Build Credit in Illinois, United States: Secured & Student Ca

Build Credit in Illinois, United States: Secured & Student Cards — What to Expect

Building credit is an essential financial step for many individuals in Illinois, especially for those who are new to credit, such as students or those looking to rebuild their credit history. Secured and student credit cards are two popular options for establishing credit. This article will delve into the various categories of credit cards available in Illinois, typical credit scores needed, annual percentage rates (APRs) and fees, application steps, and frequently asked questions.

Credit Card Categories

1. Secured Credit Cards

Definition: Secured credit cards require a cash deposit that acts as collateral. The credit limit is usually equal to the deposit amount. This type of card is ideal for individuals with no credit history or poor credit scores.

Usage: Secured cards function like regular credit cards. Users can make purchases and are expected to pay off their balances on time to build their credit history.

2. Student Credit Cards

Definition: Student credit cards are designed specifically for college students who may have limited or no credit history. These cards often come with lower credit limits and are more lenient regarding approval criteria.

Usage: These cards typically offer rewards and benefits aimed at students, such as cashback on purchases or discounts on educational expenses.

3. Cashback Credit Cards

Definition: Cashback cards allow users to earn a percentage of their spending back as cash rewards. They can be secured or unsecured.

Usage: Ideal for individuals who want to maximize their spending. Cashback percentages can vary based on categories, such as groceries, gas, or online shopping.

4. Travel Rewards Credit Cards

Definition: Travel rewards cards offer points or miles for travel-related purchases, which can be redeemed for flights, hotel stays, or other travel expenses.

Usage: Suitable for frequent travelers. These cards may have specific spending requirements to earn rewards and might offer additional travel perks.

Typical Credit Scores

In Illinois, credit scores are categorized as follows:

- Excellent (750 and above)
- Good (700–749)
- Fair (650–699)
- Poor (600–649)
- Bad (below 600)

For secured and student credit cards, applicants with credit scores in the fair to poor range may still have a good chance of approval, especially with secured cards, as they mitigate risk for lenders through the required deposit.

APRs and Fees

APR Ranges

- Secured Credit Cards: APRs typically range from 15% to 25%. The higher rates often reflect the increased risk associated with applicants with lower credit scores.

- Student Credit Cards: APRs can range from 13% to 24%, depending on the card issuer and the applicant's creditworthiness.

Fees

- Annual Fees: Some secured and student cards may charge annual fees ranging from $0 to $50. Many providers offer no-annual-fee options, especially for student cards.

- Foreign Transaction Fees: If you plan on using your card internationally, be aware that some cards charge a fee of 1% to 3% on foreign transactions.

- Late Payment Fees: These can range from $25 to $40, depending on the issuer.

Application Steps & Documents

Steps to Apply

1. Research Card Options: Understand the differences between secured and student cards, and evaluate which category suits your needs.

2. Check Your Credit Score: Knowing your credit score can help you choose the right card and understand your chances of approval.

3. Gather Required Documents:
- Government-issued ID (driver’s license or passport)
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Proof of income (pay stubs, bank statements, or tax returns)
- Proof of residence (utility bill or lease agreement)

4. Fill Out the Application: Most applications can be completed online. Be prepared to provide personal information and financial details.

5. Submit the Application: After reviewing your application for accuracy, submit it. You may receive an instant decision or be contacted later for further information.

6. Receive Your Card: If approved, your card will typically arrive within 7-14 business days.

FAQs

1. What is the best credit card for building credit in Illinois?

The best credit card for building credit typically depends on your financial situation. Secured cards are often recommended for those with no credit history, while student cards are ideal for young adults in college.

2. How long does it take to build credit with a secured card?

Building credit with a secured card may take around 3 to 6 months of responsible use before you see significant improvements in your credit score.

3. Can I convert a secured card to an unsecured card?

Many issuers allow you to upgrade from a secured card to an unsecured card after demonstrating responsible usage, such as timely payments and low credit utilization.

4. How often should I check my credit score?

It is advisable to check your credit score at least once a year. You can access one free credit report annually from each of the three major credit bureaus through AnnualCreditReport.com.

5. What happens if I miss a payment?

Missing a payment can lead to late fees and negatively impact your credit score. It is essential to set reminders or automate payments to avoid this issue.

6. Are there any benefits to using a student credit card?

Yes, student credit cards often come with rewards tailored to students, such as cashback on textbooks or discounts at popular retailers, making them a valuable option for young adults.

7. How do I increase my credit limit on a secured card?

To increase your credit limit on a secured card, you may need to deposit additional funds or demonstrate a consistent history of on-time payments. Contact your card issuer for specific requirements.

Conclusion

Establishing credit in Illinois through secured and student credit cards is a practical approach for individuals looking to build or improve their credit history. By understanding the different card categories, typical credit scores, APRs and fees, and application steps, you can choose the right credit card to meet your financial goals. Always remember to use credit responsibly to ensure a positive impact on your credit score.

About the Author

Marks Toms – Editor-in-Chief
Marks oversees editorial policy, compliance, and fact-checking at bankaccountsopen. Read more articles