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Established Contributor
ccnewcc
Posts: 560
Registered: ‎09-29-2012

Re: Secured Loan


cam2103 wrote:

Generic wrote:

I'm not a fan of getting credit in the hopes that it will improve credit scores.  I am a fan, however, of getting credit that is needed (the ability of float purchases for 30 days, needing a K loan for home repairs) and that will, in addition to the need, help credit.

 

 

Secured Credit Cards are one thing.  Secured loans are something entirely different and something that I would never do nor recommend.

 

My advice would be stay with your two secured CCs.  Maybe try for a 3rd cc -- an UNsecured CC, perhaps?

 

 Hey CC,

 

Could you elaborate on the above? Is'nt a secured credit card a secured loan?


 


No, it isn't.

 

Secured CCs are revolving accounts, and Secured Loans are installments.

 

Secured CCs can offer rewards.  Secured loans, at best, offer offer componding interest.

 

Secrured CCs can have a CL that you can max out on every month (not advisable tho) and can be Increased in CL, whereas Secured loans are a set amount of borrowed dollars.

New Member
cam2103
Posts: 6
Registered: ‎10-31-2012

Re: Secured Loan


ccnewcc wrote:

cam2103 wrote:

Generic wrote:

I'm not a fan of getting credit in the hopes that it will improve credit scores.  I am a fan, however, of getting credit that is needed (the ability of float purchases for 30 days, needing a K loan for home repairs) and that will, in addition to the need, help credit.

 

 

Secured Credit Cards are one thing.  Secured loans are something entirely different and something that I would never do nor recommend.

 

My advice would be stay with your two secured CCs.  Maybe try for a 3rd cc -- an UNsecured CC, perhaps?

 

 Hey CC,

 

Could you elaborate on the above? Isn't a secured credit card a secured loan?


 


No, it isn't.

 

Secured CCs are revolving accounts, and Secured Loans are installments.

 

Secured CCs can offer rewards.  Secured loans, at best, offer offer compounding interest.

 

Secured CCs can have a CL that you can max out on every month (not advisable tho) and can be Increased in CL, whereas Secured loans are a set amount of borrowed dollars.


Thanks for the clarification. So, in your opnion I would be better served by increasing the credit limit on my secured card with the cash I was going to use for the secured loan?

Established Contributor
sphinx313
Posts: 562
Registered: ‎02-12-2011

Re: Secured Loan

Possibly....or maybe a 70/30 split. Increasing your secured card credit limit would increase your available credit and decrease your utilization. The installment account (secured loan) will add a necessary account to your credit portfolio while you're in the growth stages.



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webhopper
Posts: 7,230
Registered: ‎09-16-2011

Re: Secured Loan

[ Edited ]

I personally like secured loans... I had one from chase bank in 2007 and I feel that it really helped. For one thing I saved 1k over the course of a year. On the other hand I improved my credit mix. Keep in mind that once the loan is funded you get your deposit back immediately as the loan funds and then you get the full asset back when the loan is paid. Also it only cost me $17 for 12 months of installment history. Secured cards and subprime cards have higher fees than that

I would definately do a 1k loan and then when the loan funds; use the funds to increase deposit on the secured card... then start paying off the loan and 12 months later you have a 1k CD

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Established Contributor
ccnewcc
Posts: 560
Registered: ‎09-29-2012

Re: Secured Loan


cam2103 wrote:

Thanks for the clarification. So, in your opnion I would be better served by increasing the credit limit on my secured card with the cash I was going to use for the secured loan?


I think that is a better option than getting a secured loan.

 

And perhaps looking into an unsecured CC.

 

I would like to add tho, rebuilding can take time.  Some ppl rush into getting CCs and loans and what not thinking it will help only to find out later down the road that only modest increases to the credit score happened.

 

Always research the options that are out there, get credit that is needed--not wanted, and have patience.

Moderator
webhopper
Posts: 7,230
Registered: ‎09-16-2011

Re: Secured Loan

http://www.ehow.com/how-does_5718656_do-certificate-secured-loans-work_.html Here is a good explanation

Starting Score: 08/29/2011 TU 671 EQ 674
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Valued Contributor
Jutz
Posts: 1,216
Registered: ‎05-10-2012

Re: Secured Loan


webhopper wrote:

I personally like secured loans... I had one from chase bank in 2007 and I feel that it really helped. For one thing I saved 1k over the course of a year. On the other hand I improved my credit mix. Keep in mind that once the loan is funded you get your deposit back immediately as the loan funds and then you get the full asset back when the loan is paid. Also it only cost me $17 for 12 months of installment history. Secured cards and subprime cards have higher fees than that

I would definately do a 1k loan and then when the loan funds; use the funds to increase deposit on the secured card... then start paying off the loan and 12 months later you have a 1k CD

+1

 

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scarrollprint
Posts: 382
Registered: ‎06-26-2012

Re: Secured Loan

Aren't CD backed loans a lowe where they don't give you a penny, but rather open up a cd in your name and then you pay for it in monthly installments. When the term is up the bank keeps the interest and you can cash out the CD (or roll it over if you want to make money off of it). 

 

If this is the type of loan your looking at, I see no issue with it as really all it is, is a glorified savings account that gets no interest but rather helps build credit. It costs nothing (a cap 1 credit card will cost at least 20$ in an AF if not closer to 40).

 

the banks like them because they are getting loaned free money that they don't need to pay interest on, butt rather can invest it to gain some.



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