secured credit card

Secured Credit Cards: A Wise bet for low those with low credit scorers

Low credit scorers, often, have to face multiple challenges such as high interest rates, denied mortgage and auto loan applications, and the difficulty to get utilities, without paying a security deposit. It is a fact that a good credit score is necessary for smoothly running your life and therefore, people with a poor credit score don’t have a choice except finding ways to repair it.

Developing sound financial habits in life and removing errors in credit report are some of the indispensable ways to improve credit score. According to a study by the U.S. Interest Public Research Group, 70 percent of all credit reports contain errors and therefore, you need to utilize all promising ways that help improve your credit score. Secured credit cards are one of the best vehicles for this.

Why Secured Credit Cards?

By simple definition, secured credit cards are collateral loans that do not hit your credit score, if you default the loan. They are similar to credit cards with the exception that they are backed by a savings account used as collateral for the amount of credit available. Being a secured mode of payment for both the lender and the user, they are often the best bet for first-time-credit-card applicants and people looking to rebuild their credit score.

Consequently, use a secured credit to establish a positive reputation as a borrower, instead of   day to day shopping needs. Many credit card companies often turn a secured credit card into unsecured after 9 to 12 months of timely payments. This has a higher hold when it comes to increasing your credit score.

Things to Consider While Choosing a Credit Card

Like other cards, there are a few things you need to consider and pay attention to before signing up for a secured credit card:

Card Fees

Most secured credit cards come with an annual fee, but they may also involve application and processing fees, which are, generally, mentioned in the credit card offer and its terms and conditions. Be sure to understand these things beforehand, and draw a good comparison between offers from other lenders. Remember, when your goal is to rebuild credit, applying for an expensive credit card does not make sense.

Communication of Payment Reports to Credit Bureaus

While you are on the road to credit repair, you need to ensure that your responsible payment habits reach your credit bureaus. You need to ensure beforehand your secured credit card company regularly reports your transactions to the 3 major credit bureaus: Equifax, Experian, and Transunion. Otherwise, your secured credit card may not be of much use.

Annual Percentage Rate or APR

The APR is one of the most significant elements requiring attention when choosing a credit card. It is the rate of interest levied on the balances you carry beyond the grace period. As secured credit cards, usually, come with higher interest rates than unsecured ones, be careful while using them. Always settle your balance in full to avoid high interest rates and the accompanying finance charges, .


Secured credit cards are meant for people with poor credit scores, especially when they are unable to find other financial tools to rebuild credit. As secured credit cards are often the last tool to credit repair, it is important to first gauge your current financial standing, needs and calculate your credit score before applying for one. At the same time, it is imperative to find out if there are errors that lower your credit score and prevent you from using other credit-building resources.

If you have a poor credit score, and need to know more about credit restoration process, talk to one of our credit experts today. Equipped with years of experience, they will follow a collaborative approach to offer you affordable customized solutions best suited to your needs.