Your credit card score is the most important factor when you are trying to obtain a loan or any further credit. If you have a bad score, you won’t get what you need. But, you can work to improve your record over time.
Credit Building Cards—A security credit card
Credit Building Card
A secured credit card is helpful in boosting a poor credit score. These cards are different from others as they have the credit builder facility.
The Credit builder cardholders pay a monthly fee to have the card which is paid for a year. Thus these cards appear as loan cards on credit records. A security card uses the money placed in security deposit.
The benefit of these cards is that the credit reports have no entries of missed repayments. This helps in building the credit score. It is also wiser to possess 3-5 credit cards for different purposes to obtain personal credit. Credit limit can also be asked on current cards
A secured credit card is one where a security deposit is put to assure the creditor that the debt will be paid. A debit card is different from a secured card. A debit card is just away to access the funds in the bank and this cannot be used by creditors. A secured car is an extension of credit. The secured affects the credit score positively or negatively
The working of the secured card is just like the traditional credit card. It can be used for both for purchases as well as for other financial transactions
After a year one can apply for an unsecured credit card– A period of one year is enough to show the worth of payment and hence a switch can be made from a secured to an unsecured card. There will be no more deposit needed and it will lead to a higher credit and reward points could also be added.
Credit Builder Credit Cards may not always be useful for bad credit. Credit cards with high fees and credit cards that are not reported in the credit bureaus should be avoided. An independent cared used for a single payment is much more useful. Secured credit cards require a cash deposit and can be turned into to an unsecured card after a given period. secured credit cards come with an annual fee, and the deposit amount usually determines the credit limit. Some secured cards charge other upfront fees as well.
Credit cards with high annual fees are better for credit building. These security cards are collateral to the money deposited. These are the best cards for youngsters to keep a good credit score.