Secured Credit Cards

[Anonymous]

My credit score is very low, around 480. Is it better for me to get several secured credit cards with big limits than it is to pay off the old debt? I plan to pay it off regardless but I'm looking to see what improves my credit first. If I had 3 $1000 secured credit cards would that significantly increase my credit score? What if I had 3 $5000 secured credit cards with little balance? Thanks.

[Anonymous]

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kbox wrote:
My credit score is very low, around 480. Is it better for me to get several secured credit cards with big limits than it is to pay off the old debt? I plan to pay it off regardless but I'm looking to see what improves my credit first. If I had 3 $1000 secured credit cards would that significantly increase my credit score? What if I had 3 $5000 secured credit cards with little balance? Thanks.

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Rgardless of the limits your key is going to be utilization.  If you geta 1000.00 card don't use more than 300.  1500 for a 5K card.  Paying of the debt will not remove it from your reports but it will stop it from reporting and keep it from being sold time and time again resulting in new damage to the score.

[Anonymous]

Great answer. What if debt is bought/sold and appears twice? Is there away to remove the old appearance or update it with account has been paid?

[Anonymous]

Would it be better to have 8 $1000 cards with a small balance or 3 $5000 cards with a small balance? In otherwords, is it more important to have more good accounts or a few accounts with big limits? Thanks again.

[Anonymous]

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kbox wrote:
Great answer. What if debt is bought/sold and appears twice? Is there away to remove the old appearance or update it with account has been paid?

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Each time a debt is sold it is a valid entry.  Just make sure the old one now appears as a zero balance once itis sold to a new one.

[Anonymous]

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kbox wrote:
Would it be better to have 8 $1000 cards with a small balance or 3 $5000 cards with a small balance? In otherwords, is it more important to have more good accounts or a few accounts with big limits? Thanks again.

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According to Experian, low limit cards can hurt your score on their model, that being said the larger limits with smaller balances would be your best option.  That plus too many accounts is never a good thing, it could prevent another ,ender from offering you credit because of too much avail credit.

[Anonymous]

Brammy,

I have a question regarding your last statement.  You said (paraphrasing) more credit cards = greater available credit but shouldn't greater CL = greater available credit.  For example if I have 5 cards, each with a 300 CL would allow me 1500 in available credit or I may have 1 card with a 5000 CL allowing me 5000 of available credit.

How do the CRA see this?

WBALKE

[Anonymous]

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WBLAKE wrote:

Brammy,

I have a question regarding your last statement.  You said (paraphrasing) more credit cards = greater available credit but shouldn't greater CL = greater available credit.  For example if I have 5 cards, each with a 300 CL would allow me 1500 in available credit or I may have 1 card with a 5000 CL allowing me 5000 of available credit.

How do the CRA see this?

WBALKE

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I'm sorry that's not what I'm saying.  Going with the number of cards versus cl there is no comparison.  Utilization is utilization.  That being said if you have 8 cards with 1k limit or one card with an 8k limit the FICO score is going to look at what you have avail versus what you've used. That should not go over 30% and hopefully pretty evenly distributed. 

What I meant by creditors not issuing additional credit was simply due to the fact that these would be secured cards and probably not the best rates.  If you wanted to move on from the secured world and had 10k in approved limits a lender could view that as all the unsecured credit they are comfortable with your profile having.  So yes it could result in denials from other creditors.

Low limits can also do the same, it has happened to me.

Message Edited by Brammy on 08-21-2007 10:44 AM

[Anonymous]

So Brammy,

   With low scores how do you get credit cards with higher limits than 300-500 dollars?? I havent seen any unless you drop 5K in a secured card... My scores arent much higher and I only have one card and its a 300 limit from Imagine

thanks

[Anonymous]

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whitewitch23 wrote:

So Brammy,

   With low scores how do you get credit cards with higher limits than 300-500 dollars?? I havent seen any unless you drop 5K in a secured card... My scores arent much higher and I only have one card and its a 300 limit from Imagine

thanks

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My best answer to that one is time.  I had a unsecured Household bank card when I first started rebuilding credit.  Started at a 300.00 limit eventually got up to 1500.00. Should have applied for other cards sooner but thought I was blackllisted due to BK.  As soon as I started applying for other cards, started getting better limits and rates  The longer I kept my good payment history and low utilization, the higher my scores got and the higher the limits went.  This started about 4 yrs ago right now I have about 20K in avail credit. Quite by accident. 

I think time is the biggest factor in all of it.