Bad Credit? You May Need a Secured Credit Card
Wondering what you can do to improve your bad credit? There are many ways to raise your credit score, but learn how a secured credit card can help. It’s certainly one proven step you might take in establishing credit or rebuilding it. What’s more, you could begin as soon as today!
What Is a Secured Credit Card?
First of all, it’s important to understand how a secured credit card is different. A secured line of credit requires an initial refundable deposit. You provide money upfront, so you’re considered super low-risk. The security deposit serves as collateral against the charges you make.
Can You Incur Interest Charges With Secured Credit Card?
Yes. Secured credit cards users get statements every month. You have to make payments by due dates, and you can carry a balance, thus incurring interest.
Is Your Security Deposit Used for Monthly Payments?
No. That’s not the idea at all. Your initial deposit is there to make you low-risk. It’s there to get your foot into the credit card door. If you have bad credit, it’s likely that credit card companies and other lenders are turning you down left and right. This way, you invest in yourself and the opportunity to raise your credit. No one is taking a huge chance on you.
How Does This Help Me Exactly?
A secured credit card can give you a way to prove yourself when you can’t get approved for a traditional credit card yet. It operates like a real-deal credit card. So, your good financial behavior can shine and help your credit. But your creditor gets to feel safer in lending you money because you’ve put money down with them already.
Most secured credit cards report your utilization and payment history to the three major credit bureaus. But always confirm with the credit company. Your score won’t improve unless they’re reporting!