Secured credit cards can help rebuild your credit profile. The trick is how you use them.
Credit Cards Build Credit
The issuing party grants the holder or the user of the card a line of credit thus creating a revolving account in the process, in other words the user is allowed to borrow money from the lender or a cash advance as most see it. Now speaking about questions related to secured credit cards, is how they can benefit the users of that card? Basically it helps to build one’s credit. Thus a really good question on many people’s mind is how does a secured credit card build credit. Yes, it is true that credit cards build credit.
So basically this is how the whole program works. If you apply for a secured credit card then you are just basically giving the lender that is issuing you the credit card a saving deposit which the lender can hold as collateral for the card. If you want a $500 credit limit then you have to give the lender $500 in cash. Generally they will hold on to that money for up to 12 months and if you make your payments in time for 12 months, then they will release and give that savings deposit back to you because you have proved your worthiness.
The important thing about the secured credit card in regards to building your credit is that now that same credit card will start reporting to the other credit bureaus, so after establishing a 6, 9 or 12 month credit history of making all of your payments on time it does ultimately start building your scores back up and you will start to find some other credit card companies contacting you that would want your business on a secured basis.
So ultimately secured credit cards are a key factor in building and helping the typical consumers that have suffered problems in the past get their credit scores and credit bureaus back on track. Thus in this way secured credit cards help benefit the users of those cards in the long run and help them establish loyalty and credibility in today’s world.