Bad Credit or No Credit?

Don't worry, there is a solution. Even if you are lacking in credit history or your you have history but it's not so great there is a way that you can build anew!
Let's talk about Secured Credit Cards.

Risk is the question

If you have very little credit history or poor credit you pose a risk to lenders as they are not sure if you will repay and as such are hesitant to lend credit to you.

​One way around this is through collateral, via a refundable security deposit.

Deposit is the answer

Generally, the amount of the security deposit will determine your credit limit, although some card issuers may offer a higher credit limit than your deposit.

If you default on your credit card bill, the card issuer may be able to use your deposit to pay off the balance. If you cancel your card or convert it to an unsecured card later on, you'll get your security deposit back as long as you've paid off your balance.

Aside from the security deposit, a secured credit card works just like any other credit card. You can use it in the same places that accept unsecured credit cards, and no one will know that it's secured.

So how does this actually help?

Lenders are more likely to approve you because the deposit eliminate risk for the card issuer. The lenders will still check our credit history but their credit score requirements are much more lenient. In fact some secured credit cards may not even have a score requirement.

So I have a card now what?

Now that you are approved for a card you can begin to use it to build positive credit history. Use your card. Pay your card. Repeat. 

Ok, I've been making my payments and building good credit whats next?

Many secured credit cards can be converted to an unsecured card after you have demonstrated the ability to make 12 months worth of on-time payments and in doing so have improved your credit score.
Even if your secured card does not allow for you to convert to an unsecured card, after 12 months of responsible use and payments your score may have increased enough for you to apply for an unsecured card.