Why are secured cards never discussed as a means to rebuild credit?

[LSUTiger32]

I see what you are saying LSU, but what is the risk of a 10k limit if you do not use it any more than you used your $300 limit? For me, part of credit rebuilding is learning that credit limits are not money in the bank. I use my credit cards like debit cards and never buy more than I have cash in the bank to pay for. I only use them because I want to build a history of using them. I pay them off immediately.

Well I just think that if you get the $10K limit and emergency strikes, it's an easy out to throw in on the credit card instead of finding a way to pay for it. There are few people out there with $10K credit limits that aren't using them and carrying a balance.

[backtoschool]

Hehe, go gentle on LSU backtoschool... I beat him up already on this topic awhile back. I think its perfectly well and good to present people with the options that they need to either rebuild credit or not rebuild their credit... I just have a problem with someone saying "if you do it this way you're stupid". In so many words...

I just thank my lucky stars that I got my credit in good shape again after my bankruptcy, otherwise I wouldn't have gotten my top secret clearance and I'd be unemployed right now! :O

I am just trying to spur LSU into a midlife crisis so he goes and buys that yellow Corvette. But seriously, I totally agree with you Amy26 that its all about choices and opportunities post bk. If a person doesn't want to rebuild their credit that is a perfectly acceptable choice.

Congrats on the security clearance!

[Amy26]

Hehe, go gentle on LSU backtoschool... I beat him up already on this topic awhile back. I think its perfectly well and good to present people with the options that they need to either rebuild credit or not rebuild their credit... I just have a problem with someone saying "if you do it this way you're stupid". In so many words...

I just thank my lucky stars that I got my credit in good shape again after my bankruptcy, otherwise I wouldn't have gotten my top secret clearance and I'd be unemployed right now! :O

[backtoschool]

I agree that there is little if you get one and keep it there. The problem is that if you get on at say a $300 limit and you take care of it, the limit will be $10,000 freaking dollars before you know it. They reel you back in and once they have you hooked again, it's limit increases, bogus fees and rate jacks all day long. Been there, done that.....got the tee shirt. (Literally.....I actually applied for a retarded credit card once for a Saints tee shirt.....and of course I got it.)

I see what you are saying LSU, but what is the risk of a 10k limit if you do not use it any more than you used your $300 limit? For me, part of credit rebuilding is learning that credit limits are not money in the bank. I use my credit cards like debit cards and never buy more than I have cash in the bank to pay for. I only use them because I want to build a history of using them. I pay them off immediately.

[LSUTiger32]

There is no "risk" in obtaining a low credit limit UNsecured credit card. How are you going to get into deep debt if you obtain an unsecured credit card in the range of having a $300-$500 credit limit? Of course, if you start going bonkers on opening more cards and trying to obtain HIGH limits... but that's a different story.

I really have faith that most post-BK have learned. Of course, some don't but that's just life. Nothing is absolute in this life. You can ask any rehab/addiction/etc center if 100% of people are 100% cured 100% of the time.

I agree that there is little if you get one and keep it there. The problem is that if you get on at say a $300 limit and you take care of it, the limit will be $10,000 freaking dollars before you know it. They reel you back in and once they have you hooked again, it's limit increases, bogus fees and rate jacks all day long. Been there, done that.....got the tee shirt. (Literally.....I actually applied for a retarded credit card once for a Saints tee shirt.....and of course I got it.)

[LSUTiger32]

I thought you would get a kick out of that piece of info. Another piece of info you will love: High end car financing arms also look down on secured credit cards in their models, so your fully loaded Mercedes will have to wait.

Dang! That Escalade will have to wait......actually I want that yellow Corvette but I am waiting until my mid-life crisis for that. I am still a tad too young for that yet.

[CCsAreEvil]

There is no "risk" in obtaining a low credit limit UNsecured credit card. How are you going to get into deep debt if you obtain an unsecured credit card in the range of having a $300-$500 credit limit? Of course, if you start going bonkers on opening more cards and trying to obtain HIGH limits... but that's a different story.

I really have faith that most post-BK have learned. Of course, some don't but that's just life. Nothing is absolute in this life. You can ask any rehab/addiction/etc center if 100% of people are 100% cured 100% of the time.

[backtoschool]

Good morning!!!

Oh even better! That's the best news I have heard all day!!! I might get a secured card now! LOL!

I thought you would get a kick out of that piece of info. Another piece of info you will love: High end car financing arms also look down on secured credit cards in their models, so your fully loaded Mercedes will have to wait.

[LSUTiger32]

Good Morning LSU!

Actually, this is really going to fuel a response, but the creditors that will penalize for a secured card, are unsecured credit card lenders.

Good morning!!!

Oh even better! That's the best news I have heard all day!!! I might get a secured card now! LOL!

[backtoschool]

Risk? Of what, possibly maybe who knows might lower you score a point or two over a secured card? According to that article it is not scored differently at all for FICO scores. Sure auto lenders may have their own thing, as do others but you cannot say with any confidence that they penalize for secured cards. See......you call me to mat on my "inaccuracies" so I am going to do the same. Show me any proof that a secured card penalizes you......I dare ya!

Good Morning LSU!

Actually, this is really going to fuel a response, but the creditors that will penalize for a secured card, are unsecured credit card lenders.

[LSUTiger32]

Most secured cards report as secured. See my post from a couple of days ago. And most proprietary score models (and pretty much all creditors have some proprietary features to their models in this climate) penalize for secured cards. So there is risk to a secured card.

Risk? Of what, possibly maybe who knows might lower you score a point or two over a secured card? According to that article it is not scored differently at all for FICO scores. Sure auto lenders may have their own thing, as do others but you cannot say with any confidence that they penalize for secured cards. Matter of fact, they could like secured cards better because like my previous post it shows them that you are not engaging in the same behaviors again.

See......you call me to mat on my "inaccuracies" so I am going to do the same. Show me any proof that a secured card penalizes you......I dare ya!

[backtoschool]

EXCELLENT FIND! There's that answer. Get a secured card and rebuild your credit......no risk necessary.

Most secured cards report as secured. See my post from a couple of days ago. And most proprietary score models (and pretty much all creditors have some proprietary features to their models in this climate) penalize for secured cards. So there is risk to a secured card.

[LSUTiger32]

MyFICO cites CardHub as its educational reference. CardHub states that a secured card is reported and scored the same as an unsecured card here:

http://education.cardhub.com/secured-cards/

Also, there is a part on the MyFICO educational center that debunks the myth that you actually need to utilize any of the credit you are given for a positive effect on your report/score. This can be found here:

http://www.myfico.com/crediteducatio...unsecured.aspx

EXCELLENT FIND! There's that answer. Get a secured card and rebuild your credit......no risk necessary.

[CCsAreEvil]

In my opinion, this is going to be a "big IF" here.... IF you have learned your lesson from BK (yeah, I do know there are some people who did not file BK because of cc debt, too but this can still pertain to them), then I really believe the unsecured CC is the way to go. I know there are some people who think it's impossible for someone to be responsible and learn from lessons, but some people actually do.

Yes, secured cards are your own money, and it's forcing you to use your own money to create your own "credit limit". Why do I need to use my own money locked in a secured account to rebuild my credit? Also, the more I think about it, who really cares what the credit limit is. My "unsecured" cc has a limit of $300. I'd have to research more, but I bet having 2-3 unsecured lines, each having a CL of $300 would have a better affect on your FICO score than a single card with a $25k limit. The number of credit lines does make a difference in the scoring. Also, 0% utilization is still 0% if you have a $300 CL or a $100,000 CL.

It appears more and more that even just by letting time pass (while having credit lines without even using your credit), is a decent factor in your FICO score recovering. I played with the online simulator from myfico and just "paying my credit cards on time" (basically/really, just have the credit lines open but no need to USE the cards), for 1-2 years would supposedly boost my scores back over 700 again.

I know some people are having a hard time obtaining unsecured cards, so just open a secured $300 line.. no need for some HUGE credit line.. you are not going to charge against it anyways, right? Then after some time (6 months to 1 year), try to apply for an unsecured line -or- have that secure line converted to unsecured so you can get your $300 back. There are even some that only require a minimum of $200 to open a secured line.

[backtoschool]

Secured cards are scored the same re raw numbers, but are considered "riskier" in most models so if there is any manual underwriting, the secured card is going to be less preferable. I made mention of this in my above post. Very few loans, secured or unsecured are gotten by simply looking at raw numbers. Most modeling takes into account other factors, (such as various risks) and secured cards do not fare as well in these additional models.