The Surprising Credit Card Trend That’s Helping People Build Good Credit
It used to be that many people hadn’t heard of secured credit cards. If you said the words “credit card,” folks assumed you were talking about a regular, unsecured credit card, and didn’t even know there was another kind. However, these days secured cards are making a huge splash, and more and more people are signing up for them.
What exactly is a secured credit card, you might be asking. A secured credit card is a card that allows people with poor credit, limited credit, or no credit to get a credit card. Since these people have no borrowing history, or a bad history, lenders might be reluctant to extend them a line of credit. So they ask potential borrowers to put down a collateral payment as a deposit, and then the credit card issuer gives them a credit card with a credit limit equal to the deposit.
By doing this, the credit card issuer is protected in case the borrower defaults. However, the cardholder has a chance to prove that they are creditworthy, by using the card and paying off the debt as scheduled. This behavior is reported to credit bureaus, which will note the regular payment info and therefore cause the borrower’s credit score to improve.
Many uses for secured cards
This is one way that young people with no credit history are establishing credit, as well as a way for people with damaged credit to rebuild their credit score. It can be very difficult to get a credit card if you’ve never had one before, as in the case of a young person, or if you have bad credit because of unemployment, divorce, illness, or another reason.
Having bad credit or no credit is nothing to be ashamed of; many people are in the same boat. Secured credit cards are a useful stepping-stone back to good credit, and more people are taking advantage of them. After a certain period of regular payments, credit card issuers may convert the secured credit card to an unsecured account and release the original deposit into the account as a statement credit.
Latest Secured Credit Cards Guides
If you need to build credit, a credit card is a sure method. But sometimes it’s hard to get a credit card having not so good credit score. That’s where secured credit cards come to the rescue.
Secured credit cards are very similar to general unsecured credit cards, except for one thing.
Sometimes people with bad credit history are at a dead end and are looking for a way out. There are several options for people in a quandary. There are different types of credit cards. Here we want to show you the most common. A secured credit card may be the best option for people who […]
Continue »If you’ve ever wondered what exactly a “secured” credit card is, or why they’ve become so popular recently, read on to find out how this type of credit card is helping people establish and repair their credit.
Continue »If your credit is less than perfect, you might be wondering how you can ever get it back to where it used to be – or even better than it’s ever been before. A great credit score is helpful in all kinds of situations, including buying a home, a car, getting a business loan, renting an apartment, and even getting a job.
Continue »There are a few reasons why someone might not have any credit history. Young people who have recently graduated from college often don’t have a credit card yet, because they’re just starting out. Recent immigrants to the US also arrive without a credit history. And then there are people who have simply never had a credit card, for one reason or another.
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