Bad Credit? No Credit? No Problem

So what happens if you have bad credit or no credit. Should you call the number they provide in the ads? Let's look at the big picture here.

Unfortunately it is almost impossible to survive in the United States today without access to credit. It is becoming increasingly difficult to use checks to buy items in a store. Some stores and fast food restaurants will not accept checks at all. If you do not have the cash or credit card you are out of luck.

What are secured credit cards ??

If you are one of the unfortunate people to have a low credit score or sometimes no credit score at all, it can be difficult to get that first credit card. If you find yourself in the position of needing a credit card but unable to get one consider a secured credit card.

A secured credit card is a type of credit card that requires a deposit of money into an account where it is held until you have shown your credit worthiness. The period of time varies with the card applied for. At first it looks strange that you need the money you want to get in credit in order to get a credit card, but the creditor needs assurance that you will honor your debt.

Creditors typically get the information on your ability and likelihood that you will pay your debt from your credit score. If you have no credit history or a bad credit history they want the deposit to guarantee they will be paid.

Typically, the applicant must put down 100% of the requested credit limit. You are still expected to make regular monthly payments, but if you default on your card the credit card issuer is able to recover the cost of the purchases from the deposit. Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be credited simply for missing one or two payments. It is usually held in the event the card has a definite delinquency of 150 to 180 days.

The advantage of the secured card for an individual with negative or no credit history is that most secured credit card companies report regularly to the major credit bureaus. This allows for rebuilding of positive credit history.

Secured credit cards allow a person with a poor credit history or no credit history to have a credit card which they otherwise would not be able to get. They are often seen and offered as a means of rebuilding one's credit. Secured credit cards are available with both Visa and MasterCard logos on them.

It should be noted that fees and service charges for secured credit cards often exceed those charged for ordinary non-secured credit cards. However, for people in certain situations, secured cards can often be less expensive in total cost than unsecured credit cards, even including the security deposit.

It is important to shop around for a secured credit card because the terms and conditions vary greatly. Also certain secured credit cards are a red flag on a credit report indicating the person is a potential bad risk.

Source by Jim Banks

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