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If you have bad or limited credit you won't qualify for the best credit cards on the market. But there are still options available to help you rebuild, including secured cards. Secured credit cards require a refundable security deposit when you're approved. This deposit will fund your credit limit for the card. Card issuers require a security deposit because it makes the deal less risky for them.
By Brendan Harkness
By Brendan Harkness
Secured credit cards are designed to give people with poor, limited, or no credit history a way into the world of credit.
Unlike other types of cards, a secured card requires a refundable security deposit when you’re approved. This will fund the line of credit for the card.
Other than the deposit, secured cards are pretty much just like any other credit card. You need to pay your bills on time. And if you carry a balance from month to month you’ll be charged interest, usually at a very high interest rate.
If you’re looking for unsecured credit cards for bad credit (which do not require a deposit), check out the Best Credit Cards for Bad Credit. And if you’re looking for unsecured cards for limited or no credit, see the Best Credit Cards for Limited or No Credit.
There are some secured credit cards that don’t require a credit check when applying, which means you’re almost guaranteed to be approved. There is still a possibility of denial, but it’s relatively low.
If you’ve been denied for other secured cards these may be your last options. Since they won’t check your credit you can probably get one of the following cards as long as your finances can handle it (some cards like these may check your credit, but they don’t necessarily use it to make the approval decision). You may still be denied if your identity can’t be verified, or if your income is too low.
These cards don’t require credit checks for approval but they’re known for having relatively poor customer support, and the payment processing systems may be slower or buggier than with other cards. This makes them riskier to use, and we don’t recommend them unless you truly can’t get anything else (even then, they probably aren’t a good idea). Some cards like these don’t require bank accounts, making them more attractive for people in certain situations.
If you use one of these cards, be sure to completely understand how to make on-time payments so you don’t wind up accidentally hurting your credit instead of helping it.
Using a secured card is basically like using any other credit card. Most of the same rules apply, but a refundable deposit is also involved.
Because secured credit cards require a deposit, the risk on the lender’s part might seem low enough that there’s no point in denying applications. But that’s not exactly how it works.
You can be denied for a secured credit card. And in general, it’s for the same overarching reason(s) you’d be denied for any credit card: Your credit history or other personal/financial information doesn’t measure up to the issuer’s standards, or there was something wrong with your application.
The actual reasons for your denial may vary, but they may include warning signs like bankruptcies, inadequate income (or lack of a stable income), perpetually late payments, and even poor management of any bank accounts you hold/have held with the issuer in question.
The good news? It’s your right to know why you were denied, and you should ask if the issuer doesn’t tell you. That way, you know exactly what to work on in order to get your credit to a place where you’re more likely to be approved.
If you have poor or limited credit there are a few different routes available to you. As an alternative or complement to a secured card, you may want to look into credit builder loans. A credit builder loan is a special type of installment loan that’s designed to build a positive credit history and good credit scores.
If you’re approved for one of these loans, the amount of the loan goes into a special account you can’t access. You make payments every month to “pay off” the loan, and the bank reports this positive activity to credit bureaus. Once you’ve paid the entire amount of the loan, you’ll get the money that was “loaned” to you from the special account that you couldn’t access until the loan was paid off.
Learn more about credit builder loans offered by Self Lender.
When starting a new business entity, your business needs to build credit too.
You can typically open business credit cards based on your personal credit, and, like regular consumer cards, it’s possible to start with a secured business card if your credit isn’t so great. This could be a good option if you’ve been denied for unsecured business cards.
Learn more about secured business cards and see if one could be right for you.
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