A credit card is a convenient way to build credit history. However, if you have bad credit, it is quite difficult to get a regular credit card. Most credit cards are unsecured, which means they do not require any collateral from you. There is another type of credit card that do required a collateral from you. This is usually in the form of a saving account managed by the credit card company. This type of card is known as secured credit card. Payment history for unsecured credit cards are being reported to the three major credit bureaus. However, this may not be the case for secured credit cases. Some of them do report the payment history to the three bureaus and some do not. If you intention is to raise your credit score, you should look for those secured credit cards that report to the three major credit bureaus. Most of the time, this benefit is highlighted in the application form. If you do not see it, you can call up their customer service hotline to enquire about it. The way you use a secured credit card to raise you credit score is the same as with a regular credit card. You have to use the card on a regular basis and must make payment on time. Unlike a regular credit card, if you default on your payment, the credit card company has to the right to collect payment by deducting the amount from the balance in your saving account. It is very easy to get approved for a secured credit card. Most of the time, a credit check is no required as you are going to open a saving account that serve as collateral. This means approval is guaranteed unless you are underage or you are residing outside USA. The amount of cash deposit into your account will serve as the credit limit. You can increase the credit limit by adding more cash. In addition, the cash in your saving account will earn you interest as long as you do not default on your repayment. This is one main advantage of having a secured credit card. The other advantage is you can avoid the pitfall of credit card debt since you can't spend more than what you have in your saving account A secured credit card is a very good option for people who has bad credit or no credit. By using them regularly and making repayment promptly, you can be assured that your credit score will raise to the level that qualify you for unsecured credit card and better interest rates.
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