Secured Prime vs. Unsecured Sub-Prime to Build/Rebuild Credit

[Scamp]

I've been wondering how a secured credit card with a prime lender is reported and scored vs. subprime unsecured.  Is one better for building/rebuilding credit than the other?

When I was ready to start rebuilding my credit a few years ago, I looked at all the pre-approvals from Crapital One, et al., that I was getting in the mail and found their T&Cs, 'acct. set-up fees', initial CL's, etc., so hideous and scary-risky that I never even considered applying for any of them  - but I see on here that A LOT of people DO apply for them instead of going for a secured card with one of the prime banks, which is what I opted for (took $1k of my IRS refund that year to set it up with the bank that'd had my checking acct. for years - a much better CL than I've seen on any of the subprime pre-apps).

I didn't check any of my scores until after it went unsecured a year later, at which point I pulled one (can't remember which), and had a 738.  So having a secured card doesn't seem to have hurt my score, that first year (....? ...did it...?). 

Does a secured card show on a report as such and/or score against you somehow..?   I could swear my bank told me that anyone looking at my report wouldn't know the card was secured, but I may be mis-remembering.

Does a subprime unsecured card score better? 

I'm past this stage of things, myself, but I'd still like to know for my own understanding, and I thought it might be helpful to others reading these boards who are trying to decide where and how to start building/rebuilding their credit.

Thanks for any info anyone can provide! 

(Edited to add highlighting color and formatting to emphasize/clarify that I'm not making this decision myself at this point, but posted for informational purposes, for others who may be in the situation I've since left behind. Thanks to everyone who's responding - I think it'll be a big help to people trying to figure out which cards to apply for!)

Message Edited by scapegrace13 on 05-04-2008 09:19 AM

[haulingthescoreup]

I have seen posts where people say that somewhere it does show as secured. Others say no, it doesn't show.

Whichever way, it makes absolutely no difference in scoring.

Some worry about what a future lender will think. My opinion is that most lenders realize that everyone has to start somewhere, and I can't fathom them sneering at a secured Bank of America card, for instance, but thinking that a Tribute card is just spiffy.

In fact, as it can be harder to get a good secured card than one of the bottom-feeders, I think it would look better. Just my opinion.

Do we have any members here with a secured card that would be willing to post the info here from their reports, XXX'ing out the account details, of course?

[Anonymous]

Do what ever costs you less money since they are scored the same under the current model as far as I know. Be careful because there is another category as super-subprime. You don't want those. These cards charge monthly fees. They all score the same but will cost you more money and you gain the same points as secured. The only difference is with subprime you can get credit line increases where with secured you usually do not. However again with super-subprime there are no credit line increases either.

Prime cards
Boa, Citi, Chase, National City, Discover, Amex, ect...

Some subprime cards
Orchard Bank by HSBC
Cap1
Boa 99/500
Boa secured

Super Subprime
Cards that charge monthly fees or a startup fee over $100.

[Anonymous]

Even if they do show "secured" that does not look bad. It means you are not desperate for credit and can put money up front. I can not in any way see how this notation will hurt, in fact I think it looks good for smaller credit lines.

Any credit card with a limit of under $1,000 looks subprime under a manual review IMO. If you had a bunch of closed CCs from years ago and a lender saw credit lines like $250, $400, $300 they know there was a situation. Some people take secured cards and raise the limit with a deposit to $1000 or more a month or two before they close the card to have it reported closed with a prime credit line.

[Geordi]

ENOUGH IS ENOUGH!

If you are considering or need a secured credit card then you are in the rebuilding stage of credit repair.

There is no such thing as a prime or sub-prime secured card, whether or not it reports as SECURED OR NOT. OVER 95% of applications for credit are done by computers that could care less if your card had the words SECURED next to it.

If it makes someone FEEL better than their SECURED credit card doesn't not report as secured then good for them.

Please try to keep in mind what the optimal goal of credit repair is: To improve your credit score and credit history. It doesn't matter a tiny bit if you have tradelines that have the word SECURED next to it.

Just pay your bill on time, never be late and get some history. As your score improves, you will be offered non-secured accounts.

If I have offended anyone then my apologies, but it seems that everyone WANTS to have their cake and eat it too. Please remember that when you were a toddler you most likely used TRAINING WHEELS on your bike. Some of the older kids probably teased you about using TRAINING WHEELS but they were necessary at the time.

Please obtain positive tradelines with some age to them. Once you build that, you wont be bothered about the word SECURED.

Just my two cents :/

[marty56]

I would go secured prime since it could lead to an unsecured prime fom the same lender.

The fact the Aspire Visa can see that they are an unsecured card whose yearly fee in $149 is a real joke.

[Anonymous]

Hi scapegrace,

It doesn't "look bad" at all if a secured card reports as "secured" in

the comments section of your credit report. Like others here have

already posted, secured and unsecured cards score exactly the same.

Having said that, my preference would be to get a secured prime card

from a bank or local credit union. This way, you're already in the prime

pipeline and there won't be a need to graduate from subprime to prime.

If you plan to get more than just a credit card i.e. line of credit, auto loan, etc.

and you have concerns about how things might look, make plans right up

front to work with one financial institution that offers everything you want.

The local bank/credit union issuing you a secured card with "secured" in

the comments section will be happy to give you a car loan or LOC as well.

So in summary, there's no difference FICO-wise in how the cards report.

But in my opinion it's better to get into the prime pipeline however you can

as quickly as possible.

Hope this helps. Enjoy the weekend!

CanDo

"The right attitude is everything"

[Anonymous]

Excellent post, CanDo!  I agree with every word.

IMO, the points you mentioned should be the main considerations in choosing a secured card, not whether it reports as "secured" or not.  When I needed a secured card, I opted for Orchard secured precisely because it did not report as a secured card.  I've regretted that decision many, many times.

[Scamp]

Geordi wrote:
ENOUGH IS ENOUGH!  Not necessary to holler; we're all right here.  

If you are considering or need a secured credit card then you are in the rebuilding stage of credit repair.  If I were, then you'd be right.  Please re-read the end of my original post, which I've now highlighted.

There is no such thing as a prime or sub-prime secured card, whether or not it reports as SECURED OR NOT. OVER 95% of applications for credit are done by computers that could care less if your card had the words SECURED next to it.  A computer may not care about a word, but if a secured card is scored lower for any reason, a computer WILL care about that.  Hence, my questions/comments about this point, which now have been very informatively addressed in others' posts.

If it makes someone FEEL better than their SECURED credit card doesn't not report as secured then good for them.  My comment about my bank telling me my secured card wouldn't show as such on my report was intended to explain my own experience with a secured card and to elicit information from more knowledgeable members on the subject, but strictly relative to whether or not a secured card is scored differently from unsecured, and/or whether LENDERS view such more negatively than subprime unsecured when considering applications for credit.  It had nothing to do with how I felt about the matter, as I didn't care at all whether it said 'secured' or not in any kind of vanity sense, only from the standpoint of how lenders and FICO might view it.

Please try to keep in mind what the optimal goal of credit repair is: To improve your credit score and credit history.  It doesn't matter a tiny bit if you have tradelines that have the word SECURED next to it.  Please see above responses.

Just pay your bill on time, never be late and get some history. As your score improves, you will be offered non-secured accounts.  Yes, I know; this has already happened - please see end of my original post.

If I have offended anyone then my apologies, but it seems that everyone WANTS to have their cake and eat it too.   Please see above responses.

Please remember that when you were a toddler you most likely used TRAINING WHEELS on your bike. Some of the older kids probably teased you about using TRAINING WHEELS but they were necessary at the time.  No comment.

Please obtain positive tradelines with some age to them. Once you build that, you wont be bothered about the word SECURED.  Please see above responses.

Just my two cents :/ 

Thank you for your input.

[braznyc]

I have a mixture of both a WAMU and BOA. I know WAMU reports as secured for me doesn't matter one bit my scores have rose and I'm all the better for it. I did however ensure that they had nice limits as I believe this is far more of a concern to future lenders/cc issuers than if it's secured or not. Well that's what I think.