Secured Credits vs Unsecured Credit
What is Secured Credit?
Secured credit is a type of credit that’s backed by a physical asset (for collateral).
An auto loan is a good example because the collateral is the car itself. If you don’t pay the lender they take the car back, since it’s really not yours until you fully pay the lender.
A secured credit card is mostly like an auto loan, with this card you make a deposit to the lender and if you can’t pay the credit on time, the lender takes the deposit.
What is Unsecured Credit?
Unsecured credit is just contrary to secured credit, there is no form of collateral so a lender can’t take anything back.
If you have bad credit, unsecured cards can have higher fees or interest rates compared to secured cards.
How They Impact Your Score
Secured and unsecured credits are the same when it comes to credit scoring, meaning they do not impact differently from one another, they are considered in the same category.
It is important to mention that if you’re looking to improve your credit and you have difficulty managing your money, a secured card is better because it helps you to limit your spending, and by doing so it helps you use credit wisely.
If you want to boost your credit, we can help you reach a good score in a few months. You just have to take the first step, which is contacting us so we can customize our solutions to your credit problems.