What Is A Reason Why Someone Would Use A Secured Credit Card? | CreditShout

What Is A Reason Why Someone Would Use A Secured Credit Card?

By Dan Rafter / November 7, 2019
What Is A Reason Why Someone Would Use A Secured Credit Card

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Having good credit is important for a number of different reasons, as it allows you to get credit when you need it. In short, good credit is paramount on getting the best cards and loans from lenders.

If you don’t have good credit or you don’t have any credit at all, your credit opportunities are far less. What do you do when you have bad credit or no credit at all?

This is where a secured credit card can come in handy.

A secured credit card is a real credit card specifically designed to help you establish or build credit. If you don’t have great credit or no credit at all, a secured credit card can be your step to getting better credit.

Now, a secured credit card is not like a regular credit card in the sense that you can apply for it, get approved and you’ll have credit to use. With a secured credit card, you have to make a deposit to the lender and what amount you deposit will be your credit line.

For example, if you get approved for a secured credit card and deposit $300, that $300 will be your credit limit. If you deposit $1,000, that will be your credit limit. You’ll have to talk to the credit card lender about the maximum amount you can deposit as some lenders have specific deposit limits.

Why Use A Secured Credit Card?

There’s a handful of reasons why you’d want to have a secured credit card.

  • To begin building your credit
  • To begin rebuilding your bad credit
  • Help improve your credit score

If you’re using a secured credit card for one of these 3 reasons, you have to realize all secured credit cards are not created equal.

There’s one crucial element you need to make sure your secured credit card does: that’s reporting to the 3 major credit bureaus.

  • Build your credit
  • Help you rebuild your credit
  • Help improve your credit score

Before you go and apply for a secured credit card, better make sure it does report to the 3 credit bureaus. As long as they do, it’s going to help you build credit and ultimately improve your credit scores.

Another thing you want to keep in mind is if that secured credit card will turn into a regular credit card later. Now, all secured credit cards are not like that, so you want to be sure you ask about that before applying.

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