If you plan to apply for a student loan, buy a home, or lease a car, it helps to have a good credit history. However, if your credit history is poor or limited, all may not be lost. A secured credit card is one option that can help you establish, or restore your credit score.
What is a secured credit card?
Escrow credit cards are very similar to traditional credit cards. The main difference is that with an escrow card you make an initial deposit of cash to guarantee your line of credit.
While your credit history could be used to determine if you qualify for a secured card, the line of credit you offer requires a security deposit. This guarantee deposit serves as a backup for banks to cover any purchase if you do not make a payment. Making your monthly payments on time is just as important for escrow credit cards as it is for a traditional card. Remember, if you don’t make your payments, the card issuer can keep your deposit.
A useful tool to restore your credit
If your credit history is poor, simply relying on cash, prepaid cards, or debit cards to make your purchases will not help your credit score, as activity is not reported to major credit reporting agencies. credit. When handled correctly, using an escrow credit card to establish or re-establish your credit can demonstrate to your credit card issuers and credit reporting agencies that you are a responsible consumer who uses credit wisely. sensible. To help you establish your credit, and avoid interest charges, pay your balance in full each month, before the due date.