Articles on Credit | Topics: credit, creditworthy, creditworthiness
by Lita Galloway
One thing that follows a person around for years is their credit score. If it’s high there’s absolutely nothing to worry about. For millions of people their credit score isn’t ideal and for them something as simple as getting a credit card can be a challenge. That’s why secured credit cards are available. They offer individuals with less than perfect credit the opportunity to get a credit card they usually otherwise would have no chance securing.
It’s difficult to imagine life without a credit card. Not only is it useful for things like renting a car, or booking a hotel room, but in some cases you can’t write a personal check without a credit card number. With secured credit cards, anyone, regardless of their credit past, can get a card that gives them the freedom to travel and more.
There are a few major differences between a typical bank card and one that is secured. The main difference is that with secured credit cards the card holder is required to supply a security deposit. Typically the credit line that is offered with secured credit cards is reflective of the amount of the deposit. So if the individual gave a $500 deposit, they would then have a credit card with a $500 line of credit attached to it. That amount that they give is not used to pay down the balance instead it is viewed as insurance for the secured credit cards in the event the cardholder fails to pay the debt back.
| Historical Quote |
There are two tendencies in all our war talk.... The first is to boast, if not of ourselves and our deeds, at least of our army, our corps, our regiments. The other is to find fault with, to criticize, to censure, to condemn others. If there is a victory, we gained it and must have the credit of it. If there is a failure, it was the fault of the other fellow,—he must be blamed for it.
| —Rutherford Birchard Hayes (1822–1893) |
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A credit check is usually performed whenever someone applies for any type of loan whether it’s a car loan, mortgage or a line of credit. That is also true with all major credit cards. The person’s credit history is used to determine whether or not they qualify for the card. With secured credit cards, the person’s credit history isn’t a consideration. This is perfect for someone who has struggled with paying their bills late or missed payments in the past.
Although this type of loan is granted to people based on a security deposit it needs to be taken seriously. Secured credit cards should be viewed as a method to rebuilding credit. If the balance is paid in full each month this quickly helps to repair the credit rating. If that’s not possible, monthly payments should always be made on time. This will also help to raise the credit score.
They certainly aren’t for everyone as they generally require a higher rate of interest than a standard card would. For someone who wants to positively affect their credit standing, secured credit cards are viewed as a solid step in the right direction.
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