Good credit is an incredibly valuable today. A high credit score benefits consumers in numerous financial circumstances, primarily when seeking approval for affordable loans, buying a house, purchasing a car, or even securing a job. An absence of good credit can mean exclusion from most of life’s important events, and because credit can only be earned, it can be challenging for those starting out or recovering from hardships to take advantage of the benefits of good credit.

The best approach to building and rebuilding credit may be found in the use of a secured credit card. Unlike other popular payment methods, such as prepaid debit cards and celebrity cards, most secured credit cards do not have an application fee or transaction fees, and all actively build or restore your credit with each payment you make. Interested in learning more? Read on.

Secured credit cards are designed for those with poor credit scores or no credit history at all (which can be just as limiting as bad credit). For example, if you’re a college student with a debit card and want to build credit in preparation for future purchases (like a house), but are having trouble getting credit card approval from big bank issuers, a secured credit card can provide a simple way to accumulate credit history. For those with a poor FICO credit score as a result of late payments, carrying a balance deemed too large, or closing and opening too many lines of credit, a secured credit card serves as a more attainable means of improving a credit score. Keep in mind that credit can only be improved with regular use of the secured credit card and timely payments.

After an extended period of consistent payments, many secured cardholders can upgrade to unsecured lines of credit, or can move on to applying for any type of credit once credit has been sufficiently established or improved.

To acquire a secured credit card, such as UNITY Visa from OneUnited Bank, you’ll need to provide a security deposit with the party issuing the credit card, who in turn will provide a line of credit via a credit card based on your ability to pay. The security deposit functions as collateral, just as it would in the case of renting an apartment. (Note: The annual fee will reduce your available credit when you initially receive your secured credit card and whenever the annual fee is charged.) Unless you fail to make your monthly payments, you’ll receive your initial deposit back when you pay off your credit line and close your credit card account. With a secured credit card, you can usually never charge more than the amount of your deposit, which helps you with budgeting. Further proof that secured credit cards are designed to help users is the ease with which they can be acquired, which makes sense because the cardholder, not the issuer, fronts the risk of the line of credit with their security deposit.

In terms of general use and function, a secured credit card is a real credit card and, therefore, works in the same manner as a traditional credit card. You can use it for buying groceries, reserving a hotel room, renting a card or for any other circumstance where cash or checks aren’t convenient or applicable.

So for those ready to begin establishing a credit history, or for those ready to work towards repairing their credit, a secured credit card may be just what you need to get started on the right path, or to correct past credit mistakes and start building a strong financial future.