Having a bad credit record these days can cause you a lot of trouble, even beyond difficulties of getting approval for credit cards, having to pay high credit card rates, and applying for loans. Your credit profile can affect your insurance rates, and your mortgage rates (or if you get approval for a mortgage at all). It can affect where you can live because many landlords these days run credit checks on prospective tenants. It can even affect your employment status, as many companies have now adopted the practice of running credit checks on job applicants.
However, it is entirely possible to solve all of these problems, and that's by availing of secured credit cards so that you can re-establish your credit record into a more respectable level.
What's A Secured Credit Card?
To use a secured credit card, you need to first deposit a minimum amount, and this amount becomes your credit limit on the card. So if you put in a thousand dollars in your deposit, you can use the card for that amount only. However, some credit card issuers may increase the credit limit without the need for further deposits if your credit profile isn't totally atrocious or when you start making your payments on time regularly.
You can go online and find companies which offer secured cards, although if you're a member of a credit union you should inquire if they offer this service. About 50% of all the credit unions in the US offer secured cards to their members, and some of them may not ask for annual fees and charge comparatively lower interest rates.
If the credit union route isn't available to you, then you need to look around online for the best possible deal for you.
The Features of Secured Credit Cards
Each secured credit card has different features, and you really need to read the fine print so that you know what you're getting yourself into. Some cards don't charge for an application fee, which is great. Just about every secured card comes with an annual fee and for you the lower the better. Some secured cards are nightmares, however; some
Each card also has different minimum deposit requirements. Some cards are only for those who are new to credit, but others can help you rebuild your credit profile by reporting automatically to the three major credit bureaus.
How to Use Secured Credit Cards to Rebuild Your Credit Profile
The key to rebuilding your credit profile is to be assiduous in making all of your payments on time. Don't ever miss a single one. This is why it's important to choose a secured credit card that automatically reports all your credit card activities to the three major credit bureaus--you get credit for your good behavior. The issuer of the credit card should also not flag their reports to the bureaus as a secured card, as some experts believe that this may hamper your efforts in rebuilding your credit profile.
If you can behave responsibly for an entire year or so, you may be able to fix your profile enough that you will likely be eligible for an unsecured card with lower annual fees and interest rates.
We try to help borrowers with a variety of credit histories make good finance decisions. You can learn more online at our credit card and pre paid credit cards portal and by visiting the internet loan guide where we post related stories on consumer finance.