I recently applied for a home loan and my FICO scores are hurting because of past credit problems. I have not had and revolving accounts in years and have been turned down when trying to get some credit cards recently. One person at Bank of America suggested that I get a secured credit card and start from there. Will a good account with a secured credit card help my scores improve even though it is secured? And does it show has a secured credit card on my credit report vs. unsecured?
You can go the secured route which will become unsecured eventually. I would reccommend this simply because other lenders, Orchard, Cap One and Household, who offer credit to troubled credit generally have annual fees. Once you get to the point of great credit again you won't want to continue paying an annual fee and most will notl et you convert to a card with no annual fee. With the secured card you can keep it once it becomes unsecured and sockdrawer in favor of better interest rate or rewar cards down the road only breaking it out occassionally tto keep it actively reporting thus not hurting your score by closing your oldest account. Make sure they will be willing to convert to unsecured at some point though.
Some secured cards do report as secured: Bank of America does (it didn't used to). BofA and Wells Fargo's secured cards are harder to get than most, I believe. While it's not available on their site, National City has a really excellent secured card. You have to call to get the application sent to you. Their # is 800-762-0974. The annual fee is $36 billed as $3/month, so it's less expensive than many other secured cards. It also does not report that it is a secured card. Minimum deposit is $250; max $2500.
I had absolutely no credit, so my only option was a secured card, which I got through US Bank last year. I notice two of the reporting agencies show it as a secured card on my credit report, but the other agency does not. I read as much as I could about secured cards, and everyone said the fact that the card was secured made no difference. I don't know why they even bother listing that info on credit reports if it doesn't matter, but there you go.
FYI, the interest rate on the "Secured Savings account" is really pathetic I think I've earned something like $.41 interest, but at least I have a score now, and it's continually improving. US Bank doesn't charge an annual fee, though, so that helps counteract the crappy interest rate on the savings account part of it, as well as the *really* crappy interest rate on the credit card itself.
I would go for the secured card. I got one through BofA last summer, with a limit of $500, in exchange for $99 down. It does help my credit score--the credit limit and existing balance are reported, and it's an account in good standing. The only difference is a descriptor attached to it that says "Secured card." I don't think the FICO calculations are affected in the least by that little disclaimer.
Moreover, the bank is in the process of taking the training wheels off and converting it to an unsecured card--with a $1000 limit--while refunding my $99 plus interest. And two months ago I got approved for another card--CapitalOne. Before I got the unsecured card, I got turned down for CapitalOne, too.
You have to keep in mind that the whole FICO improvement process is a big-time patience game. You can't expect immediate results. You're not going to go from a FICO of 550 to getting approved for $2000 unsecured cards overnight. My advice: take the secured card. It's a start.
- - - - in a credit-scoring postnuclear Stone Age...
I agree with TheNewWorldMan. I also got one of the BofA 99/500 cards (semi-secured), and it definitely opened the door for other cards. (I also have the National City I mentioned previously. Though it didn't unsecure -- and the BofA did -- it still helps with my history.)
Another advantage of secured cards: depending on the maximum limit, if you really do save up and increase your limit, when you do start getting approved for unsecured cards, you'll show responsible use of a card with a higher limit and will bypass the smaller-limit cards.
definitely get one. deposit an amount that you think you will spend 1/3 of each month i.e. 2000 dollars, spend 6-700 each month. use the card to make purchases that you used to make with cash , like gas and groceries. pay the card off each month, before the due date. you can do it online from a diff banks acct. easy. after a few months bofa returned my deposit, gave me a platinum card and now my limit is 5500. all in 18 mos. as for how it affects your credit, just dont let the balance to be more than 1/3 the limit when they report- once a month. bofa treated me great. i waited a few months and got a sec. card from usbank and despite my timely payments they have not offered to convert it to a real card. bofa is the way to go, but get a bank acct somewhere else as they have high fees. hope this helps, e
secured cards help your scores ive seen 20-30 points gained from secured cards on all 3 reports . bank of america is ok but orchard bank and first premier is better because they dont show secured on your credit report . Bank of america states that the card is a secured card .
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