Sometimes, you may be faced with financial hardships which make it impossible for you to meet your financial obligations such as paying your monthly bills on time. Subsequently, your credit score is affected, and soon you may find yourself having to deal with the nightmare of a bad credit score.
In some rare cases, you may even be required to declare bankruptcy. However, this doesn’t mean that you will never get back on course again. If you are ready to start a fresh and retake charge of your financial life, then a second chance credit can be of great help. You can use a second chance credit to take a second shot at rebuilding your credit history. As long as you are making your payments on time, you will start seeing your credit score rise.
What Is the Difference Between Regular and Second Chance Credit?
The most significant difference between regular and second-chance credit is that second chance credit is specially designed to help you if you are trying to rebuild your credit history. It is typically available to an individual with credit scores of between 300 and 619.
A good way to access second chance credit is through applying for either a secured or unsecured credit card. Since most lenders understand that you are trying to rebuild your credit history, they will be lenient with the acceptance criteria. Second chance credit is meant to be a short-term financing solution to your poor credit score.
Second Chance Secured Credit cards
A secured credit card offers an incredible way of rebuilding your credit history. Typically, a secured credit card is backed up by cash deposit. Your credit limit is usually equal to your cash deposit account balance.
The cash deposit is meant to reduce the risk on the part of the card issuer such that if you fail to pay your credit, the card issuer can recoup the money from your deposit account. However, you will always get your deposit back if you develop a habit of paying your bills on time and you end up improving your credit score as well.
Second Chance Unsecured Credit Card
You can also access a second chance credit through an unsecured credit card. You should look for an unsecured credit card that is specifically marketed to those with bad credit history. As opposed to a secured credit card, you don’t need a security deposit, but the fees usually tend to be high.