Yes, you can rent a car with a secured credit card. But to rent a car with a secured card, you need to have enough available credit to accommodate the hold that the rental agency will put on your card. That’s the case with any credit card, yet it’s a bigger concern with secured credit cards because the spending limit on a secured card is equal to the amount of the security deposit you put down.
When you basically have to pre-pay for all of your purchases, you’re unlikely to have as high of a spending limit as you would otherwise. So even if you have enough credit available to cover the cost of your rental, plus incidentals, renting a car with a credit card could make other purchases difficult to complete until the rental company releases the hold on your account. Using a large portion of your credit for a car rental may also increase your credit utilization, which is bad for your credit score.
Before renting a car with a secured credit card, it’s important to know how car rental agencies charge for their services. Instead of charging customers upfront, the agency will place a hold on your credit card. The amount of the hold is based on your estimated rental costs. There’s also a charge for a security deposit on the rental. (This is separate from the deposit you put down to open the secured credit card account.)
When there’s a hold on your account, your card isn’t charged yet, but you won’t be able to use that amount of your credit limit until you return the vehicle and it’s inspected for damages. Then, the rental agency will remove the hold and charge your card for what you actually owe. These holds are standard practice, and you can probably ask how much the amount will be in advance.
You can build credit with a secured credit card in as little as 1 month, but it will take many months or even years to build a consistently good or excellent credit score. The length of time also depends on whether you’re building credit from nothing or rebuilding damaged credit. If you have no credit, you could see a good score after just a few months of paying on time. You’ll have a … read full answerVantageScore after 1 month and a FICO Score after 6. With bad credit, though, it will probably take 12-18 months of responsible use for you to move up to the fair credit range. Secured credit cards are great for building credit because they are easy to get and report to the credit bureaus just like unsecured cards.
But it's hard to give you an accurate estimate of how long it will take to build credit with a secured credit card without knowing the details of your situation. That’s where WalletHub can help. Just sign up for a free account, and we’ll give you a personalized credit analysis that will tell you what to improve and give you a better sense of how long it will take.
Here’s how long it takes to build credit with a secured credit card:
If you have no credit, it will take 1 month to get a VantageScore and 6 to get a FICO score. Depending on how responsibly you use your card, your first score could be anywhere from bad to good.
If you pay your bill on time and otherwise manage your finances responsibly, you can rebuild from a bad credit score (300-639) to a fair credit score (640-699) in approximately 12-18 months.
A good credit score based on limited information could easily fall due to an increase in credit utilization or a single missed payment. Building and then keeping a good or excellent credit score requires consistency over time. This is a project measured in years.
For people rebuilding credit, it will take 7-10 years for some negative information, like bankruptcies and late payments, to disappear from your credit report. But the older they are, the less impact they will have on your score.
If you’re looking to rebuild your credit, secured credit cards are the best way to do it. They’re easy to get and are indistinguishable from unsecured cards aside from the deposit requirement.
Rebuilding credit will take a while, so it’s best to get started as soon as possible. Some good behaviors to practice are always paying on time and using less than 30% of your available credit.
The best credit card for a 550 credit score is the OpenSky® Secured Visa® Credit Card. There’s no credit check when you apply, so approval is almost guaranteed. You just need $200 for a refundable security deposit and enough income to make monthly payments. This card also reports to all three major credit bureaus every month, which is your ticket to a better credit score. And a $35 annual fee isn’t too much to pay for that.… read full answer
The Discover it® Secured Credit Cardis another great 550 credit score credit card. It has a $0 annual fee and actually rewards you for making purchases. A 550 credit score won’t keep you from getting approved either. But a pending bankruptcy will.
Those aren’t the only credit cards you can get with a 550 credit score. In fact, there are two kinds of credit cards for people at that credit level: Secured credit cards and unsecured credit cards for bad credit. A 550 credit score is within the bad credit range, unfortunately. Bad credit goes from 300 to 639. But picking the right 550 credit score credit card and using it responsibly could help you improve your score to “fair” territory within 12-18 months.
Before applying for a card, make sure to check out its terms and conditions, or a FAQ page if there is one, just to make sure you fit the criteria for eligibility. You can also try getting pre-approved for a credit card. It won’t hurt your credit, and it will give you a good idea of your odds if you decide to apply.
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