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Valued Member
BethJ
Posts: 35
Registered: ‎03-05-2009
0

Secured Credit Cards

I have a secured credit card to help with rebuilding my credit. Will it benefit me or hurt me to keep adding to the associated savings account to increase my credit limit? I am paying more then my minimum and paying it on time.
03/16/2009 EQ 535 * EXP 581 * TU 586
7/13 EQ 616 * EXP 626 * TU 640
8/1 EQ 626 * EXP 640 *TU 603
Frequent Contributor
manyquestions
Posts: 309
Registered: ‎10-20-2008

Re: Secured Credit Cards

It may help, it won't hurt.  If your limit is more your utilization percent will be less.  You may get larger limits on other cards when you apply for other cards.  Sometimes they base the credit limit on the limits of the cards you already have.
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008

Re: Secured Credit Cards

If you are not increasing your balance in proportion to your CLI (increased savings) it can only help you.  Your ability to manage credit is important.  Your existing CL is also important, it demonstrates to lenders that other creditors have entrusted you with larger CL's and you have successfully managed it.

 

PLUS, it is always a good thing to increase your savings!  Money in the bank, bigger CL, building credit.  All good.

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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
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GULC95
Posts: 1
Registered: ‎04-06-2009
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Re: Secured Credit Cards

TXJOHN--GOOD NAME--

 

WOULD YOU, KINDLY--IN A FEW SIX-GRADE-LEVEL-WORDS, EXPLAIN WHAT YOU SAID RE: THE SAVINGS, UTILIZATION, ETC. FOR THE PERSON TRYING TO BUILT CREDIT WITH THOSE SECURED CREDIT CARDS?  ALAS, I DO NOT KNOW A CLI FROM A STEAK SANDWICH...

 

I AM A FEMALE ATTORNEY, HAVE NEVER HAD A CREDIT CARD, AND ONLY USE A DEBIT CARD.  I NOW FIND MYSELF AT 50 SOMETHING WITHOUT ANY CREDIT, PERIOD.  MY FORMER HUSBAND HAD MANY CARDS, IN HIS NAME, ONLY.

 

HOWEVER, WE HAVE BEEN PAYING A $250 M MORTGAGE ON TIME FOR THE PAST 25 YEARS, FROM A JOINT ACCOUNT.  THAT IS NOTED, IN SMALL LETTERS, IN MY CREDIT REPORT.

 

TXJOHN, I SO APPRECIATE YOUR TIME.  HOWEVER, I DO UNDERSTAND IF YOU CAN NOT HELP ME, TRULY, I DO.  I AM PRESIDENT OF A PRO-BONO LEGAL ANGEL FOUNDATION, AND THE DAYS ARE NEVER LONG ENOUGH HERE IN FLORIDA...

 

TAKE CARE, AND HAVE A BLESSED DAY--

 

WINSTON

Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
0

Re: Secured Credit Cards

[ Edited ]

gulc95 -

 

Welcome to the forum.  Whether you are 50 or 18, this is a good place to be when you are building credit, repairing credit, establishing credit and managing credit.  Pretty much any information you may need is either here or may be obtained by asking questions.  However, most of your questions have probably been asked before and can be answered with a search on this site.

 

In order for this forum to make much sense, you do need to become familiar with the common abbreviations used.  It's sort of like texting shorthand.  You can find a list of common abbreviations at this link:

http://ficoforums.myfico.com/fico/board/message?board.id=Welcome&thread.id=23

 

Also, here are some links to basic threads and posts that will be useful for you:

FICO High Achievers - Credit Scoring 101 - myFICO PDF Booklet - Closing CC's
Frequently Requested Threads - FTC website: Knee Deep in Debt - Helpful Threads
FICO Score Estimator

 

In answer to your question, one of the quickest ways to establish credit is through the use of a Savings Secured Credit Card.  Simply put, you pledge a savings account as collateral for your credit card charges.  Usually your Credit Limit is equal to the value of your savings account.

 

After a period of time, you may be able to 'unsecure' your credit card, after you have established a history of use and payments.  The best place to start this is usually with a Credit Union, rather than a big bank.

 

Since your credit limit will equal your savings balance, as you deposit additional amounts over time into savings, you can have your credit limit of the secured credit card increased to match.  In this way you are literally saving money while building your credit.

 

A secured card is like hybrid to debit.  You are actually borrowing your own money, per se.  But rather than the funds be debited from your balance, you are loaned the money just like a normal card.  Then you pay the statement balance or make a minimum payment just like a standard credit card.  Like a normal credit card, if you pay in full each month, you incur no interest charges because you have a grace period on puchases (not on cash advances).

 

For somebody, such as your self, if you have no derogatory credit, but do have a 25 year mortgage, then building your credit will be much easier than for those who must "clean" up their credit before they can really build it. 

 

Credit scores, such as FICO determine your score from a variety of factors, but one of the big ones is your oldest account and average age of accounts.  Your mortgage establishes a 25 year oldest account and will help to increase the average age of your new accounts.

 

It is unfortunate to hear about your experience, that you had no personal credit and upon divorce found yourself without any credit.  This is why we teach here on the forum the importance for both spouses to establish and maintain personal credit (there are other positive reasons as well).

 

Use the links provided above to get your feet wet.  Visit with a local credit union, or non-local such as Alliant Credit Union (www.alliant.org) or others.  Credit Unions usually are the best place to build financial and credit relationships, especially when starting out.

 

You would most likely be able to obtain some of the starter cards on the market, if you wanted to do so, such as Capital One, Orchard and others.  But these are not long term quality credit.  The secured card and Credit Union approach will grow with you as your credit builds.  The "starter cards" eventually will have to be dumped in lieu of better cards and credit down the road.  It just depends on your goals and the results you wish to achieve.

 

Credit Unions, based upon your age, mortgage and income may even approve you for an unsecured card (maybe a lower limit initially, but would grow over time), because you can speak to a real live person (Loan officer) who you can explain goals and circumstances.

 

Good luck, it is never too late to get started on a better today and tomorrow.  And again, welcome to forum!

 

 

Message Edited by txjohn on 04-06-2009 07:04 AM

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
rp
New Visitor
rp
Posts: 1
Registered: ‎06-24-2011
0

Re: Secured Credit Cards

I had to file Bankruptcy after I lost my job in  2009, and I had never made a late payment in  25 years.  I am back to work in 2010 and my score is 645 from Equifax. Can you tell what Credit Cards secured or unsecured should I try to apply for to reestablish my credit. 

 

Thanks RP

RP
Senior Contributor
Wolf3
Posts: 3,197
Registered: ‎01-24-2010
0

Re: Secured Credit Cards


BethJ wrote:
I have a secured credit card to help with rebuilding my credit. Will it benefit me or hurt me to keep adding to the associated savings account to increase my credit limit? I am paying more then my minimum and paying it on time.

It is generally a very good idea to increase the deposit.   But you say you are paying more than the minimum.   Generally, you should be paying the full balance each month to avoid interest.   If you are carrying a balance and paying interest, I would not increase the deposit,  

Senior Contributor
Wolf3
Posts: 3,197
Registered: ‎01-24-2010
0

Re: Secured Credit Cards


rp wrote:

I had to file Bankruptcy after I lost my job in  2009, and I had never made a late payment in  25 years.  I am back to work in 2010 and my score is 645 from Equifax. Can you tell what Credit Cards secured or unsecured should I try to apply for to reestablish my credit. 

 

Thanks RP


I like Captial One and Orchard for rebuilding.  You are likely to get approved for secured card, possibly unsecured.    

 

Many CU offer secured cards with good terms.

Senior Contributor
bichonmom
Posts: 3,318
Registered: ‎05-05-2011
0

Re: Secured Credit Cards

 


BethJ wrote:
I have a secured credit card to help with rebuilding my credit. Will it benefit me or hurt me to keep adding to the associated savings account to increase my credit limit? I am paying more then my minimum and paying it on time.

Before you add to your deposit/CL, you'd be better off paying your balance in full. Once you're paying in full each month, then I'd look at increasing your deposit. Also, once you have established a positive history with them, you can call and see if they will give you a CLI or convert to an unsecured card.

 

 

~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*~*
EQ FICO 750 | TU FICO 761 (Walmart) | EX FAKO 767 | Goal: 800+

Edits, funky spacing and spelling due to my iPad not getting along with the forum editor!

Senior Contributor
Wolf3
Posts: 3,197
Registered: ‎01-24-2010
0

Re: Secured Credit Cards


GULC95 wrote:

TXJOHN--GOOD NAME--

 

WOULD YOU, KINDLY--IN A FEW SIX-GRADE-LEVEL-WORDS, EXPLAIN WHAT YOU SAID RE: THE SAVINGS, UTILIZATION, ETC. FOR THE PERSON TRYING TO BUILT CREDIT WITH THOSE SECURED CREDIT CARDS?  ALAS, I DO NOT KNOW A CLI FROM A STEAK SANDWICH...

 

I AM A FEMALE ATTORNEY, HAVE NEVER HAD A CREDIT CARD, AND ONLY USE A DEBIT CARD.  I NOW FIND MYSELF AT 50 SOMETHING WITHOUT ANY CREDIT, PERIOD.  MY FORMER HUSBAND HAD MANY CARDS, IN HIS NAME, ONLY.

 

HOWEVER, WE HAVE BEEN PAYING A $250 M MORTGAGE ON TIME FOR THE PAST 25 YEARS, FROM A JOINT ACCOUNT.  THAT IS NOTED, IN SMALL LETTERS, IN MY CREDIT REPORT.

 

TXJOHN, I SO APPRECIATE YOUR TIME.  HOWEVER, I DO UNDERSTAND IF YOU CAN NOT HELP ME, TRULY, I DO.  I AM PRESIDENT OF A PRO-BONO LEGAL ANGEL FOUNDATION, AND THE DAYS ARE NEVER LONG ENOUGH HERE IN FLORIDA...

 

TAKE CARE, AND HAVE A BLESSED DAY--

 

WINSTON


To have a good credit score, you need credit cards.  Both bank cards (VISA, MC, AMEX, Discover) and store cards are good and you should plan to have at least 3 to devlop a good credit history.  .   

 

Since you have a thin file with no negatives, you have a lot of options.  Consider applying with the bank you do your checking, savings, mortgages with.  Credit Unions are good.   If you shop somewhere regularly and they have a credit card, consider applying and using their card.

 

Assuming you have the cash for deposit, a secured card can help get a larger CL (Credit Limit), making it more usable and may help get larger CL in the future.

 

Simply put:

Get some Credit Cards.

Use them instead of your debit card

Pay your bills on time

 

If a few years, you are golden.   

 

 


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