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Credit Score Repair Much Easier With Secured Credit Cards

By Sally Maison
Published: Sunday, February 21st, 2010

A lot of American consumers got their credit scores trimmed down during the economic crisis of the past two years. With their credit scores down, these consumers are going to have a hard time getting loans and applying for credit cards. There are even some people who suggest that people with low credit scores are going to have trouble getting a job.

Credit Score Repair Much Easier With Secured Credit CardsRebuilding a ruined credit score can be a tough job. One thing that can make that much more easier is a secured credit card.

A secured credit card is a credit card which is secured against some form of collateral, commonly a savings account. Unsecured credit cards, on the other hand are the regular kind of credit cards, the ones offered with no need for a collateral.

The great thing about a secured credit card is that a lot of banks and other financial institutions are much more open to giving it to a consumer with not so good credit scores or with no credit score at all, such as college students. A few of these lenders will also offer their secured credit cards with low interest rates, though the credit limit may not be that much.

This does not mean to say that people with bad or nonexistent credit scores cannot get unsecured credit cards. There are plenty of offers for unsecured credit cards out there with low interests that are open to people with low or nonexistent credit scores. However, these cards may contain some hidden fees or interest rates which can cause problems for the card holder further down the road.

For people who are building their credit history or those who are repairing their credit scores, secured credit cards are a great tool in helping them do so. Of utmost importance for them is to find the secured credit card with the lowest interest rate which should be comparatively easier to do with secured credit cards than with unsecured credit cards. In the long run it is the interest rate which ends up extending debt payments over a period of time and adding more to the original amount. Also, the higher the interest rate, the higher the chances that the consumer will default on his or her payments which hurts their credit score.

To actually repair or build up their credit scores, consumers must focus on paying off their credit card purchases as quickly as possible. If holders of secured credit cards can consistently do this, they will then prove to their bank or lending institution that they are good at handling credit which will bring up their credit scores and which will probably get them better offers from their credit card issuer as well.

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