According to recent data from FICO, the leading credit scoring company, roughly  43.4 million people have FICO credit scores below 599. What exactly does that say about American’s and their ability to obtain a loan?

Simply put, it means that roughly 25.5% of consumers are in the “bad credit” category and considered high risk for lenders. That means, getting a mortgage, a new car, even an apartment are out of the question for some.

As the FICO data proves, the number of people with bad credit has grown significantly post-recession, leaving more people with no idea how to dig themselves out of their credit woes.  There are many in the industry who believe that the way to deal with their bad or no credit histories is to ignore them. While time will certainly help, some negative information will stay on your report for seven to 10 years—that’s a possible decade of not being able to obtain a loan.

Many experts believe one of the best options for people with bad credit is to mix it up.  According to FORBS, that means “dillute the negative information by maximizing the amount of positive information coming into (your) credit report on a consistent basis. It’s like a dirty glass of water – the only way to clear it up is to continue to add clean water until the dirt is less noticeable.”

If you fall into the bad credit category, FORBES suggest that the the most inexpensive way for you to maximize the positive information on your credit report and rebuild your credit is to obtain a secured credit card.  How does it work?. Well, pretty much just like a regular credit card with a caveat: a secured credit card requires a deposit to establish the account and your credit limit matches the amount of the deposit you put down.

The minimum deposit to open a secured credit card is $200, in most instances. “This is a fully refundable deposit that you will get back once you close your account in good standing,” according to FORBES. Since the deposit acts as collateral, you can get the credit card at low risk to both you and your lender, so approval is likely to be easy, regardless of how bad your credit is.

“The reason that secured credit cards are a good and inexpensive option,” writes FORBES, is because the cards are reported to the credit bureaus on a monthly basis and  have a low fee structure and annual percentage rates of interest. TheOrchard Bank Secured Credit Card, for example, has an APR of 7.9%, no annual fee the first year and a $35 annual fee after that.

If you’re one of those individuals who isn’t quite ready to take on a credit card without fear of overcharging, don’t worry.  You can actually open a credit card account and not use it and it will still have a positive effect on your credit report.  How?  Well, explains FORBES, “ as long as the account is open and in good standing (which it will be if your balance is zero), you will be reported to the credit bureaus as current on the account each month.”  Current is good!

A good option for a low-maintenance, worry-free credit card, suggests FORBS, is the Public Savings Bank Secured Card.  “With this card you pay a one-time set up-fee of $75 and nothing else.”  In other words, you can open up the account, toss the card in a drawer, and forget about it until your credit score moves into positive territory.  Once that happens, and you can find out by checking your credit report for free once annually, you get your deposit back and your good credit.
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