Dear Dave,

I’m thinking about getting a secured credit card to help rebuild my credit score, because I’d like to buy a house. Do you think this is a good start toward getting my credit back on track and taking control of my finances? I make $50,000 a year, and I have $3,500 in debt and $2,100 in savings.

Maria

Dear Maria,

No, 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 have the ability to build wealth and be generous. When you have debt, all you do is send money out the door to make payments. So, being in debt is a guaranteed way to stay broke.

Number two, you can get a home mortgage with no credit score through a 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, Maria. 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. Buying a house when you’re broke and in debt is a really bad idea.

—Dave