You Can Get A Good Credit Score With Bank Secured Credit Card

Bank secured credit cards are ideal for those who have no credit history or for those who have bad credit scores. Since banking or financial institutions will not grant you any loan facility or credit cards if you have no credit history to check against. Since credit history and credit score are important, your initial course would be through bank secured credit cards.

Bank secured credit cards are also extended to individuals who would like to repair their credit scores by keeping their credit reports active with new rounds of credit transactions and manifest their rehabilitated paying habits. A person may have gone through a trying experience that affected his or her capacity to pay. A major illness perhaps, a divorce or sudden loss of job are situations beyond his control which caused him or her credit score to drop from good to bad.

In some cases however, a person was simply too reckless with his spending habits until every credit purchase caught up with him. A declaration of bankruptcy was his only way out. However, these persons are not doomed for life since some banks will still take the risks of extending credit facilities through bank secured credit cards. In fact, they have very minimal risk exposure via this type of credit card since the individual will be required to put up a bank deposit account. The bank deposit account should maintain a balance, usually 0, which will be equivalent to the cardholder’s maximum credit limit. Depending on the cardholder’s history, the credit limit may be equivalent to 100% of his deposit or can even be less.

The only objective of the bank secured credit cards is to provide a credit facility that the cardholder can use to create a new credit history that will eventually overwrite the bad credit score attached to his report. It may take 5 to 7 seven years before the bad credit score can be removed in a person’s credit reputation. For those who resorted to bankruptcy declaration, it will take about 10 years from the date bankruptcy was declared before the bad credit score can be removed.

The cardholder will be prevented from incurring additional bad credit points in bank secured credit cards. The maintaining deposit will be applied in case the cardholder fails to add additional funds in his account as payment for his current credit obligation. There is a price to pay though, because the cardholder will be hit with considerable amounts of bank charges. Naturally, he will be required to replenish the maintaining balance of his security deposit in order to continue with the use of his bank secured credit card.

There are banks however who will reward a cardholder for good credit records by increasing the amount of his bank secured credit card limit, although with an equivalent increase in his bank deposit balance. What is important however is for the bank to report your good credit performance to the credit monitoring bureaus. Otherwise, all the additional costs on your bank secured credit card purchases as well as the fees and charges you have paid for will all go to waste. Your bad credit score will not change unless these reports reach FICO through the credit monitoring bureaus.

FICO or First Isaacs and Co. is responsible for tabulating all the points created by your bank secured credit card history and the company can only use the information supplied by any of the three bureaus namely Experian, TransUnion and Equifax.
Be wary of banks or credit unions that will charge you with unnecessary fees just to have a bank secured credit card. Checkout Bankrate.com for a comprehensive list of credit card companies or credit unions that issue bank secured credit cards for reasonable interest rates.

For more useful information, please visit our website: THE KNOWLEDGE BASE, and look for the BUSINESS & FINANCE section.

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