FAQ'S
Why do I need a Secured Credit Card?
Sometimes in life we face life’s difficulties that force us to declare a personal bankruptcy. Unfortunate but many times a reality. When a person goes into bankruptcy he/she has to hand in all their credit cards to a bankruptcy trustee. After that person has been discharged from bankruptcy, he or she is often once again a good credit risk, since that person has no debt. However, a discharged bankrupt individual often has a difficult time getting a new credit card from the regular financial institutions. Perhaps you’re a new adult student with a zero credit history at the credit bureaus. No one wants to offer credit to someone who presently has no credit. Often life deals us a crippling blow by an unexpected divorce or death.
The most successful option when you’re in a similar situation is to acquire a "Secured Credit Card".What is a Secured Credit Card actually?
A "Secured Credit Card" is a card obtained using backed-up or secured by funds you have deposited with the financial institution that provides you the Card. The card looks like a credit card, and acts like a credit card but will have a limit depending on the amount of money that secures the card. A secured credit card is a product where the security deposit you provide is equal to the credit limit of your credit card. Your secured deposit will be held in an interest bearing account with interest paid to you annually on the anniversary of the opening of the security deposit account. You are required to make regular payments to your credit card balance account over and above the security deposit amount because this isn't the same as a "pre-paid" card it is in fact a regular credit card. You get to set your own credit limit because your credit limit is equal to your security deposit.
What advantages are offered using a Secured Credit Card?
Using a secured credit card is a quick way to rebuild your credit rating. The issuing financial institution reports your payment history to the credit bureaus each month. As you make regular payments your credit history looks better and better. Remember, being able to re-establish YOUR damaged credit re establishes you into the driving force of our economy.
Credit finances our homes, our vehicles and our vacations. It also helps us to pay for things like appliances or hotel rooms. In short, for many people credit is "the good life”. Credit allows you to carry less cash, or rent a car without a lot of hassles. Credit is the only way you can purchase items online or to buy airline tickets. Credit is neither good nor evil - it just depends on how you use it. Basically, credit is a promise to pay for something in the future that you received in the present for example - mortgage is a type of credit. Mortgage allows you to make a very large purchase having good credit are a necessity in today's world, yet millions of Canadians are turned down for loans, mortgages and credit cards every year.
Do I qualify for a Secured Credit Card?
If you don't presently have a credit card or if you are one of the millions being turned down for a credit card due to past poor credit payment history then keep on reading this page. You can't get credit without a positive established credit history and it's hard to develop a credit history when no one will give you credit. The secret is to start small and work your way up. Gasoline cards are easier to get than a Visa or Master Card, but the problem is that gasoline companies rarely report to credit bureaus. The only time they will report is when you are delinquent and therefore they are not a good place to start. Many people will try department store cards, but that's not a way to go either. Your chances of getting one are 50/50 and even if you get approved they will start you with a very small credit limit which may not be good enough for large loans from mortgage lenders. So, properly re-established credit means that for a minimum of one year you must have a loan or a credit card with a minimum credit limit of $1500.00.
How do I get started?
There are number of ways for you to build credit, but before you get started you'll need to obtain a copy of your credit report.
How can you re-establish your credit if you don't know where you stand in first place?
Once you have your credit bureau report, check it for any failures or errors, in order to clear your credit bureau account from the bankruptcy by looking for any unpaid collections that may have escaped your bankruptcy trustee. You can obtain a free copy of your credit report simply by contacting Equifax National Customer Care Centre at 1-800 465-7166, as well as the other Credit bureau Trans Union at 1-800 663-9980.Once you have confirmed that there are no outstanding bad debts on file at either of the two bureaus, you are ready to start re-establishing it. You could try to take out a new loan. This is the more traditional way to build your credit. The problem is that bankers will be reluctant to help you. You will need to go from a bank to bank or visit few credit unions until you find an open minded manager. I am not a big fan of this strategy. The best way to re-establish your credit is with a secured credit card!! The minimum deposit amount CAN BE AS LOW AS $500.00 but you can deposit up to $25,000. So the decision is up to you. Your security deposit is held for as long as you maintain your account. If you decide to cancel it, your deposit will be returned to you with interest, after all outstanding purchases have cleared and the balance owing is paid in full.