Got Bad Credit? Get Secure

There truly may be a credit card for every person. Yes – even those with bad credit. But you must wonder why someone with bad credit would want plastic in the first place AND why would a credit card company intentionally take a risk like that?

Well, the truth of the matter is that to get good credit, you have to have credit. Credit card companies offer bad-credit credit cards for just this reason. Many of these credit cards issued to people with bad credit are secured credit cards. These cards require you to send money to the credit card company which is put into your account. You can use your credit card based on the amount of money you have “secured” the card with in your initial deposit. Once the money/credit limit has been reached, you will need to replenish your account in order to use it again.

The Big Difference

Sounds like a checking account, right? Well, it is the same theory but the one major difference is that secured credit card accounts will get reported the three major credit bureaus as any other credit card would. This difference is what is good for your credit. As you begin to use your new secured credit card responsibly, your credit history will begin to improve. It will show that you have been consistent with your payments and help to boost your overall credit score.

No Credit Is Just As Bad

Besides people with bad credit, people with no credit can also utilize the secured credit cards to establish credit history. There are people who make the mistake and think they can go through life without credit. While many may be able to live without credit cards, no one can really survive without a credit rating. Since there are so many ways your credit report will be used throughout your lifetime, it is best to establish and maintain good credit as soon as you can. Having no credit can be just as detrimental as having bad credit. As you begin to use your secured card and build up proof of credit worthiness, you should be able to transition to an unsecured card down the road.

Won’t Happen Overnight

Rebuilding bad credit is not an overnight process. It will take some time and a lot of effort on your part to ensure your credit report is accurate. Any disputes or incorrect information should be reported immediately to the credit reporting bureau so it can undergo an investigation. In the mean time, make sure you are paying your bills in a timely manner and work hard towards paying off your debts, even if that involves sacrificing some luxuries for a few months. Using a secured credit card will help you to rebuild some positive back into your credit report but that is only the start. You will need to remain active in improving your credit and continue to analyze your credit reports every few months to make sure all of your reported information is correct. When you attempt to apply for an unsecured credit card and find your application has been rejected, make sure you take advantage of your right to request a copy of your credit report and see where additional improvements can be made.

When you are ready to rebuild or initially establish your credit, be sure you have compared all of the different credit card offers on the market and don’t just jump at any chance to apply for a card. Use the internet resources to look at different cards and find the one that best fits your lifestyle and your financial goals.

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Repairing Your Credit Score: To Pay or Not to Pay »

This entry was posted on Friday, December 19th, 2008 at 5:40 am and is filed under Choosing a Credit Card. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.