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Having a good credit score is important for anyone who wants to experience wealth and financial security. However, having a great credit score can feel elusive, and it’s super easy to end up with a low score when times feel tight or financially stressful.
If you’ve had the experience of ruining your credit, you may be ready to rebuild it. One of the best ways to do that is with a secured credit cards. Curious about the difference between secured vs. unsecured credit cards? Secured credit cards allow you to spend the money you need while also being financially secure for banks, so you can prove that you’re in a good financial position and a trustworthy recipient of credit.
Here’s how you can help rebuild your credit with secured credit cards.
Secured credit cards are credit cards that require a cash deposit. The amount that is deposited to the credit card is the amount that you can spend. The best secured credit cards feel like debit cards, but they allow you to build your credit.
Unlike secured credit cards, unsecured or regular credit cards allow you to spend the money of the bank (or card issuer), without having the cash present. Then you must pay the bank back for the money you spend (with interest usually) after a period of time.
A secured card helps you build your credit because it is reported to the credit bureaus. This helps build your credit score as you use it. If you want to rebuild your credit, make sure you get a secured card that’s reported to the bank normally and not reported as a secured card. You can shop around for different secured cards so you can make sure that you choose one that actually helps you build your score. (Companies that report secured cards as secured may actually end up hurting your credit, so it pays to be careful).
When you’re trying to rebuild your credit, there are several strategies to try, including using secured credit cards. Secured credit cards prove to lenders you’re worthy over time, and eventually your score will be raised and they’ll be ready to lend directly to you. At that point you’ll be ready to shop for a new card that fits your new credit score.
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