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Ask Dave

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Maria wants to get a secured credit card to help improve her credit score, because she wants to buy a house soon. Dave doesn't think this is a good idea.

QUESTION: Maria is thinking about getting a secured credit card to help rebuild her credit score. She asks Dave if this would be a good step toward getting her credit back on track, and taking control of her finances, because she would like to buy a house soon. As you might expect, Dave isn’t a fan of this idea.

ANSWER: Getting a secured credit card is not a good idea. Let me tell you a couple of things. Number one, your income is your most powerful wealth building tool. If you don’t have any payments, you can build wealth and be generous. Being in debt is a guaranteed way to stay broke.

Number two, you can get a home mortgage with no credit score through a process called manual underwriting. Just make sure you have a good, long history of paying other things, like your rent and utilities, on time. You would also need to have all your debts paid off completely, and the accounts closed for at least six months.

I want you to become debt-free before you buy a home. I also want you to save an emergency fund of three to six months of expenses and a down payment before you buy a home.

Find out why Dave recommends becoming debt-free, building an emergency fund, and saving for a down payment before buying a home in our nine-week class Financial Peace University.