How a credit card could help erase your bad credit rating

While a bad credit score usually begins with a credit card, it can also end with one, too. Find out how a secured credit card could help erase your bad credit rating.
No, you're not dreaming! Even if you have declared bankruptcy or have a bad credit record, you still have the chance to carry a credit card. Thanks to guaranteed secure credit cards, you can start to restore your reputation among financial institutions. How do you do it? Simply by submitting a secured credit card (or guaranteed credit card) request to an issuer.

• Intended specifically for people with bad credit or no credit history. It aims to restore (or establish) your credit.
• Some cards target a specific clientele, such as students or newcomers.
• They can be provided by the same companies that issue "normal" credit cards.
• Requires a deposit to guarantee in whole or in part the amount of your credit card limit. This deposit will be retained by the issuing company to cover the value of the card in case you are unable to pay the balance—hence the term "guaranteed" or "secured". The deposit amount can be as little as $75 to $500, sometimes more. You can increase your credit limit by paying an additional deposit. The deposit is refunded to you when you decide to close your account.
• Interest may be paid on your deposit.
• In addition to annual fees, other charges may be applicable including: fees to open the account and monthly charges.

No, but the requirements are much less stringent than for a regular (unsecured) credit card. Here are the general criteria required to obtain one:

• You must be a Canadian citizen or permanent resident.
• You must be over 18 and havea Social Insurance Number.
• You must have a permanent residence that you have occupied for at least six months.
• You must be discharged from bankruptcy.
• You must have a stable job for at least six months, sometimes longer.
• You must not have any other credit cards.

When looking into a secured credit card, do not accept the first offer you find. It's best to shop around since your financial well-being is at stake. There are additional costs and obligations associated with secured cards. Compare different options before you decide on one. It is also advisable to do business with a known and trusted credit card company.

• Respect your monthly payments and pay the full balance on the card; otherwise you will only make matters worse. Only use your secured card to pay for items and services you would normally purchase anyway and that you can easily repay, such as groceries and gas.

You will not improve your situation if the balance on the credit limit is too high. While credit companies are willing to give you a second chance, a third chance will probably not be extended.