Need a foot in the door.. What's best? Secured or AU?

[Anonymous]

I want a Discover card. I have two choices:

1) I've been offered the Discover IT Secured card.

2) I've been offered an AU on my friend's Discover. He's had it for about 2 years and maintains a low balance and excellent payment history.

My questions:

1) If I get a Secured card, how will that card (which reports as secured from what I understand) affect decisions by my other issuers (Chase, Amex, NFCU) in regard to CLIs and new product offers?

2) If I get a Secured card, should I do like most people do and open it up with the minimum $200 or should I send in $3k and guarantee myself a decent limit when it graduates? Would the amount on deposit affect the graduation of the card? For example, would they be less likely to unsecure a higher limit like that?

3) If I get an AU card, will I have access to all 2 years of my friend's account history, or just from the time I'm added forward?

4) If I get an AU card, and G forbid anything should happen and my friend was unable to maintain his account properly, would I be able to remove myself before the damage could spread to my reports?

Thank you in advance

[Anonymous]

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@Anonymouswrote:

I want a Discover card. I have two choices:

1) I've been offered the Discover IT Secured card.

2) I've been offered an AU on my friend's Discover. He's had it for about 2 years and maintains a low balance and excellent payment history.

My questions:

1) If I get a Secured card, how will that card (which reports as secured from what I understand) affect decisions by my other issuers (Chase, Amex, NFCU) in regard to CLIs and new product offers? It won't affect it specifically because of the card.  But the point of getting the secured is so you can build your profile positively and THEN apply for unsecurd cards...after the secure card unsecures.

2) If I get a Secured card, should I do like most people do and open it up with the minimum $200 or should I send in $3k and guarantee myself a decent limit when it graduates? Would the amount on deposit affect the graduation of the card? For example, would they be less likely to unsecure a higher limit like that? $200 is enough, you'll just have to make more payments in a month.  Don't think you would get $3k when it graduates.

3) If I get an AU card, will I have access to all 2 years of my friend's account history, or just from the time I'm added forward? Not sure, some banks do from years ago some do from time added to your profile.

4) If I get an AU card, and G forbid anything should happen and my friend was unable to maintain his account properly, would I be able to remove myself before the damage could spread to my reports?  Depends, if you know he will be default or miss payment etc, you could dispute and have it remove before it happens.  Not gurantee.

Thank you in advance

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[Anonymous]

Having a card in your name will help you way more long term. You also want to start having great habits of knowing your billing cycle as well as payments. I would go with the secure card. I started with this one and since then I have been able to get an AMEX and Barclay Uber card after 7 months of usage on the secured. It does report as secured, but I don't think any of the other companies care.

Good luck

[Anonymous]

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@Anonymouswrote:
Having a card in your name will help you way more long term. You also want to start having great habits of knowing your billing cycle as well as payments. I would go with the secure card. I started with this one and since then I have been able to get an AMEX and Barclay Uber card after 7 months of usage on the secured. It does report as secured, but I don't think any of the other companies care.

Good luck

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Great advice Joooser. I totally agree. I keep a spreadsheet to map everything out and I believe it's been instrumental in helping me build my credit. I've gone from no (open) credit with a report that showed a CH7 followed by 3 defaulted student loans, a repo/charge-off, and 11 medical collections to a pretty respectable profile (aside from the medical collections still reporting) in just 4 years.. mostly thanks to my responsible management of and 100% perfect history with the credit I've been granted along the way.

[RobertEG]

An AU account is, by definition, not your account, and if you get an AU added to your credit file/report, it will automatically then make any score no longer representative of your own credit history/risk.  Potential creditors have no way, should they seek a score that represents only your own credit history and risk, of backing out the AU and obtaining a score based only on your credit history.

If an AU helps your score, it can be useful if the creditor does not do a manual review, and thus does not consider the fact that the score is not based only on your own history.  Many starter and rebuilder cards save time and money by not investing a a thorough manual review, and thus addition of an AU can be a useful building or rebuilding tactic.

However, if you seek higher amounts of credit, the chances of a manual review increase, and thus a creditor may balk at your score if they are aware it is based on part on an account that is not yours.

Having your own accounts is preferable once you advance past the initial building/rebuilding stage.