Many consumers take advantage of unsecured credit cards, because they offer a convenient way to add a boost to their credit history without having put something up as collateral; unfortunately, if you are one of the many consumers burdened with poor credit, you may not be able to qualify for an unsecured credit card.

If you are in the type of situation, where your credit rating is suffering, your chances of being approved for a credit card will be better when you have applied for one that is secured. Secured credit cards are different than unsecured credit cards, in that they require collateral in the form of a cash deposit, which is then placed in a savings account monitored by the card issuer, to give security on the credit card account.

The payment history on unsecured credit cards is constantly monitored by the three major credit bureaus, however, according to each individual company’s policy some secured credit cards do not report their payment histories to these bureaus.

If you decide to use a secured credit card to raise your credit score, the best move to make would be to pick one that reports its payment history to the credit bureaus. Normally, the credit card application form outlines the benefits of the reports, so if they do not mention anything about payment history, you should contact the card company’s customer service division for more information.

You can raise your credit score without too much trouble, all that is required is to use a secured credit card to purchase items and then pay off the balance, on time.

The secured credit card is different from a standard credit card, because if payments go into default, they are collected from the balance you have sitting in your savings account.

The approval process for a secured credit card is usually quite easy, these types of credit cards more hassle free than any other credit card. Only two basic restrictions come into play when applying for a secured credit card: first, you must live in the U.S. and secondly, you must be 18 years old or older. You will not have to undergo credit checks, as is the common practice with standard credit cards, because you have presented collateral in the form of the money stored in a savings account.

The credit limit on your card is based directly on the cash deposited in your account; if you want to increase your limit, you just add more money to the account and it earns interest as long as there are no defaults on payments.

One of the biggest advantages of having a secured credit card is when you add more money to raise the card’s limit, you also can earn more interest in the account. The cash deposit is probably the biggest advantage of secured credit cards, because you will not be using more credit than you can afford, since the credit limit is determined by actual money sitting in a savings account.

For many people with no credit or bad credit, secured credit cards can be a viable alternative; when used regularly and paid off promptly, these cards can be an excellent tool for building your credit score and possibly open more options to you, as a borrower.

Ally Cossgrove writes for the JSNet.org offering credit cards with great offers including instant approval credit cards or just visit to read more of Ally’s great articles!

Technorati Tags: ,