Many people who may have a low credit score and poor credit history often turn to a secured credit card as bad credit borrowers often can get a more affordable interest rate on this type of credit card than they can with an unsecured credit card. When someone’s credit score drops oftentimes the interest rate on their credit cards will rise, which can be troubling for anyone who may want to improve their credit score but cannot afford high interest rates on their cards.
Secured credit cards offer the same benefits as unsecured credit cards, in that they can be used for any purchase and will reflect well on your credit history if used properly. A secured credit card typically says to a lender that a bad credit borrower is serious about improving their credit history and credit score, as a secured credit card will require a deposit into a bank account, the sum of which will set the credit limit on the secured card.
However, a secured credit card is not a guaranteed fix to a credit score problem. In order for someone with a bad credit score to improve their credit history with a secured credit card, they are going to have to develop new financial habits and use their credit card responsibly.
Anyone who can discipline themselves to save money, make a budget and stick to it, and live within their financial means will find they are more easily able to improve their credit score by using a secured credit card and they can also develop habits that will keep their credit score high and in many cases lenders will offer the cardholder and unsecured credit card if they have been responsible with a secured card.