Secured vs. Unsecured

[Anonymous]

The Difference? Better to have secured?

[blacklotus]

Depends on credit situation- but unsecured is always better.

[fused]

I agree with blacklotus. As for FICO scoring, it doesn't matter if your CC(s) are secured or unsecured, one is not better than the other.

[Anonymous]

Secured can be better if you have no credit history or bad credit.  Assuming you have the funds to deposit.   And you pick a decent secuired card, not a bottom feeder type card.   Compared to very low limit unsecured card, I think secured is better because:

You can set decent credit limit you need to be usable. 

Bigger secured credit limits can begat bigger unsecured credit limits.

You can charge close to max without spooking the creditor.

Youj can sock drawer it for months and they won't cancel.

You can develop a relationship with a prime  creditor who may not give you an unsecured card.

. 

[Anonymous]

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@Anonymous wrote:

Secured can be better if you have no credit history or bad credit.  Assuming you have the funds to deposit.   And you pick a decent secuired card, not a bottom feeder type card.   Compared to very low limit unsecured card, I think secured is better because:

You can set decent credit limit you need to be usable. 

Bigger secured credit limits can begat bigger unsecured credit limits.

You can charge close to max without spooking the creditor.

Youj can sock drawer it for months and they won't cancel.

You can develop a relationship with a prime  creditor who may not give you an unsecured card.

. 

---

Does it also mean that if I had a $200 secured card, it would unsecure with a similar CL?

[Anonymous]

I can not prove that bigger secured lead to bigger unsecured. It is more of a theory that others have hinted at.  

I have never read a post where someone got a smaller unsecured limit.   Usually it is a bit more than the secured.   

I have seen a lot of complaints that the minimum deposits get unsecured and go nowhere.

The bigger limits seem to go further. 

IMHO,   I think toy card limits <$1000 are not inviting on your report.  I think Creditors want people who use the cards a lot, which requires larger CL. .      

I started rebuilding with 2 secured cards at $1000 each and I plan to go much higher before it is time to unsecure.  I will see if it pays off. 

[haulingthescoreup]

When you're in the rebuilding stage, secured cards can be great. As mentioned above, there is no difference in FICO scoring.

But I would strongly, strongly advise that you just get two, maybe three. There is no point in junking up your credit reports with an endless series of $200-$300 CL cards. For FICO scores, all you need are 2-3 open revolving (aka CC) accounts, and you pay them promptly. You are not going to get any additional benefits by having more low limit cards.

When you're rebuilding, you have to develop the skill (and virtue) of patience. Let these 2-3 cards build up an unbroken streak of good usage and prompt payments. That will far outweigh any possible benefits of additional cards.

I would also recommend checking out local credit unions, which are generally very helpful for those digging their ways out of past problems. You might still have to have a secured card, but CU's often give higher CL's, and they are wonderful resources for future needs, such as auto loans.

So in other words, don't worry about whether a card is secured or not. Do ask if the card can be graduated to unsecured status, keeping the history (original opening date), and ask what the lender wants to see before moving you to unsecured. But otherwise, limit yourself to two or three, keep perfect history with them, and allow time to pass. You'll be able to move on to better cards in the future.

[Anonymous]

I think terms and conditions and quality of the instituion are more important to consider when rebuilding or building new.

There are some banks who offer secured and unsecured cards with horrendous terms and fees.we know who they are. . They will cost you enormous amounts of money for a credit card that is hardly useful.And  they have no future either.   We know them by their:

Application fees

Monthly fees

Annual fees

Credit Limit increase fees.  

No Grace period on purchases.

It is much better to get a secured card with a credit union or major bank who has a card with normal terms and usually a modest annual fee. And you are developing a relationship with institutions you can stay with for a long time.