Now that is a tough question! Talking about credit cards is never black and white, because people use them with varying degrees of responsiblity. That said, this lesson should give you a decent idea of how much secured credit cards can help your credit score. Since there are different types of people who would consider using these cards, I’ll create a few different scenarios.

#1 – Person with no credit and virtually no credit history. This individual has the most to gain by using a secured card. Since this person doesn’t have derogatory items on their credit report, a few on-time payments will make a huge difference. This person will also almost always be able to take out unsecured credit cards within six months or so. Their credit report will start to look a lot better to other credit card companies.

#2 – Person with little credit history and a few past mistakes with credit. This person will also be able to make decent gains with the use of a secured card. Since this individual has a few late payments that show up on their credit, they won’t have as big a leap as #1, but they can still improve their credit significantly.

The late payments will, however, remain on their credit report for around seven years. This will hurt the score somewhat, but this person will still be able to take out loans for almost anything they need.

#3 – Person with serious, terrible credit issues. If you have something major that’s hit your credit (such as a bankruptcy, foreclosure, or repossession), a secured card won’t help nearly as much, but it will still help. In order to dig out of the hole that’s been created, you will need to re-impose a history of making on-time payments. You need a secured card more than everyone else. It will take time to rid yourself of the major issues in your credit report. However, banks will start to trust you again if you develop a new history. In a short year or two you can explain to a lender that you have taken control of your financial situation and that you care about making payments on time. You will have the history to back it up. Your score will still be affected but you can actually have a solid credit score, even with a bankruptcy – as long as you start making on-time payments.

As you can see, a secured card can help people in most situations. However, the mileage will vary. Exactly how much benefit you’ll get will depend on your credit history, but there’s no doubt that you’ll get a benefit, as long as you make your payments on time.

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