Having a secured credit card can be a great way for individuals to build or rebuild their credit history. However, it is important to note that even with a secured credit card, they may still face rejection when applying for other types of credit. Here are a few reasons why this may happen:
Lack of Credit History
- While a secured credit card can help individuals establish a positive credit history, some lenders may still require a longer credit history before approving them for certain types of credit.
Income Level
- Lenders may also consider their income level when evaluating their credit applications. If their income is not sufficient to cover the new credit they are applying for, they may be rejected.
Debt-to-Income Ratio
- Even with a secured credit card, if their debt-to-income ratio is too high, lenders may be hesitant to extend them additional credit.
Credit Score
- While a secured credit card can help improve their credit score, other factors such as missed payments or high credit utilization can still negatively impact their credit score and result in rejection for other types of credit.
Overall, while having a secured credit card can be a positive step towards building their credit history, it does not guarantee approval for other types of credit. It is important for them to continue to practice good credit habits and monitor their credit report regularly to improve their chances of approval in the future.
