Getting a Secured Credit Card? This Is the Single Most Important Feature

Don't get a secured credit card that doesn't offer this feature.

If you are trying to build credit, a secured card can be a great way to do it. 

Secured credit cards work differently than unsecured cards. With a secured card, you need to make a deposit that's equal to the line of credit the card issuer makes available. For example, to get a $500 credit limit, you would need to deposit $500. With an unsecured card, on the other hand, you don't have to deposit anything at all to receive access to credit.

The money you deposit protects the lender from losses with a secured card, so virtually anyone can get approved for one. That's what makes these cards so great for people who want to build credit. They can access the card even when most other types of loans are off limits, and they can start developing the positive payment history that's so crucial to a good credit score.

If you're thinking about getting a secured card, you'll want to research your options carefully to find one that offers low or no fees and potentially other perks such as rewards. But while many factors go into picking the right secured card, there's one feature that's most important of all -- and you should not get a secured card that doesn't offer it.

You must make sure your secured card has this feature

If you are getting a secured credit card, you will want to make absolutely sure the card issuer reports to the three major credit reporting agencies. These include:

• Equifax
• Experian
• TransUnion

You'll want the card issuer to send a monthly report to these credit bureaus detailing how much of your credit you have used and whether your payment was made on time. The credit reporting agencies will then add this information to your credit report and it will be used to determine your credit score.

Your credit score is based on several factors, including your payment history; the level of credit used versus credit available; and the average age of your credit. In order for your secured card to help you improve your score -- which is one of the main reasons for getting it -- you'll need the card issuer to let the credit reporting agencies know about how you're doing with the card.  Unless this information is reported, your responsible use of the secured card won't do anything at all to improve your score.

How to improve your credit with a secured card

The good news is, most secured card issuers report your borrowing and payment behavior to the credit reporting agencies. So you'll want to make sure you show you are a responsible card user. This means you should pay your card on time every month, and should make sure not to use more than 30% of the credit available as charging too much on the card could hurt your score. 

If you reliably pay your bills and keep your credit use to a reasonable level, eventually your credit report will show that you're a borrower that can be trusted and your credit score will reflect that, opening doors for you with other lenders.