Getting credit nowadays is becoming a much harder task. Lenders take a look at CIBIL reports before giving out loans and credit cards. And thus, the people with lower credit scores get stuck since nobody is ready to provide them loans due to their lower scores. So what possibly could be a good solution for these people?
With low credit scores, there are very few card options out there for such people. These people have trouble getting unsecured cards and that is why secured cards would be the solution for them.
What is a secured card?
A secured credit card is basically a card given, based on the money placed as security deposit which is taken as collateral. And that is why lenders get the confidence that they will get their money back even if you have bad credit or no credit history. The credit line in your secured credit card is determined from your ability to pay, your income and your cash collateral deposit.
Secured cards are like prepaid cards but unlike prepaid cards, your payments would be reported to the major credit rating agencies like CIBIL, Equifax etc. thereby ensuring that your account history will be reported to your credit report. Thus, secured credit cards will help you establish your credit history.
How will these secured cards work?
Secured credit card works just like unsecured credit cards. You can use them for the usual everyday transactions where you use normal credit cards. As much as these secured credit cards can help you rebuild your credit history, a default in your payments and you would be back to square one, with the card issuer keeping your collateral deposit. The monthly payments are just as important for a secured card just as it is for an unsecured card. Secured cards are also reviewed at regular time intervals, if the card issuers find your credit behavior responsible (i.e by being regular on your monthly payments) they may qualify you to move to an unsecured credit card and get a refund of your collateral deposit.
That is how by making timely payments and maintaining your balances well within your credit limits on secured credit card , this responsible credit behavior might help you a lot in building or rebuilding your credit score.
source-secondary
Source: Secondary
With low credit scores, there are very few card options out there for such people. These people have trouble getting unsecured cards and that is why secured cards would be the solution for them.
What is a secured card?
A secured credit card is basically a card given, based on the money placed as security deposit which is taken as collateral. And that is why lenders get the confidence that they will get their money back even if you have bad credit or no credit history. The credit line in your secured credit card is determined from your ability to pay, your income and your cash collateral deposit.
Secured cards are like prepaid cards but unlike prepaid cards, your payments would be reported to the major credit rating agencies like CIBIL, Equifax etc. thereby ensuring that your account history will be reported to your credit report. Thus, secured credit cards will help you establish your credit history.
How will these secured cards work?
Secured credit card works just like unsecured credit cards. You can use them for the usual everyday transactions where you use normal credit cards. As much as these secured credit cards can help you rebuild your credit history, a default in your payments and you would be back to square one, with the card issuer keeping your collateral deposit. The monthly payments are just as important for a secured card just as it is for an unsecured card. Secured cards are also reviewed at regular time intervals, if the card issuers find your credit behavior responsible (i.e by being regular on your monthly payments) they may qualify you to move to an unsecured credit card and get a refund of your collateral deposit.
That is how by making timely payments and maintaining your balances well within your credit limits on secured credit card , this responsible credit behavior might help you a lot in building or rebuilding your credit score.
source-secondary
Source: Secondary
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