Credit Cards to Rebuild Credit
If you have ever missed out on payments, defaulted on your home loan or worse been bankrupt you will know how badly your credit gets hit. Rebuilding that credit isn’t exactly easy and the black marks on your credit file makes it extremely difficult to even begin.
For a person in that situation, when credit is completely shot, often the only option is to start the rebuilding process with credit cards. Sadly it’s likely that you won’t able to just apply for a standard unsecured card, however a secured credit card is often obtainable.
What is a secured credit card?
A secured credit card is a kind of credit card that is offered when the customer puts a deposit into a linked deposit or savings account. Often it will be somewhere between 50%-100% of the amount of credit you are looking to obtain but some special offers have been known to offer a secured card against a 10% deposit.
Companies offering secured credit cards are known to report to the credit agencies fairly often so it’s a great way to start showing you are now a responsible consumer and in turn increasing your credit score.
Of course it all sounds great but first off you need the cash available for the deposit. Also the service fees, interest and charges tend to be higher, in some cases much higher, than standard unsecured cards. Falling behind on payments could quickly end up in you owing more than your deposit due to fast accruing interest.
So who offers secured credit cards?
Almost every credit card company offers a secured credit card option so you won’t have trouble finding one. Of course though you need to study the terms and conditions on each card and make sure ALL fine print is read so you don’t get screwed into a terrible deal. You also want to remember the purpose is to rebuild credit, not to get yourself back in debt, again!
An alternative option…
What about you say, forget credit cards, forget credit and just decide that you don’t need it! That’s been my decision. I killed my credit, got into a debt management plan and sorted the debt out. My credit probably should be repaired but I decided that I didn’t need it anymore. You can read more about my ideas here: A Pledge To Never Take Credit Again!
Credit Cards to Rebuild Credit, Your Input
So have you been in the situation when your credit has been needed to be rebuilt? Did you use a secured credit card to get your credit back on it’s feet or did you find an alternative option?
Thanks for reading.