Think a secured credit card is the scarlet letter of the credit world? You might want to think twice. Secured credit cards aren't reserved for those with irresponsible spending habits. In fact, there are a few different reasons why someone may need a secured credit card, and none of them have to do with irresponsible financial habits.

1. A Ghost

I remember when I applied for my first car loan (I was 18) and I was told I was a "ghost". I had no idea what in the world they were talking about. It turns out, the word "ghost" meant that I had no credit -- none whatsoever. No bad credit, no good credit, not a single unpaid bill (or paid bill for that matter). Nothing, nada, zip.

Oftentimes no credit can be worse than bad credit. At least with bad credit someone is willing to give you a second chance. With no credit, it seems they just run in the other direction. That's where a secured credit card can help.

If you have no credit at all, a secured card can be the tool you need to establish a positive credit history. Instead of nothing showing up on your credit report, your secured card account and payment history will show up and your credit history will begin to develop.

2. A Fledgling Business

If you start a business and want to establish a line of credit, a secured card might be needed. A fledgling business is considered risky by most creditors (especially since many businesses go belly up their first year). Because of this, an unsecured card might not be an option. A secured credit card, however, can help your new business develop the credit history it needs.

3. When Bad Things Happen to Good People

Even if your credit has some bruises, it doesn't mean you're financially irresponsible. I once knew a person who had horrible credit and didn't do a thing to deserve it. Her husband had gotten seriously ill and while their insurance did cover some of the expenses, she found herself claiming bankruptcy because of the tens of thousands of dollars that weren't covered.

This person was not financially irresponsible. In fact, she had never had an unpaid bill and had never made a late payment. Yet, she found herself filling for bankruptcy. A few months after the bankruptcy, she found herself applying for a secured credit card to help re-establish her creditworthiness.

As you can see, a secured credit card isn't a reflection on the card holder's financial common sense. There are a number of reasons why a person might not be able to qualify for an unsecured credit card and oftentimes a secured credit card can be the very thing needed to hold you over until lenders see you as the financially-responsible individual you are.