What happens when consumers are denied for secured credit cards?

The last few years have seen many Americans rejected for credit of all types because of how they've handled their accounts in the past, though many fell into those financial pitfalls through no real fault of their own. Nonetheless, these problems persist, and might even lead people to be denied for what are supposed to be credit-building accounts.

Secured credit cards are meant to be fairly easy for consumers to qualify for, as they tend to come with a bare-minimum credit qualifications and also require a down payment to insulate the lender from losses. But those with truly severe credit difficulties could find themselves turned away even from those accounts in some cases, according to a report from the consumer advice site Nerdwallet.

"In my head, I was doing everything right," Kyle Khachadurian, a 23-year-old who was denied such a card, told the site. "I had a big chunk of savings. … I did everything the way you're supposed to except for [dealing with a balance in collections he'd forgotten about]."

Fixing the problem
There are, of course, many steps consumers can take to determine why they were rejected and get back to where they need to be, the report said. Most of these efforts should start with checking one's credit report to see whether any accounts are not in good standing, or have been sent to collections. Armed with that information, consumers can start to figure out the best way to address those issues as quickly as possible.

Whether that's paying down an outstanding debt or just doing more to make sure every payment is made on time and in full, the benefits of these steps won't be immediate, the report said. However, they will, eventually, end up being quite beneficial because they will not only lead to better credit, but a better overall financial picture as well.

Know what's next
In addition, it's likely to be important for consumers to not be bullheaded about how they deal with credit applications, the report said. One rejection, or perhaps two, should be enough to get the message across that they have some work to do.

In the meantime, they might also want to make sure they're doing all in their power to find help through alternative credit, such as scores from PRBC. Alternative credit looks at not only how consumers have handled credit cards and loans, but other monthly payments such as rent, utilities, and more. Taking that into account may paint a more complete overall financial picture.

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