Both businesses and individuals have used secured credit cards over the past months to rebuild their bad credit score. Many individuals and companies have struggled due to the recession and fallout from many financial troubles that have befallen both homeowners and businesses, which has resulted in a dependance upon credit cards to meet the most basic needs, and in some cases, the inability to pay off these charges.
There have been business owners and private cardholders who have used their credit cards to make essential purchases in the hopes that things would get better and they could pay off these charges. Yet, slow economic growth and job market recovery have caused many to struggle in these areas and, as a result, have seen their credit score drop due to building a poor credit history.
However, secured credit cards have been a way that many businesses and people have been able to repair their bad credit score in instances where they have been unable to obtain a line of credit or handle high interest rates on their credit cards that have resulted due to a poor credit score. While a secured credit card for a business or individual cardholder is not a guarantee to a better credit score, it is a tool that many people have used in order to build a better credit history.
While there are online offers for secured credit cards and many sources who, again, cite the fact that secured credit cards are excellent for rebuilding credit, cardholders must be cautious before proceeding with this type of card. Again, a secured credit card does not automatically repair one’s credit score, yet it is a way in which a bad credit borrower can obtain a line of credit which they can use to build a better credit history and score over time.
This, however, takes financial discipline, smart spending practices, and making purchases in a way that allows the cardholder to promptly pay off these charges in a timely manner. A secured credit card requires the deposit of a sum of money into a bank account which protects the lender from loss if the cardholder defaults or fails to pay their charges. It’s for this reason that cardholders who seek a secured credit card must be serious about repairing their credit history since they will either use the card to their advantage or lose money from their secured account on purchases they made and do further damage to their credit score.
In the past, businesses and companies who have used their credit cards wisely have found a card that is best for their situation from a reputable lender that reports to the big three credit bureaus. After selecting a card, these cardholders have changed their financial habits in a way that has not only allowed them to improve their credit score but, for many, has given them the opportunity to obtain an unsecured credit card from their lender, which can be used to increase one’s credit score even more.