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Does Getting a Prepaid Credit Card Hurt My Credit - Secured Charge Cards and Your FICO Score

June 2, 2009

One of the best ways that you can increase your credit scores is with a secured credit card. They are very easy to get and will report the same as any other charge card does on your credit report. However many people wonder does getting a prepaid credit card hurt my credit? This article will examine that question and help you better understand these financial tools..

How The Prepaid Credit card Will Help Your Credit

Not at all. In fact these special types of charge cards are the most recommended types of accounts for people who need their credit repaired. This is because they offer the same FICO score boosting characteristics that a regular charge account does.

However they do this while offering both the lender and the card holder protection from each other. This is done by the issuing lender holding a cash security deposit from the borrower.The deposit it equal to the accounts maximum limit.

This security deposit will cover the lender against losses in the event that the borrower defaults on the account. The borrower is also protected from themselves because if they fail to make the payments there is money there to cover the cost. This helps to avoid consumer collection accounts and judgments that can further damage the borrowers FICO scores.

This security deposit is refundable when the account is canceled or the account is switched over to a normal unsecured account. Which often happens when the borrower pays their payments on time and shows responsibility for 6 months to a year.

by Darin Sewell

Written by paydayla · Filed Under Credit Cards 

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