Individuals with a bad credit score and poor credit history often turn to secured credit cards in order to build up their credit score and improve their credit history. Many people with bad credit scores do not think to use a secured credit card or are unaware of how a bad credit score can be improved simply by using a secured credit card.
Unsecured credit cards often see an increase in interest rates when the cardholders credit score drops. These higher interest rates can be difficult to handle especially for anyone who is trying to improve a bad credit score.
A secured credit card often requires a deposit of a sum of money into a bank account that secures the account and sets the credit limit, as well as, can make the card more affordable for certain bad credit borrowers. A secured credit card shows a lender that the cardholder is serious about improving their credit score due to the fact that if they fail to make payments on secured credit card charges they will simply lose money without improving their credit score.
There are many lenders who offer a secured credit card, but it will be important to find the right card for your personal situation. Finding a reputable lender and a secured credit card that will not charge excessive interest rates or fees will be necessary in getting one’s financial life back in order.
However, it needs to be understood that a secured credit card is no guarantee when it comes to improving a bad credit score and a poor credit history. When used correctly, along with smarter financial habits, a secured credit card can be a valuable tool in improving a bad credit score. Yet, the secured credit card, when used improperly, can do just as much damage to one’s credit score and history as any other credit card.
Using a secured credit card wisely and developing better financial habits will be vital for any individual who is looking to build a better credit history and increase their credit score permanently.