Secured credit cards are a common tool which consumers used to rebuild their bad credit score, but there are questions of whether borrowers should choose unsecured credit to begin the process of repairing a low credit score, as there are reports that more borrowers in a bad credit position may find unsecured credit cards available. Recent indications have shown that lenders are opening up lines of credit and access to borrowing opportunities, even for those who may be in a position where they have less than perfect credit.
Obviously, consumers who are looking for a line of credit to rebuild a bad credit score do have opportunities from both secured and unsecured cards, but questions as to whether consumers should use an unsecured credit card to begin the process of rebuilding a bad credit score is an issue where some may stand on opposite sides. Many might ask why a consumer would use a secured card if an unsecured credit card is available, but there are some advantages to secured credit cards when a consumer is beginning the process of repairing a poor credit score.
Typically, a consumer must deposit money into an account which will set their secured credit card limit and, obviously, guard the lender against loss if an individual defaults on their purchases. While reputable secured credit cards and unsecured cards will report to the big credit bureaus and, when used properly, will reflect well on a consumer’s credit score, secured credit cards can be more helpful and even affordable when it comes to building better financial practices.
Again, there are reports that state lenders are offering credit card opportunities even for borrowers in a bad position, these rates associated which credit cards for subprime borrowers may not be as affordable in some cases, even if a line of credit is available. Secured credit cards, since they are backed by a bank account, maybe more affordable for someone attempting to repair their credit score, which will obviously cut down on costs related to interest, but there are arguments that secured cards should not carry a balance and if the cardholder plans to make affordable purchases and promptly pay them off, an unsecured card may be just as helpful.
Credit card advisers, however, suggest that consumers who are unsure of whether they should use a secured credit card to rebuild their bad credit score, which typically leads to an unsecured card, or those who feel that an unsecured card may be best need to simply look at what rates, fees, and offers are available for their personal situation. Some consumers may be able to increase their poor credit score with the use of a secured credit card and get an affordable unsecured card later, but again, as there are more subprime credit card offers being presented to consumers who may, for example, have simply fallen behind due to unemployment rather than taking on too much debt, as a result more affordable unsecured options may be available.
At the end of the day, consumers who need to repair a bad credit score must first erase debts associated with this poor credit score before even thinking of getting a card, and then comparing the benefits of either a secured card or unsecured card, again factoring in fees and interest, and how these different card offers may help that particular person with their bad credit repair process.