Secured Credit Cards Allow Students, Businesses, And Bad Credit Borrowers To Build Or Repair A Poor Credit Score And History

Secured credit cards have been a tool which many have used to both build or repair a credit score.  There are many who don’t have a credit history or cardholders who have seen their credit score drop for various reasons, but secured credit cards have been used by students, businesses and bad credit cardholders for a variety of purposes in the past.

Typically, a secured credit card is often referred to as a bad credit credit card as many individuals use this type of card to repair a bad credit score. However, individuals, students, or businesses can also use this type of credit card to build a credit history, which can lead to secured credit card offers in the future once the cardholder has established they are a safe financial risk and can handle the responsibilities that come with a credit card.

A secured credit card can be used similarly to an unsecured card, only to secured card requires the deposit of a sum of money into a bank account which protects the lender against loss in the case that a cardholder either misses payments or defaults on charges. While there are different types of secured credit cards offered from a variety of lenders, individuals or businesses who may be looking to use this type of card will not find a shortage of offers online. Yet, it will be important for students or businesses, not to mention bad credit borrowers, to explore their options and make sure they are getting the best rate they can find on a secured card.

Building or repairing a credit history takes time and effort, as well as financial discipline and responsible spending habits, but when a cardholder chooses a lender who may not be reputable or have their best interests at heart, repairing a bad credit score or building a good credit history will be more difficult. While some secured credit cards may come with certain fees and there will be interest charges involved, excessive fees and interest rates are not something that will be beneficial for an individual trying to build or repair their credit score.

Also, a good secured credit card lender will, obviously, report credit card charges to the big three credit bureaus so that a cardholder’s history and credit score will be affected positively, if the card is used properly. Again, the secured account attached to this card often forces the cardholder to develop better financial habits and repayment plans since a student, business, or bad credit borrower, if they use the card improperly, will lose money from the secured account and simply do further damage to their credit score.