Are you having problems getting approved for a credit card and want to improve your FICO credit score? We recommend getting a secured credit card because it offers many benefits compared to other options. Although it does not offer real credit to users, this is not important since you really should be avoiding any new cash advance loans now until existing financial problems are resolved.Because banks must extend credit to users of charge cards without any security, it is not likely you can get unsecured credit cards when you have poor credit. As long as you have any missed and late payments in the past, your chances of getting a new unsecured credit card is very low. Instead, get a secured credit card with 100% guaranteed approval since the provision of collateral makes it safe and low risk for the issuers.
Secured Credit Cards and Prepaid Cards
Unlike pre-paid credit cards where you need to load cash into the account before you can pay with the card, a secured credit card has real credit given by the bank. Thus, you need to pay the balance in full every month. The difference is that your credit limit depends on the amount of collateral you offer to the bank, which is usually your fixed savings or certificate of deposit. The larger your collateral, the higher limit you get on secured credit cards. However, we recommend not to use more than 50% of your credit limit if you intend to improve your credit score. If you cannot pay off the balance on time, the money owed will be deducted from your collateral and this is very bad for your credit score.Apply for Secured Credit Cards With High Limit
It is easy to get approved for secured credit cards because the bank gets your fixed deposit or certificate of deposit as collateral. The credit limit will be based on the amount of security offered, and generally, you can have a higher limit compared to unsecured bad credit credit cards. In fact, we do not recommend the latter since there are a lot of fees and restrictions on such cards, making them not friendly for the consumers. Choose either a secured credit card or a prepaid debit card instead, although the former is more suitable when you need to establish and improve your credit score.Missed and Late Payments on Secured Credit Cards
You can end up with poor credit when you have any missed or late payments in the past, delinquent accounts or worse, filed for bankruptcy. In such cases, forget about getting any deals from lenders or credit card issuers. The important thing now is to build your credit score, and if you need a checking account or card for banking transactions and purchases, secured credit cards for people with bad credit is the best option. These cards require collateral in the form of your fixed savings or certificate of deposit, so you cannot use the money inside these account. However, they will continue to earn interest sitting there as security against expenses you charge to your card. Do not take any $1000 loan from direct lenders to pay the balance on credit cards as well.Secured Credit Cards For Repairing FICO Credit Scores
Secured credit cards are good for improving your FICO credit score since they report your payment activities to the credit agencies (Experian, Equifax and TransUnion). With their low annual fees, secured credit cards are the cheapest way to repair your credit and you can easily do it yourself.Card issuers will report whether you are making payments each month, so you need to make sure your payments are always on time. Keep this up and you will see 700+ FICO credit scores within 6 to 24 months. Then, you will be eligible for cheap unsecured loans and credit cards with high limit.
Most banks will convert your secured credit card to an unsecured one with real credit available, provided your account is in good standing and you do not owe the banks any fees. This is the cheapest way to build credit since the secured credit card fees are relatively low. As long as you use the card prudently and pay the balance in full every month, you can improve your FICO credit scores fast. Since it is never easy to establish credit, make sure you manage it properly by not misusing loans as easy money.
