Can A Secured Credit Card Raise Your Credit Score

Unsecured credit cards offer a simple means to build up your credit history since no collateral is required to use it. Yet, if you have bad credit, the chances of getting approved for a unsecured credit card are virtually nonexistent.

If you do not qualify for an unsecured credit card, you could always apply for a secured credit card. These types of card use a savings account monitored by the card company to store a cash deposit. This deposit acts as a form of collateral.

The payment history on unsecured credit cards is monitored by the three major credit bureaus. Yet, some secured credit cards do not report their payment histories to these bureaus. This will vary from one credit card company to another.

Since the goal is to raise your credit score by using a secured credit card, you should locate those cards that take the extra measure to report their payment histories to credit bureaus. While they may or may not be listed on the application form, the benefits of using a secured credit card in this way may be further explained by the companys customer service department.

The process of raising the credit score is rather simple. You can take the secured credit card, make a payment for any purchases, and make sure that any payments due are paid on time. Secured credit cards are different from other cards. For instance, default payments are taken from the balance sitting in the savings account.

Getting approved for a secured credit card is fairly easy. Far less hassles involved than with other cards. There will be no required credit check since the saving account will be the source of collateral on the card. The only restrictions on getting approval for secured credit cards involve age and US residency; you must be 18 or older and living in the United States.

A secured credit cards limit is based entirely on the money deposited in the required savings account. Limits are also determined by this amount so you can raise the limit by adding more money. Cash deposited will earn a certain amount of interest unless you make a default on repayment. One of the biggest advantages of secured credit card is this limitation of funds. This means that you can avoid the dangers of credit card debt since you do not spend more than you have.

If you happen to be one of the millions that have bad credit or none at all, then a secured credit card may be the best choice. If you use these cards regularly and are able to pay promptly and on time, you will begin to see increases in your credit score. Eventually, you might qualify for better rates and more options.