Having a good credit score is essential for numerous reasons. From affordable car insurance to easier approval to buy/rent property. Bad credit scores are increasing dramatically within society. Along with the stress and anxiety associated with financial troubles, people with low credit often feel trapped, as though there is no way out. Luckily, this is not the case. Secured credit cards are designed for people who may have bad credit and want to make a change.
What is a Consumer Proposal?
Any debt that you may owe, a consumer proposal is a legally binding process between you and your creditors to help repay the amount. With it being one of the most popular forms of debt relief in Canada, a consumer proposal has to be regulated and conducted by a Licensed Insolvency Trustee (L.I.T.)
TransUnion, a consumer credit reporting agency, removes a consumer proposal over a period of 3 years after you’ve repaid all of your debts or 6 years from the date you defaulted on the proposal (whichever occurs first.)
How can you avoid interest fees?
Avoiding interest fees easier than standard cards, secured credit cards help to establish credit scores and make it easier for the individual to have a card approved which results in a quicker process to get their life back on track. Also, with the reward of a refundable deposit, any money that is used as a cash deposit to open the account should be refundable.
How can you obtain a secured credit card?
To obtain a secured credit card, you are usually required to put down a cash deposit. As rates are expectedly higher than standard payment cards, you can only borrow a small amount to begin with. Fees are the bane of many of our lives, and sadly, secured credit cards potentially have high fees that may include application, processing and annual fees.
Building and developing your credit score can be difficult, especially if it is from scratch. However, secure credit cards are there to help and improve your score and transform your life to debt-free. Depending on the issuer, some secured credit cards automatically update to standard unsecured credit cards after you show that you can make payments on a regular basis.
So, how do secured credit cards positively affect your credit score?
Monitoring your spending behaviour is essential in building your credit score. When you efficiently use the card, making transactions and payments in-full and on-time, Canada’s bureaus will be made aware of this information. Therefore, this will lead to a positive impact on increasing your credit score.
Staying away from unsecured credit cards during a consumer proposal is vital. Overspending with a credit card in current times has never been easier. Due to its convenience and accessibility on smartphones, contactless payments allow consumers to spend money carelessly up to a $250 limit.
So, if you’re finding it hard to get a credit card authorised, it is in your best interest to obtain a secured credit card. Increasing and developing your credit score is the same process for every human on the planet – pay in full and on time.
