Security Credit Cards: Life After Bankruptcy

By Leni Parrish on October 25, 2010

Security Credit Cards are credit cards for people with no credit history consumers and bankrupt consumers. These people fear they will not be approved of a new loan since credit card companies have grown stricter.

Credit Card companies are commonly basing their decisions on credit reports. These credit reports provide the details of the customers’ recent credit accounts, loan account and defaults. These reports measure the creditworthiness of customers; how they handle debts, when do they pay or are they worthy for a new credit. Technically, if a credit report reports a lot of defaults and a lot of existing credit card accounts, the customer is denied for a new account. Those with no credit history, credit card companies will usually be deny their credit because these companies are still not sure of the credit status of the new borrowers. However, if these two types of customers are accepted for new credit accounts, they will be charged with higher interest rates.

For bankrupt people, secured credit cards are their opportunity to start anew. Of course they don’t want to get into the same turmoil again and find themselves often times abandoning credit just to not rerun the same situation. That is an ideal path, by the way.

But for those who still can’t do away with credit, especially for people who still need money for their basic needs, they are still lucky. They have to come up with a deposit though for the secured credit cards, which amounts to at least $300. The deposit will be placed in an account, and will grow with interest. The good thing about this is that the deposit is going to be returned once the credit is paid. This means that the amount is not actually a fee or an expense but just a security. Even if the security is used up to pay the credit as a result of default, the credit report won’t be smeared with a red record of non-payment. If the deposit was applied to the credit that means the cardholder is still considered paid.

Refresher consumers must make sure that when they pay for the credit card, the three credit bureaus have recorded the payments to the credit reports. Customers must take advantage of the free credit report under the new federal laws. This will allow them to check for errors to be disputed against the credit card companies and credit bureaus.

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