There is an uncertainty when the loan: you get credit for building loans. Players with good scores are ready to use the tools to further improve their position. In the meantime, less or negative borrowers have less access to construction loans. But those with little or no conviction have high pay rates that are extremely costly to build or rebuild loans. Secure credit cards can be a useful tool for creating or rebuilding a positive credit history. Positive credit quality is the basis for obtaining further favorable loans.
How does secured credit cards work?
Businesses offer secured credit cards as an alternative to traditional credit cards. The first deposit must be secured to protect your financial institutions so you can not pay the bill.
In addition to ensuring security, providing secured credit cards is nothing more than unsafe.
In most cases, the collateral is the credit line. If you enter a $ 200 security deposit, you will receive a $ 200 credit limit. If you provide a $ 500 security deposit, you will receive a $ 500 credit limit. You typically have to open at least $ 200 worth of security to open your account.
The issuing institution treats the deposit as collateral. It offers a card that works exactly like a typical, unsecured credit card. You buy, invoice, pay the bill. That is, unless you pay the bill. Subsequently, the financial institution is entitled to recover the collateral and close the account.
An unsured credit card provides easy access as well as those who have little or no credentials to create a positive one, which is a prerequisite for favorable credit conditions.
Secured credit cards or prepaid credit cards
The difference between credit cards and prepaid amounts is day and night. Completely different.
The prepaid card is issued by the amount of the purchase of the card. You can use your own money to buy.
With a prepaid card, the loan will not increase. Use your own money. This is a fundamental and monumental difference.
If you use secured credit cards, you buy from the bank’s money. Extension of credits, although limited to the amount of the credit line. With a prepaid card, the loan will not increase. Therefore there is no report for the credit agency. Prepaid cards are not built or rented because they do not have credit.
Credit cards are used for “Bad Credit”
Some institutions issue cards to consumers whose credit ratings are very bad. From the point of view of the issuer, the difference between secured credit cards and unsecured cards for bad credit clients is the issuer’s risk management method.
With an insured card, the issuer limits the risk by using the collateral, typically the amount of the credit line. For bad credit cards, issuers do not have the necessary collateral, so they charge more fees and interest as they cause a relatively higher payment delay. They know that many consumers are inadequate, so they have to pay for those who pay.