a yearly premium just to use a line of credit.

While no annual fee credit cards are attractive, some of these cards have fewer rewards. If you get a credit card without an annual fee, you might not be able to amass as many bonus points or cash back rewards. But for many consumers, a credit card without an annual fee is still the right choice, and one that will ultimately leave you with more cash in your pocket.

Here are seven of the top credit cards with no annual fees:

Capital one quicksilver cash rewards

The Capital One Quicksilver card is a very attractive cash rewards credit card that also comes with no annual fee and a relatively low APR. You receive 0% APR on both purchases and balance transfers until December 2015 (almost nine months from today). Then, the on-going APR is 12.9% to 22.9%. The rewards are incredibly strong and easy to understand. Cardholders receive 1.5% back on all purchases with no limit to the amount. In addition, you receive a $100 bonus after you spend $500 during the first three months of card ownership. The card does have a balance transfer fee of 3%, but no foreign transaction fees. You need good credit to qualify for this card.

Chase Slate®

The Chase Slate® card has no annual fee, and comes with a 15-month introductory period where the APR is 0% on both purchases and balance transfers. The most attractive feature about this card is the lack of any balance transfer fees for the first 60 days of card ownership. Most card issuers charge a 3% fee to transfer your balance, so this is a significant savings. The card’s on-going APR ranges from 12.99% to 22.99%, depending on your credit worthiness. There are standard perks such as fraud protection, Chase Online Management, and the ability to add additional credit card users. However, this card does not come with the rewards that are associated with a number of other credit cards. You’ll also need excellent credit to get this card.

Discover it®

The Discover it card has a very attractive APR, ranging from 10.99% to 22.99%. There is a 0% introductory period for the first 14 months of card usage on both purchases and balance transfers. This card also has a rewards program, unlike some cards that have no annual fee. You can get 1% cash back on all eligible purchases, and 5% on revolving categories each quarter. Those categories include movie theaters, restaurants, home improvement, holiday shopping and gas stations. You need a strong credit history in order to qualify for this card.


Besides having no annual fee, the Blue Cash Everyday from American Express has one of the best rewards features on the market. Cardholders receive 3% back on supermarket purchases up to $6,000 per year; 2% back on purchases at gas stations and select department stores; and 1% back on all other purchases. There is a one-time bonus of $100 that youll receive in the form of a statement credit once you spend $1,000 during the first three months of owning the card. Consumers receive 0% APR on purchases and balance transfers for 15 months; and then an on-going APR ranging from 12.99% to 21.99%. You will need excellent credit to be approved for this card. In addition, there is a 3% balance transfer fee.

Discover it Miles

If you are looking for mileage rewards, the Discover it Miles card is tough to beat. You receive 1.5 miles for every dollar you spend. Plus, during the first year, Discover will double the miles youve earned. In addition to no annual fee, the card has an attractive introductory offer of 0% for 12 months on purchases. The on-going APR is 10.99% to 22.99% depending on your credit worthiness. Discover pays for your in-flight Wi-Fi fees (up to $30 a year) with a statement credit. There is a 3% balance transfer fee. Like a number of these cards with no annual fees, you need excellent credit to be approved.

Capital One Platinum Prestige

The Capital One Platinum Prestige card may not have a rewards program, but it has one of the lowest on-going APRs of any major credit card on the market: 10.9% to 20.9%. In addition, the card has a 0% introductory APR until June 2016 (almost 15 months from today). There are no annual fees or foreign transaction fees. There is a 3% balance transfer fee. Consumers with good credit may qualify for this card.

Citi simplicity mastercard

Along with no annual fee on the Citi Simplicity card, you can expect a variable APR of 12.99 to 21.99%. Additionally, the card comes with 0% APR on purchases and balance transfers for the first 21 months of card ownership, the best introductory offer of any major card. The card also has no late fees or penalty fees. The card does not have a rewards program. You’ll need an excellent credit profile to get your hands on this card too.

Each of the cards on this list requires either a good or excellent credit score. These cards are extremely attractive, and credit card companies know that consumers want to get a card without an annual fee.

It’s great to be able to get out of one of the many fees that are associated with credit cards. If you have worked hard to achieve or maintain great credit, you will likely be eligible to choose from one of these cards. Make sure that apart from the no annual fee, you are selecting a credit card with characteristics that fit your lifestyle and purchase patterns. When you are deciding between several cards, be sure to research the terms and conditions of every card you are considering to fully understand the charges you may be incurring.

Can My Bank Take My Social Security Benefits to Pay My Credit Card Bill?

If you owe on an old debt and receive Social Security payments, you may be wondering whether that money can be taken to pay for the outstanding debt. Generally speaking, Social Security Income (SSI) is protected by federal law. It’s a welfare program to support those who cannot care for themselves. If your Social Security is deposited into a bank account, a creditor with a judgment cannot execute against that account to satisfy the claim against you. There are exceptions, however.

If your Social Security income is from a disability award (SSDI) or Social Security retirement income, then it is not completely protected by federal law. Claims for taxes or other money owed to the government, child support obligations or student loan payments can be satisfied from this money.

Don’t Mix Your Money

For this reason, it is important not to mix your Social Security money into an account with money that comes from other sources, as it may become impossible to figure out which money is protected and what is not. When you mix your funds, you may lose it all to your creditors.

A reader raised a different but related question: “Can a credit union setoff my account that contains Social Security money to pay an overdue credit card bill I owe to the credit union?”

The key word here is setoff. While it is a simple word, setoff is a difficult concept to describe. When you deposit funds with an institution like a bank or a credit union, that institution owes you that money. In effect, you are lending that money to the bank and in exchange, they pay you interest on that “loan.” Likewise, when you borrow money from that same bank, you have an obligation to pay them back. Setoff is the right to cancel out the obligations. Typically, you will see a bank take money out of your account to satisfy a debt that is owed to it.

Setoff is a creature of the common law with roots in ancient England. Most deposit institutions like banks and credit unions will also have an account agreement that will cover setoff. The deposit contract allows the bank to invade your account by withdrawing money and applying it to debts it is owed. Both the common law and deposit agreements seem to be contrary to the Social Security Act protections. This would mean the bank might take money out of your account that contains only Social Security funds.

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The Social Security Act amp; Setoff

Social Security funds are not entirely protected from setoff. Banks are not allowed to offset Social Security funds for just any money owed. The debt that is owed must arise from the same account relationship. This means that the debt must arise as the result of the deposit account. If the account where your Social Security money is deposited has incurred overdraft fees or account charges, then the bank or credit union can take money out of the account as an offset for those fees owed to it.

A bank or credit union cannot take money out of an account where only Social Security money is deposited as a setoff for other debts owed to it. If you have a credit card or loan account with the same institution that is not being paid, that institution cannot take money out of the account to pay it unless you authorize that transfer.

How Your Accounts Are Protected

Effective May 1, 2011, the US Treasury has enacted certain steps that banks must take to safeguard Social Security funds, Veteran’s benefits, Federal Railroad retirement unemployment and sickness benefits, and Civil Service Retirement System and Federal Employee Retirement System benefits. When the federal government inserts an electronic tag in all direct deposits of exempted payments, the bank has to follow the regulation.

  1. Within two business days after a bank receives a garnishment order from a court, it must review the customer’s account and determine what money in the account is exempt from seizure. Those payments cannot be frozen or garnished.
  2. Banks are required to exempt all tagged deposits made during the two months prior to the receipt of any garnishment order and protect those deposits from garnishment.
  3. Within three business days of receiving the garnishment order, the bank must provide the customer with the name of the creditor, the date of the garnishment and the amount of both protected and non-protected assets in the account.
  4. Amounts owed for federal taxes and in response to state child support agencies cannot be protected from garnishment even if they come from otherwise exempted federal sources. In other words, even under this new regulation, your Social Security or federal pension payments can be garnished to pay for overdue federal taxes or for child support.

As always, if you think that your accounts have been wrongfully setoff or garnished, you need to take action to protect them. Consult with a qualified lawyer to protect your rights.

If you want to see how collection accounts are affecting your credit, you can get a free summary of your credit reports updated every month on

More on Managing Debt:

  • 5 Tips for Consolidating Credit Card Debt
  • Understanding Your Debt Collection Rights
  • The Best Way to Loan Money to Friends amp; Family

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Hack Your Credit Score: Pay Off Holiday Credit Card Debt |

Credit Cards » Credit Hack: Pay off remaining holiday debts

Credit Hack 1: Pay off that holiday debt

Still revolving holiday credit card debt? Chances are, youre not alone.

In the US, average credit card debt increased about 3.5 percent from November 2013 to January 2014, according to a Bankrate analysis of Experian data.

But dont take solace in the fact that other consumers are probably still paying for the holidays, too.

Its in your best interest to pay off all your holiday purchases as soon as possible. High credit card balances will negatively skew your credit utilization rate — essentially how much credit you are using versus how much collectively has been extended to you — which, in turn, will hurt your credit score.

Fortunately, there are some strategies that can help keep those pesky holiday purchases from ruining your new year and tainting your credit report.

Attack those balances

First, refrain from putting more purchases on your credit cards.

Just try to use cash and your debit card as much as you can, while paying down existing debts, says Kevin Weeks, president of the Association of Independent Consumer Credit Counseling Agencies.

Next, prioritize payments. The most cost-efficient method for getting rid of your debt involves paying the minimum on your lower interest rate cards in order to put all the other funds you can toward the card with the highest annual percentage rate, or APR.

Disaster Looms for Many With Home Equity Lines of Credit


If you have been reading the headlines lately, you will notice a lot of news about home equity lines of credit. On the one hand, we are fearing the looming crisis of resetting HELOCs. And, at the same time, banks are celebrating the rapid growth of this product. Are we losing our minds?

The Reset Crisis

Before the mortgage crisis in 2008, HELOCs were incredibly popular. If you had equity in your home, the bank would give you a line of credit. You could use that line of credit in multiple ways: you could write checks, transfer funds, or even use a debit card. The infamous debit card was the true signal of a world gone crazy: it was easy to finance your latte over 30 years.

Help! I Don’t Have Enough Money to Pay My Taxes

About three-quarters of taxpayers receive a refund, according to 2014 data from the Internal Revenue Service. If youre among the roughly 27% whose returns are processed and you owe money, you have an important question to answer: How will you pay?

Perhaps more important: Can you afford to pay? If you have the cash on hand, you have the option of paying by directly transferring funds from your bank account, writing and mailing a check to the IRS (or your state government, if you owe state taxes) or paying with a credit or debit card. If youre paying with a debit card, the payment processing company will charge a fee of $3.89 to $3.95, but credit card payments require a convenience fee based on the amount youre paying. If the fee outweighs the benefits of paying electronically, consider another payment method.

If you cant afford the entire amount due, you should contact the IRS about your payment options. Even if you wont be able to pay the taxes by the deadline, its in your best interest to make as much of a payment as you can before April 18 to avoid failure-to-pay penalties, according to the IRS website.

Request a Short Extension

You can ask for an additional 60 to 120 days to pay your debt by filling out an Online Payment Agreement application on the IRS website (you can also call the IRS at 800-829-1040 to set up the payment agreement).

Paying as much as you can afford by the deadline will minimize the amount you pay in penalties and interest later, as will a shorter payment agreement. The amount you owe by the end of your extension will be calculated to include interest accrued to the end date, so if you plan to pay the full amount before the end of your extension, call the IRS to recalculate what you owe.

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Apply for an Installment Agreement

If you need more than 120 days to be able to pay the full debt, apply for an installment agreement. You also have the option of submitting Form 9465, Installment Agreement Request, in writing or calling the IRS, but the online application is a faster route.

You will be required to pay a one-time fee for entering an installment agreement. Once its set up, you will have a minimum monthly payment and due date, much like other bills, the difference being you dictate how much you can pay each month and what day youd like the payment due.

Use an Alternative Payment Method

You could finance your tax burden with a credit card or personal loan, if youd rather manage those instruments than deal with the IRS. Keep in mind theres a credit card processing fee — a percentage of what you owe — in addition to whatever APR your card carries, so that can be a costly option. The APR for late tax payments is 3%, which is pretty low, but you also need to consider the fees associated with late tax payments and setting up an installment plan.

Its up to you to determine the best option for your budget and your credit standing. Using a loan or credit card to pay your taxes can impact your credit. (You can get a free credit report summary on to see how an increased debt load would impact your scores.) The most important thing is to pay what you can by the deadline, because a tax lien and tax debt collectors could cause financial problems, too.

More on Income Tax:

  • How to File Your Taxes for Free
  • How to Protect Yourself from Taxpayer Identity Theft
  • How to Maximize Your Tax Refund

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3 Reasons Your Credit Card Issuer Could Close Your Account

Once you’re approved for a credit card, it’s yours for as long as you want it, right? Not necessarily.

If you don’t live up to your part of the agreement, the credit card issuer can close your account. Here are the three most common reasons issuers close accounts.

1. You’re in default.

The agreement you have with your credit card issuer is fairly straightforward. They agree to advance you money, and you agree to pay it back. At least, you agree to make regular minimum payments by the due date every month. If you stop paying entirely, the card issuer will understandably not want to advance you any more credit. And if you haven’t made a payment for 180 days (about 6 months), the company is likely to close your account.

What happens next: The credit card company will probably sell the uncollected debt to a collection agency to recoup some of its losses. After that, all your dealings will be with the collection agency. Your credit score will probably take a beating, and the black mark will stay on your record for seven years. You will also probably lose any credit card rewards you haven’t cashed in.

How to avoid defaulting: Make your payments on time, even if you can only afford to pay the minimum. If you do fall behind,  contact your lender and take a good hard look at your finances and see if there’s anything you can do to reverse the situation.

2. Your account is unused.

Failing to pay your bills isn’t the only thing that will cause a card issuer to close your account. You may also find that your account is shut down from lack of use, even if you have a zero balance. That’s because the credit card issuer makes money in the form of interchange fees (sometimes known as swipe fees) when you use your card. If you stop using the card, the issuer may choose to shut it down because they’re not making enough money to justify keeping the account open.

What happens next: If you paid the card faithfully while you were using it, that positive history stays on your credit report for up to 10 years, even after the account is closed. However, your credit might take a hit when a card with no balance is closed, because it reduces the amount of available credit you have. If you carry a balance on your other cards, your credit utilization ratio will immediately jump. And as is the case when you’re in default, you’ll probably lose any unspent rewards.

How to avoid letting your account become inactive: Use your card. Usually making one purchase a month is a safe bet. Of course, you should also be careful to pay it on time, even if the amount due is relatively small.

3. Something about you (or the issuer) changed.

A change in your financial record also can cause your account to be closed. This is a little hard to pin down, because it’s not always clear why the issuer has shuttered the account. It may be because your credit score dropped significantly, and the issuer now considers you too risky a borrower.

It’s also possible that the credit card issuer no longer offers the same terms it originally gave you, or that the card you’re using is being phased out. Whatever the case may be, the company can close your account if you’ve changed or if it’s changed what they want to offer their customers.

What happens next: Find out why your account was closed, if possible. You should also check your credit report to make sure there’s nothing fishy going on; if you spot an error that’s dragging down your score, be sure to take steps to have it corrected right away. Again, your unspent rewards are probably out of reach now, unless they were airline miles and are already showing up in your frequent flyer account.

How to avoid changing (in a negative way): Try to be a good customer — use your card, pay on time and keep your credit score nice and healthy. That will increase the chances that the card issuers will still see you as a keeper, even if they stop offering precisely the terms they gave you when you opened your account.

Virginia C. McGuire is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @vcmcguire and on Google+.

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Give Yourself Some Credit: How to Boost Your Credit Score

But what if you havent needed credit? Thats the situation my friend Chris finds himself in. Hes a 30-year-old professional who doesnt own a car and, apart from some school loans, hasnt needed to use credit. Thats admirable — no credit card means no credit card debt — but he knows good credit is essential to his future dreams of owning a home and starting his own business.

Theres a bit of mystery that sometimes surrounds credit scores, so I first had him find out his exact number. My favorite way to do this is through the free budget tracker Among its many valuable features, Mint tracks your credit score for you, automatically updating it each quarter, and even breaks out the elements that affect it so you know exactly what you need to do to move it higher.

According to, a score below 620 makes it less likely you will be approved for a standard credit card. With his limited credit history, this is where Chris finds himself. Lets take a look at his options for boosting his score.

The Friends and Family Plan

A pretty quick and painless way to raise your credit score is to ask a friend or family member with excellent credit to add you as an authorized user on their existing credit card account. Their credit account and related credit history will then show up on your credit report just the same as if you held the card yourself.

This is how I built up credit as a college student, and how I helped my former husband rehab his poor credit. Its a very effective strategy, and your benefactor never even has to give you access to the actual card.

Sound too good to be true? There are some caveats. You have to have a high degree of mutual trust for this to work — a missed or late payment by either one of you will hurt the others credit, and if the primary card holder racks up a high amount of debt, that could hurt you too. And of course, if the primary card holder gives you a physical card and you charge something to it, they are legally responsible for paying for it.

Secure Your Future

Not quite as simple, but equally effective is to get a secured credit card. With a secured card, you deposit cash, usually $200 to $300, which is held in a bank account as security in case you dont pay your bills. You can usually spend only up to the amount you have deposited, though some cards will gradually increase your credit line after several months of on-time payments.

The good news? Your credit score doesnt know the difference between a secured card and a regular one. As long as you pay your bills on time, your credit score should improve.

I recommend using this type of card to auto-pay a bill you already have, such as your mobile phone bill or your Internet bill. That way, youll have monthly activity on the card and youre not tempted to charge purchases you wouldnt otherwise. To be extra safe, set up a second automatic payment from your bank account to the card each month to be sure it gets paid on time. Mint comes in handy here — if you link your card to it, Mint will remind you when the bill is due.

The bad news? Most of these cards come with annual fees, ranging from $19 to $49, dont offer much in the way of extras and have double-digit interest rates. Of course, youre going to pay the bill in full and on time every month, so that wont be a problem, right?

Here are a few to consider (see a longer list at

  • If you can part with $300, no fees and the cool factor make the Harley Davidson (HOG) Secured Visa (V) a great choice. It even comes with a few extra perks, including a reward program for Harley purchases.
  • If you have limited cash on hand, try the Capital One (COF) Secured MasterCard (MA), which lets you get a card with as little as $49. This card is one that will reward your on-time payments with a higher credit limit over time, but be careful that you dont charge more than you can pay off each month.
  • If you are eligible for USAA membership (limited to those who have served in the military and their families), check out the USAA Secured Card Platinum MasterCard. It has an annual fee of $35 but comes with some useful features, such as travel and car rental insurance, and it has particularly good terms for active military members. USAA stashes your deposit amount (anywhere from $250 to $5,000) in an interest-bearing CD account.

Be Credit-Smart

No matter which option you choose to build your credit, there are a few key rules that will keep your score heading northward.

  • Pay your bill on time, every time. No exceptions! When youre in credit-building mode, ideally you will pay the bill in full each month, but even if you have to pay the minimum due, on-time payment is the golden rule of good credit.
  • Keep your credit usage low. Credit usage refers to the percentage of total credit you have that you are actually using. Creditors dont want to see you maxing out those cards, even if youre paying on time. You want to keep this number under 20 percent.
  • Dont go card crazy. As your score rises, so will the number of card offers that show up in your mailbox. Its tempting to apply for these cards, but be selective. Too many applications will damage your newly improved score. Once your score is in the high 600s (considered in the good range), choose one unsecured card with a reasonable interest rate (under 15 percent) to replace your secured card. Regardless of the rate, continue to try to pay off the card each month. If youve gone the authorized user route, nows a great time to get a card in your own name and let the primary card holder off the hook. Either way, continue to use your new card just as responsibly.

Robyn Gearey is a Motley Fool contributing writer. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

3 On Your Side: Common Mistakes That Affect Credit Scores

By Jim Donovan

PHILADELPHIA (CBS) If youre thinking ahead to some spring cleaning, you may want to put tidying up finances and your credit report on that list.  But first, 3 On Your Side Consumer Reporter Jim Donovan  looks at some credit score missteps you may not even realize youre making.

Spring brings some opportunities to dig out of credit card debt.   Maybe a tax refund will go toward putting a dent in an amount owed.   But maintaining good credit goes beyond just paying bills on time, and some consumers may be sinking their credit scores without even knowing it. recently looked at some of the common mistakes Americans make when it comes to credit scores.

First, if you pay off a card in full, dont be so quick to close that account.  Its actually a positive thing for your credit score to keep it open, as it widens the ratio of how much you owe, to how much credit you have available.  Using too much of your available credit, can cause your score to drop.

Consumers with good credit are also good targets for more credit, and often receive offers to open accounts with new lenders.  Choose those offers wisely, as those inquiries account for ten percent of your score.

Any good spring cleaning for your finances will include a check of your credit report.  These reports can clue consumers in to everything from an error on the part of a lender to an incident of identity theft.  You can obtain your credit report for FREE at