Secured credit card: Building credibility and getting needed credit

By Ben Woolsey

Think that a bad credit rating on a credit report will prevent you from obtaining a credit card? Think again. There are a number of companies that will issue you a credit card even when you have bad credit and need a credit card.

A credit report reflects your credit history. Credit reports are very important when you apply for loans for a mortgage, a car, or when you fill out credit card applications. What are your options if you have poor or bad credit and you need a credit card?

Secure credit or pre-paid cards
Secured credit cards are a great choice. A secured credit card or a prepaid debit card requires the user to deposit money into the credit card account before the card can be used.

Once money is deposited into the account or you have obtained some credit, the secured credit card can be used to purchase items. The prepaid debit card or secured credit card will not allow you to exceed the amount of money you deposited into the account.

An option for students
For high school and college students secured student credit cards and prepaid debit cards are great options. A secured credit card enables a student to begin establishing a good credit rating on his or her credit report while learning good financial planning skills and responsibility. Also, secured credit cards prevent the overspending that often happens with unsecured credit cards since users only have access to the funds that were deposited into the account.

If you have a not so good credit card you are not going to get the best credit card rates and options available to someone with great credit. However, this doesn’t mean you can’t enjoy the benefits of using credit cards or you will always have bad credit. With a little patience, discipline and time you can improve and repair your credit history.

Before beginning any credit repair program or applying for any credit cards, discuss your specific financial situation with your financial adviser.

Published: December 17, 2005

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