It is a hopeless situation, in order to obtain a credit card, you must have good credit, but you cannot improve or rebuild credit score without a history of good payment on a credit card. It’s a vicious circle for those who have a bad credit standing and it is a mystery to all newcomers who have no credit history.
Fortunately, there are options available for those who need a boost in credit, and as guaranteed approval and secured credit cards or guaranteed.
A secured debt versus an unsecured debt
The traditional credit cards are designated as unsafe. This means that the lender offers lending based on the good faith and credit coast copy that proves you’re not a lousy credit risk is likely to default on money lent.
Secured credit cards, on the other hand, make you join the action to words by asking you a prepaid amount as collateral in exchange for a credit card. This amount is retained as the balance on the card and can be removed just as long as the card is in use. The lender gives you a credit limit equal to the same amount or a little more in some cases. The only way to get back the money invested as an advance is to pay the card balance in full and close the account with the lender.
Features of secured credit cards
Apart from the initial payment, the secured credit cards work exactly the same way as a traditional card. There are options that are offered by both MasterCard and Visa that are accepted by the same retailers. In most cases, the card will be identical to its counterpart insecure. Billing will also be monthly and interest will be applied to any outstanding balance over to the next billing period. The main difference is the level of the credit limit. While it may be easy to apply for a limit increase to an unsecured card, lenders of secured credit cards may require proof of conduct by using the card or increase the lead first. Another disadvantage is that the options for secured cards are often accompanied by higher interest rates than many other options on the market.
This is not a prepaid credit card
A commonly held misconception is that secured credit cards and prepaid credit cards are the same thing, and we can easily come to this conclusion because both require a payment to establish a credit limit. However, a clear difference is that secured credit cards report your payment history to the credit offices and prepaid credit cards do not. This is vital since using your secured credit card, so you can create a history liable to the use of your revolving debt.