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05-03-2010 11:11 AM
Hello all. I am helping my fiance clean up his credit. I'd like your advice/thoughts regarding experiences with secured & unsecured cards.
He has no active credit cards/loans in his name, lots o' baddies, for which I am taking advantage of this site's guidance
I recently added him as an AU to 3 of my cards (2 carry $0 balances, one carries 9% utilization, perfect payment history, several years average age of accounts, $14.2K total CL). If they appear on his report, it won't be for at least a month (just added).
I have read that the most common Credit Report used my many lenders is issued by Equifax - and apparently, this CRA apparently has a tendency NOT to report cards for which one is an AU (based on my myfico forum research).
I would like him to start rebuilding his credit with card(s) in his own name to ensure that he definitely has a way of proving his credit worthiness (it'll take time, but you have to start somewhere!). I've done a bit of research, and secured cards definitely seem the safest option.
But what about cards for people with BAD credit? Any current experiences you'd like to share? Let's say he applies for an unsecured card but gets denied - are there any experiences with companies that will still offer at least an unsecured card? I'd hate to see him get a hard inquiry with no benefit, but part of me wonders if it is worth at least trying for one.
Thanks very much in advance!
05-03-2010 12:13 PM
You should wait until the AU appear on his credit report. That will bump his score based on the age of the accounts you add him to. I have my little sister as an AU on one of my accounts (Aged just under two years), and her credit score is 678, mine is 633!! Go figure!! I think it takes like two months for it to report. Well worth the wait though. I know the Secured cc from BofA are a good deal, if you want to go that option.
05-03-2010 12:33 PM
Thanks for your input , AyalaZero Yes, we're certainly going to wait and hope that all 3 reports show his AU accounts before doing anything. I just like to plan for the worst - assuming the potential creditor pulls Equifax, and assuming that Equifax does not report these AU accounts, I want to figure out the best approach.
I usually err on the conservative side, but part of me wonders if we should risk application to an unsecured card.
This is my opinion only (I do not intend any offense to anyone): I view unsecured cards negatively (I sure as heck am not an expert, though). In the best light, I could say that its presence could indicate that that someone may have had past troubles, but they are taking steps to improve his/her credit by establishing history - now this is positive. Life happens sometimes, and I sure as heck would rather see signs that someone seeks improvement.
But it also indicates that this person likely could not obtain even a small secured amount - and that doesn't inspire much confidence. Sure, down the line, once history builds, one could obtain secured cards and eventually either update the secured card to an unsecured one, or close it altogether (but that would reduce the average age of accounts, not good).
Perhaps my point of view is too severe, but that is how I see it. So I'd like to have him start off with an unsecured card at least, but I am afraid of that failing, with a hard inquiry and nothing to show for it. The world wouldn't end if we did, I'd just like to get some insight before deciding.
05-03-2010 12:51 PM
Well, i got a secured cc from BofA in 2/08 and it raised my score 15 points. It unsecured 9 months later and got a $500 C/L increase. My sister has me as an Authorized user on one of her CC (CapOne) and that reports to equifax. I got a collection that is 1 yr 7 months old. It's an old cell phone bill that in reality is almost five years old now. Your Fiance sounds like he is in the same boat i was in a few years back. I got approved for a Cap One card over the weekend... they sent me a pre-approved offer and I went ahead and gave it a shot. It's not hard work, just be sure that he pay everything on time, or else knee him in that you know where!! That'll teach him!!
05-03-2010 12:59 PM
I don't quite understand your opion on secured vs unsecured.
Anyway here is mine for fiance. .
A few inquires for someone with bad credit don't really make much difference, so use a few it you want. .
If you want to see if you have a chance with unsecured, I suggest try HSBC/Orchard site (or Capital One) and let them prequalify you (soft inquiry).
If you qualify for unsecured , you should consider it and maybe try for another unsecured. .
If you qualify for secured, you should consider it, since you are not likely to qualify for any unsecured. .
If you can't get secured card from them, I suggest you check out Public Savings Bank secured card, (IMO best card for people with very bad crediit)
If you go the secured card route, put down more than minimum, (Toy credit limits do not look good).
I think 1 or 2 secured cards with higher limits is better than unsecured with toy limits.
Once you get 1 or 2 cards, use them every month and PIF mostly.
Then do what you can to clean up reports while you develop some positive history.
05-03-2010 01:39 PM
AyalaZero: Thanks again! When your card went from secured to unsecured, did it retain its original start date or was it replaced with an entirely new account (so it had to start the aging process all over again)?
No worries about paying bills late...or kneeing anyone's "goods" LOL I handle the finances thanks to my "budget baby" - this handy little spreadsheet budget I created a few years ago and maintained ever since. I show him what I am doing, and we ALWAYS talk about the budget, and how different scenarios impact future dinero. The eventual goal is that he will be able to do this himself. But baby steps, baby steps.
05-03-2010 01:41 PM
Wolf3: Thanks for your advice!
My opinion on secured versus unsecured is based on the assumption that credit card companies are indicating whether an account is secured or not. But it looks like my assumption might be wrong here, based on your point - "I think 1 or 2 secured cards with higher limits is better than unsecured with toy limits."
Do credit reports indicate whether a card is secured or not? If they don't, this advice is brilliant! I never thought of that possibility I am so glad I asked! I compeltely agree that higher limits would do better, when maintained properly.
05-03-2010 01:55 PM
The CC does NOT re-age when it unsecures, everything remains the same. I think it did report as secured, but I dont think that has an effect on your creditscore. Also, I don't think it works against you to have a secured cc... if anything i think it would show people that you are willing to risk your own money to prove that you are a responsible person now, regardless of your careless past. I have an excel sheet also that I made also it works like a charm, down to the penny "x" amount of months into the future.
05-03-2010 02:20 PM
Some secured report as secured, others do not. It makes no difference to FICO score.
Public Savings Bank does not report as secured ( I have one).
I don't think HSBC/Orchard does either. Recently got one, but haven't pulled reports for a few months to verify. Maybe post the question about it.
Credit Unions are good source of secured cards as well, if you belong to one.
There are some very expensive sub prime cards out there that you avoid like the plague. Post if you are not sure.
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