Secured credit cards can help in rebuilding credit history by allowing individuals to establish or re-establish a positive credit history. A secured credit card requires a deposit, which serves as collateral for the credit limit. This deposit reduces the risk for the lender, making it easier for individuals with poor or limited credit history to be approved for a card. As the cardholder makes on-time payments and keeps the account in good standing, the credit bureau will report the positive activity to the credit bureaus, helping to improve the individual’s credit score. 

• Secured credit cards require a deposit, which serves as collateral for the credit limit. This deposit reduces the risk for the lender, making it easier for individuals with poor or limited credit history to be approved for a card.
• As the cardholder makes on-time payments and keeps the account in good standing, the credit bureau will report the positive activity to the credit bureaus, helping to improve the individual’s credit score. By using a secured credit card responsibly, the individual is demonstrating to lenders that they are creditworthy, which can lead to being approved for other types of credit in the future. The positive credit history will be reported to the credit bureaus and will be used to calculate the credit score. The more positive history you have on your credit report, the higher your credit score will be.
• Using a secured credit card responsibly can help demonstrate to lenders that the individual is creditworthy, which can lead to being approved for other types of credit in the future, such as a personal loan or an unsecured credit card.
• • Secured credit cards often have lower credit limits than unsecured credit cards since the deposit acts as collateral for the credit limit, and the credit limit is therefore determined by the deposit’s value. This can assist the cardholder in managing their credit limit and avoiding costly fees and exorbitant interest rates. Managing the credit limit and avoiding costly fees and excessive interest rates can both be made easier with this.
• Some secured credit card issuers will upgrade the cardholder to an unsecured credit card after a certain period of time, typically 6-12 months, if they have shown a good track record of making payments on time and keeping the account in good standing.
• It’s important to remember that the deposit is not a fee, but security for the credit limit, and the deposit will be returned to the cardholder when the account is closed, provided that the account is in good standing and all the outstanding balance is paid.
• Secured credit card can help in building a positive credit history, but it is important for the cardholder to use the card responsibly and make payments on time. Late payments can have a negative impact on an individual’s credit score.

Also Read:- THE DIFFERENCES BETWEEN SECURED AND UNSECURED CREDIT CARDS

Bottom line:

Secured credit cards can help rebuild credit history by allowing individuals with poor or limited credit to establish a positive credit history, as the deposit serves as collateral for the credit limit and reduces the risk for the lender. By making on-time payments and keeping the account in good standing, the positive activity is reported to credit bureaus, leading to an improvement in the individual’s credit score.