How Can A Secured Credit Card Make Your Credit Rating Higher

By Author: Alisdair Cosgrove
Total Articles: 184
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Many consumers take advantage of unsecured credit cards because they are a convenient way to add to their credit history without having to offer collateral, unfortunately, if you are among the many consumers with poor credit, you may not qualify for an unsecured credit card.

A person in this sort of situation will more likely be able to obtain a secured credit card. Secured credit cards differ from unsecured ones in that they require collateral in the form of a cash deposit, which is placed in a savings account administered by the card issuer to give security on the account.

The unsecured credit cards typically have their payment histories monitored by the three big credit bureaus, but the same is not always true for secured credit cards, because many do not report their payment histories at all.

Secured credit cards offer a way to increase your credit score; this is usually accomplished by choosing those companies that report the payment history to major credit bureaus. Normally, the credit card application form outlines the benefits of this action, if they do not mention anything about payment ...
... history, then you should contact the card company's customer service division for more information.

The process of raising your credit score is rather simple, you can use the secured credit card to make payments for your purchases, and make sure that any payments due are paid on time.

The secured credit card is different from a standard card, because any default payments are collected from the balance you have sitting in your saving account.

Secured credit cards are easier to get approval on than normal credit cards, because the requirements are less stringent. The only restrictions on getting approval for secured credit cards involve age and residency; you must be 18 or older and living in the United States. There is no required credit check done because your credit card is secured by collateral in the form of money in a savings account.

Your credit limit is determined directly by the amount of cash deposited into your account, so if you want to increase the credit limit, add more money which will also earn interest as long as there are no defaults on repayment.

This factor may be one of the biggest advantages of having a secured credit card. This idea is what makes secured credit cards such an advantage over standard credit cards: with limits on funds available, you will avoid serious credit card debt.

With so many people with no credit or bad credit, secured credit cards can be a viable alternative; used regularly and paid off promptly, these cards can be an excellent tool for building your credit score and with time, more options will be opened to you, as a borrower.
Alisdair Cosgrove is a freelance writer specializing in personal finance. You can read more of his work at www.JSNet.org for best credit cards and also offers a comprehensive list of credit cards with low interest rates.