secured vs. unsecured

[Anonymous]

I am trying to rebuild my credit. I have a middle score of 575, no revolving lines of credit, and 2 options. The first is a low limit unsecured card (around $200-$300) that I am preapporved for, or I could get a secured card with a limit of $500 or so. I know that having a lower debt/available credit ratio is preferable, but im not sure if having a secured card lowers my credit building potential. So which should i go with? a lower limit unsecured or a higher limit secured? thanks!

[Anonymous]

I'd go with the unsecured. Most unsecured companies can raise your limit in a short time. Secured companies tend to lag... Like Orchard. A bunch of people in this forum I've read say that Orchard never transfers you over to unsecured once you get a secured from them. Most people in your (actually OUR, since mine is around the same) score range can't even get an unsecured. So if you "can" get it, get it! I'd die for an unsecured right now... Where'd you plan on getting the unsecured? I was denied in two apps a couple weeks ago with a low 500s for EXP and TU but a 590 with EQ. Those denials were because of "too recent derogatories". (I have a judgment from Cap One that was paid off two months ago)

So yeah, unsecured anytime I'd say for anyone who can get it.

[Anonymous]

Thanks for the reply... The unsecured is from Credit One Bank, I got a preapproved offer in the mail. If I decided to get a secured I would probably get it from my bank, US Bank. Im not so worried about it converting to unsecured, as I am only getting it to improve my score, not out of need for the card. My only concern over the Credit One card is that the limit is very low, and wonder if it will do much to improve my score.

[Anonymous]

I'm no expert (yet ) But I hear that you'd want to go unsecured. In manual reviews of your report unsecured always looks best. That's manual reviews of course. You know people that run your credit reoprts never really look, but I'd say it's still better. Secured makes you look like a high risk since it makes it look like you can't get an unsecured card. Most secured cards are for low credit score and high risk people, therefore it will make you look like one if you have one on your report that reports as secured. Not only that, once you're in with a secured and you get a company that rarely does raises, then you're stuck with having a low limit on that card until it drives you insane and you decide to cancel it. Even though y ou start with a lower limit on your unsecured, just know you'll have a better chance of getting a much higher limit increase in the long run. And that's what really counts. The higher your limits (as long as you have low utility) the better it is for your score in the long run...

Message Edited by slove1106 on 03-06-2008 02:50 PM

[llecs]

I'd do the unsecured (even though Credit One is a high-fee, low CL card). Wait for that to report on all 3 CRAs, then app for a secured.

By waiting, you'll likely get a score bump across all 3. And if I could do it all over again, besides waiting, I would have saved more. My bank had offered me a secured CC for $2k if I would deposit that first in a CD for 1 yr. Had I done that, subsequent approvals would have resulted in CLs of $1000 plus versus these $300-$600 CLs I have now. In other words, save more than the $500 and get a secured card in a couple months. Make sure the lender will convert the card to an unsecured in about a year's time (unlike Orchard, e.g.).

Also, secured cards aren't that bad. Lenders, like my bank, mentioned that it was a favorable thing to see. Not too many people in financial distress proactively save, yet alone save for a CC deposit.