To learn more about each of these options I am about to discuss below, I encourage you to start with the Bills.com resource Credit Score Report and Information. I am not aware that a "large" amount in a secured credit card account has more of an impact on your credit score than a "small" amount. Keep in mind that this secured credit card account is creating a new baseline for your positive credit history, this is an account you want to keep open for a long time. Therefore, $250 is a good compromise between making the card usable and giving the credit card company a free loan.
According to Fair Isaac Company, creator of the FICO score, it is relatively easy to make positive changes in one's credit score, in a positive direction, when the person's credit score is in the 500s. Therefore, you may be pleasantly surprised to see your score improve after your secured credit card reports your positive usage for a few months.
Here are a few factors that influence your credit score:
As you are inquiring about credit scores let me give you some information on how it is calculated. It is important to understand how your credit score is calculated. Your credit rating is calculated based on several variables, including:
This counts for approximately 35% of your score, is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.
Total debt and total available credit
This counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score. The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.
Length of positive credit history
This counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments. If you have accounts with long history (5 or more years) and no missed payments, you should keep these open and paid off.
Mix of types of credit
This counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.
The number of new credit applications you have recently completed
This accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.
If you would like to learn more about credit reports, credit scoring, and what it means to you, I encourage you to explore the wealth of material offered by Bills.com.
I hope this information helps you Find. Learn & Save.