Secured Credit Cards...A Cost-Effective Way to Rebuild Your Credit History

If you are finding it difficult to obtain the traditional credit cards, then you may get a bad credit secured credit card. This card works by paying a certain amount in order to establish a credit line or a limit in which you can borrow, and the deposit is paid prior to obtaining the card. These secured cards offer a more cost effective way in building your credit history. One thing you need to do when your credit dips passed the levels of prime and subprime financing, you need to bring it up.

You may have different option to do this, but certainly using low credit secured credit cards can be a viable option. When you have bad credit, you are faced with many challenges. First, whenever you apply for a loan, the lender runs a credit check. This definitely affects your credit score. This is because, there is some doubt with the lender and this is why a credit check is done to determine how you have been paying your bills, and if there are any missed payments, and loan delinquencies you have had in the past.

By itself, a credit check will hurt your creditworthiness by lowering your score. Secondly, it becomes worse if you apply for numerous loans and they are not approved despite the lenders running a credit check. In order to avoid numerous credit-checking that lowers your score, you can use the secured credit cards. You need to have about $300 to deposit in a bank so that you secure the card.

It is worthwhile getting low credit secured credit card rather than unsecured cards. The hefty fees charged on unsecured card are not worthy the deposit you put up when obtaining a secured card. You would better look for that money in order to make a deposit because this will save you from those fees. For example, as at March 2013 if you obtained a secured Centennial Secured credit card, you would not pay the program fee of $95 that is charged on the Centennial unsecured credit card.

In addition, with the Centennial Secured credit card, you would not pay a monthly servicing fee of $7 and account setup fee of $29. Similarly, with this secured card, you would pay less on the annual fee placed at $69 when compared to the annual fee of the unsecured Centennial card of $84. In essence, it is important to consider a secured credit card if you are in bad credit because it not only protects you from paying the enormous charges but also helps you rebuild your credit score.

Depending on the card issuer, if you obtained a secured credit card and demonstrate a responsible use of the card, after sometime, say one year, the issuer may consider converting the card to an unsecured credit card that does not carry the different fees that are witnessed in a traditional unsecured credit card. As a caution, if you want to obtain a secured credit card, make sure that the issuer reports to at least one of the credit reporting agencies like TransUnion, Equifax, and Experian.