If you’ve ever put in a credit card application and gotten denied, there could be a variety of reasons. Maybe you don’t have enough established credit history -- this is common for young adults or other people who are becoming financially independent for the first time. Maybe your income isn’t high enough to be approved for that particular card or credit limit. Or maybe your credit score is too low. In that case, you may want to consider a credit builder program.
While there are a variety of ways to address the factors leading to a credit card denial, those with low credit scores may have the hardest time moving forward financially. But it doesn’t have to mean that you’re doomed. Keep reading to learn more about credit scores, credit building, and Academy Bank Credit Builder.
Why Are Credit Scores So Important?
On the surface, credit scores may look like they’re only numbers. But these numbers pack a lot of information into their three digits -- by using a variety of factors, they create a single score to tell a lender the creditworthiness of a borrower. In other words, how likely the borrower is to repay the loan amount. Credit scores generally range from 300-850, and a higher number is better.
Some of the factors impacting a credit score include the following:
- Payment history: Missing payments or not making payments on time is a quick way to sink your credit score.
- Credit utilization ratio: Using too much of your available credit can be a red flag for lenders.
- Length of credit history: Lenders look at your oldest and newest credit account, as well as the average age of all accounts.
- Credit mix: Do you have a mortgage, credit cards, a car loan, student loans?
- New credit: Making too many hard inquiries into your credit reports, as well as opening too many accounts, can lower your score.
Remember that your credit score can impact you in a variety of ways -- it’s not only about applying for new credit card accounts. It’s common for lenders to use your credit score when you apply for a mortgage or a car loan. But you may be asked for it in other situations: putting in an apartment rental application, applying for car or home insurance, or even applying for a new job.
What Is Credit-Building?
If you have a lower credit score than you’d like, it’s important to know that all hope is not lost. You can rebuild your credit -- it might just take some time and hard work.
Credit builder programs exist to help people build their credit in a safe, supervised way. That way, people with low credit scores can work on establishing a stronger credit profile, including on-time payments, which will eventually help boost their scores.
One popular way to do this is through credit builder loans. With credit builder loans, the “borrower” is actually paying the lender in installments that are going straight into their own savings account. Meaning that you aren’t really paying the lender (except for any fees and interest) -- for the most part, you’re actually paying yourself. By paying on time, your credit score should be looking better than when you started.
Another credit builder program involves a secured credit card, and this may be the best option for many people. A secured credit card is backed by a cash deposit, which can then be used if you default on your payment, meaning it’s less risky. With a secured credit card, making even small purchases and paying in full by the due date can help boost your score. As credit card companies automatically report payments to the credit bureaus each month.
Academy Bank Credit Builder Credit Card
At Academy Bank, we offer a Credit Builder Secured Visa Credit Card, which is perfect for those looking to improve their credit score.
With automatic reporting to the three major credit bureaus, Academy Bank is here to help you build a better credit history. Set your own credit limit between $300 and $3,000 based on the amount you deposit into your Credit Builder Savings account. Increase your credit limit by adding funds in increments of $50 or more to the savings account.
Features of Academy Bank Credit Builder include the following:
- No application fee
- No over-limit fee
- Automatic reporting to the three major credit bureaus to help you build a credit history
- Upgrade to an unsecured card with good performance.
- Added security of EMV chip technology
- Faster, more secure online transactions when you enroll in Visa® Checkout
How to Apply
Applying for the Academy Bank Credit Builder Secured Visa Credit Card is easy and free.
Keep in mind that you will need to deposit an amount into a Credit Builder savings account equal to the credit limit you are requesting. You can request any amount between $300 and $3,000.
For example, if you are applying for a $500 secured credit card, you will need to deposit $500 into a Credit Builder savings account. You will then be expected to make monthly payments equal to at least the minimum payment amount shown on your monthly statement.
Here’s what else you need to apply:
- Drivers License or Government-Issued ID
- Social Security Number
- Date of Birth
- Current Home Address
- E-mail Address
Working Toward Your Financial Goals
No matter where you are, Academy Bank will work with you to help meet your financial goals.
Learn more about our Credit Builder credit card* and get on track to where you want to be.
*Annual Fee applies. Subject to credit approval. Improved credit score is not guaranteed. Member FDIC.