How ‘Secured Credit Cards’ Can Help You Build Your Credit Score

 

Secured credit cards are a viable choice for those who do not meet the requirements for standard credit cards. This could be someone who is new to credit and does not yet have a credit score, or someone who has bad credit and is working to repair it. A secured credit account helps you to build a track record of timely payments, which is essential for a high credit score.

A secured credit card can help you gain control of your credit and establish a credit history for the future. This can help you build a credit history by managing your credit accounts with ease.

Who Can Avail A Secured Credit Card?

Banks generally issue secured credit cards to individuals who hold some kind of deposit or loan with them. A Fixed Deposit is the most common type of security required for a secured credit card.

Credit Limit On Secured Credit Cards

The maximum limit you can have on a secured credit card depends on the value of your deposit. Banks usually set this limit according to the value of your deposit and the risk involved.

A common rule for standard credit cards is that the limit is the value of the deposit plus an additional 20-25% for a total of 50% and above. Generally, the higher your deposit is, the higher your limit will be. You can’t exceed the limit.

How Do Secured Cards Help In Building/Improving Credit Score?

– Secured credit cards help you build a track record of timely payments, which is essential for a high credit score. If you make all your payments on time, you get a positive credit report

– Secured credit cards have lenient eligibility criteria, so they’re a possibility worth exploring for establishing or re-establishing your credit. So people who cannot get traditional credit cards can get it easily.

– Paying the bills on time shall be reported to the credit bureau which will improve your credit score. The more you pay on time the better your credit score shall be.

– Since the credit limit is lower, you will be able to pay your bills on time. This will help you boost your credit score in the long run.

Can My Credit Limit Be Increased Later?

Based on our payment history, the credit card company may increase your credit limit. This means that you’re more likely to be approved for higher credit limits.

A higher credit limit means that you’ll be able to keep your credit utilization ratio under control. This in turn helps you build a stronger credit history.

Things To Remember Before Getting A Secured Credit Card

Secured credit cards offer a new form of credit that has become popular with new borrowers. However, the FD’s of those who have a secured card with a guaranteed rate of return may not be withdrawn. If you open a secured credit card account, you may withdraw your funds at any time. However, your ability to withdraw your FD or deposit is not allowed until the credit card is closed.

Though these are secured credit cards, not paying bills will cause your credit card to report to the credit bureaus that your account is delinquent or possibly even in default. To avoid this, it is important to make payments on time and to make only the minimum payments that are due.

To Conclude

Secured credit cards are the best option for someone who is new to credit and does not yet have a credit score, or someone who has bad credit and is working to repair it. This can be a great option if you have bad credit. Since secured credit cards don’t rely on your credit history, you can have a positive impact on your score. If you have good credit and have been making payments on the card, you can still improve your credit score by using a secured card.

 

 

 

https://www.indiatimes.com/worth/news/how-secured-credit-cards-can-help-build-credit-score-559292.html

https://upsolve.org/learn/build-credit-with-secured-credit-card/

https://www.experian.com/blogs/ask-experian/can-i-increase-my-credit-limit-on-a-secured-credit-card/

 

Leave a Reply

Your email address will not be published.