Establish your Credit Using Secured Credit Cards

| January 3, 2012

If you are a young person and looking for ways to build your credit, you can opt for a secure credit card. These cards are excellent even for the older people who don’t have any credit history. You will face difficulties in getting credit if you have not established any credit history. Almost all lenders scan your credit report before processing your loan application to ascertain whether you are eligible for the loan or not. They will not risk their money if you do not have any credit history.

It is not possible for anybody to function properly in a society without a good credit score. Securing a house, vehicle or even a job requires a credit check. Therefore, it is essential to have a good credit history.

Secured credit cards

Any person can use a secured credit card to establish his or her credit. Secured credit cards are fully secured by the money deposited by the borrower in the bank account. This card has a balance limit which is less than the deposit made into the bank account and you can use this card as a normal credit card. Secured credit cards are beneficial and secure both for the borrower and the lender.

Zero risk for credit card provider

There is no risk for the credit card company as it will only be lending that money which is completely secured by the amount deposited by the borrower in the account. This also prevents the borrower from taking large amount of money as debt. The borrower receives a bill each month as in case of regular credit cards.

Build your credit score by spending

The users of secured credit cards start building their credit report as they begin making purchases using these cards. Secured credit cards have higher interest rate than unsecured credit cards but have no annual charges.

Secured Credit Cards for people with bad credit score

Sometimes, due to circumstances, the credit history of person suffers. In United States, thousands of families have been badly affected by the economic downturn in some way or the other. All those who have bad credit history should not lose hope as they can take few actions to improve their credit score.

They can opt for a secured credit card as these cards have been designed specifically for the people with bad credit score. Secured credit cards allow people to open their card account to prove their credit worthiness. Users have to make a security deposit in their account and they can make purchase according to the limit of their account depending on the money deposited by them.

You should choose those secured credit cards that report all your payments to all the three big credit bureaus. Aside from this, you should check whether your card comes with a reasonable interest rate and fees. Within just few months, you will see dramatic improvement in your credit score. Sometimes, you may see improvement in your score within 12 months period of using your secured credit card.

Category: Bad Credit Loan

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