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Building or rebuilding credit may seem like a tall order. But it doesn’t have to be. Qualifying for a secured credit card may be easier than you expect, since many card issuers offer these products for people who have limited or poor credit histories.
A secured credit card can help you gain control of your credit and establish a strong financial profile. But to get one, you’ll have to put down a deposit, which typically becomes your credit line. If you were hoping for a higher credit limit that would give you more purchasing power, a secured card could still be an option. Here’s what you need to know.
What Is a Secured Credit Card?
There are two types of credit cards: unsecured and secured. When you apply for an unsecured credit card, the bank will typically approve or deny your application based on your record of on-time debt payments, past delinquencies and current credit score, among other possible factors. You’re not required to put down any collateral to “secure” the credit line.
If you have poor credit or a limited credit history (known as a “thin file“), you may not qualify for an unsecured credit card. That’s where secured cards come in. Because they require a deposit to open the account, secured cards are often a good option for people who can’t qualify for an unsecured card.
A secured credit card can be a great tool for establishing or rebuilding your credit, since the barrier to entry is lower than with an unsecured card. The OpenSky® Secured Visa® Credit Card Card, for example, doesn’t require a credit check at all, and reports your account activity to all three national credit bureaus: Experian, TransUnion and Equifax.