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

[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.

[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.

[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.

[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.)

[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.

[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]

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!

[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.

[LSUTiger32]

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!

LOL! Please keep spurring!

You two......"if you don't want to rebuild your credit"......blah, blah, blah! There are other ways to rebuild credit than a credit card. BK taught me two things......don't buy things you can't pay cash for and there are more important things in life than your FICO score. As mentioned though......to each his own. I know I won't be back on the other side of this forum because I did stupid again. I think there are some of you that have credit cards that won't either but why risk it? You have the cash, just use the cash. That said, there are many on here that are getting right back on the ride that will lead them down the same path because they couldn't handle it the first time (all of us) and they still can't.

[CCsAreEvil]

That said, there are many on here that are getting right back on the ride that will lead them down the same path because they couldn't handle it the first time (all of us) and they still can't.

Yes, this is true. But we can't save everyone. It would be nice in a perfect world, though. Even the people before me at my 341 were at the exact 8 year mark of filing BK for the 2nd time. My eyes popped open because it felt that they were almost taking advantage of the system. And I know people who do all kinds of deceiving tricks to obtain food stamps, welfare, etc (getting off topic... sorry).

Anyways, like any lesson in life, some people learn and some won't. That's just how it is. However, there are plenty of people who have learned their lessons from BK and can control having a credit card now.

I don't know if we are allowed to talk about financial people, but I was listening to some Dave R. audio CDs during a road trip. I don't know if I agree with everything he said, but one thing that made a lot of sense is that we should NEVER be borrowing money ever again.

I used to think credit cards were there for "emergencies". Even that is wrong. We should have our own emergency fund of a certain duration of time to cover emergencies that come up. If we don't have one yet, start by saving around $1k in an account and NEVER touch it... then continue building up that fund. Of course, if an emergency came up that was going to cost us $50k, that's another story... but those type of situations should have been covered by some form of insurance (another topic).

Back to the point, you can't save "everyone". Some adults will continue to behave like kids.. the more you tell them to do the right thing, they turn around and do the opposite.

[tobee43]

Yes, this is true. But we can't save everyone. It would be nice in a perfect world, though. Even the people before me at my 341 were at the exact 8 year mark of filing BK for the 2nd time. My eyes popped open because it felt that they were almost taking advantage of the system. And I know people who do all kinds of deceiving tricks to obtain food stamps, welfare, etc (getting off topic... sorry).

Anyways, like any lesson in life, some people learn and some won't. That's just how it is. However, there are plenty of people who have learned their lessons from BK and can control having a credit card now.

I don't know if we are allowed to talk about financial people, but I was listening to some Dave R. audio CDs during a road trip. I don't know if I agree with everything he said, but one thing that made a lot of sense is that we should NEVER be borrowing money ever again.

I used to think credit cards were there for "emergencies". Even that is wrong. We should have our own emergency fund of a certain duration of time to cover emergencies that come up. If we don't have one yet, start by saving around $1k in an account and NEVER touch it... then continue building up that fund. Of course, if an emergency came up that was going to cost us $50k, that's another story... but those type of situations should have been covered by some form of insurance (another topic).

Back to the point, you can't save "everyone". Some adults will continue to behave like kids.. the more you tell them to do the right thing, they turn around and do the opposite.

it may surprise some that there are many people who did NOT get into bk because of poor money management skills or simply by buying luxury items with their cc's.

some people either lost their jobs or got ill or maybe even both.

so for some they need to rebuild their credit for other reasons than for just spending...and i also agree they should NOT be used for emergency purposes. however, in our case if i did use them for a life threatening surgery, i'd be dead...so i think we have to evaluate exactly what one considered as emergent. i think choosing life over death may flip the bill on that one. however, not for...my daughter needs a new pair of shoes to match her outfit for the party on friday night. even tho she's screaming about it 24/7.

personally, i want a mortgage someday again...unfortunately the society we live in make US NEED credit, if we want a own a home one day.

[Amy26]

Ok I'm gonna start singing songs from The Lion King here shortly... I feel that this is a very ciclical thing we/us/you are talking about. I think ultimately we all agree on the same fundamentals. Just not the practice... and yes there are other ways to build your credit without a credit card but they are difficult and if you do not have any credit cards you will get a flag on your report that says something to the effect of "Your score is being impacted because you do not have any major credit cards". And just because I get in my car and go "for a ride" doesn't mean I'm gonna drive all the way to California... if someone does not have the responsibility, the will power or the self control to handle their finances correctly (especially after bankruptcy) then no amount of belly aching from you/us or anyone will change it.

It is perfectly feasable to over extend yourself even with living a cash only life. Take for example people who get paid once a month. They get this ginormous check once a month and if you are not on your a game with your finances then come 2-3 weeks after you get paid you will find your bank account sitting at zero dollars. No matter what method of money management a person is using its their mentality and their life fundamentals that are going to get them by. Not just by not having a credit card.

Just because you do not allow yourself a credit card does not mean you will be free from making bad decisions with your money. Are the odds less? Sure... but the risk is still there. Strictly exempting yourself from owning a credit card does not elevate you to a higher plane of financial knowhow.

And yes there will be ding dongs that end up in the same situation over again... we cannot control that. But telling people its stupid to try and rebuild their credit is well... stupid. I will not say things like I cannot rent a car without a credit card or stay in a hotel...I will say things like I need good credit for my employment (which I do) and I need good credit to keep my stupid car insurance rates down and I need good credit to avoid paying huge deposits on things when I sign a lease or start up my electric service. Just because I have cash reserves saved up doesn't mean I want to spend it on high deposits for things other people with good credit get for free.

Risks exist every day... not just in finances but in everything we do. We take a risk just breathing the air around us... life is about risk mitigation yes, but they are always there. You can say what you like about credit but in the United States credit is a necessary evil. I hate credit and I think it is the most rediculous thing ever... I have lived in Europe where they do not have credit and I thought it was the coolest thing since sliced bread. But, unfortunately I live in the US again. And while I fully believe and know that people can live perfectly happy lives without paying attention to their credit ... I cannot. Everyone lives in different circumstances and different parts of the US. Where I live and the line of work that I do... my credit plays a large factor. While I could give a shit about the number and limits on my credit cards... they do in fact help me rebuild my credit quite nicely. If I ever happen to get another 10k limit credit card... will I run the risk of charging it up? I certainly hope not...but I'm not really going to worry about it. Specially when I know myself and how I manage my funds.

Believe it or not, some people weren't in this mess because of their inability to keep from charging things. My bankruptcy was caused by being laid off living overseas and not eligable for unemployment in the US and not having any income whatsoever for 8 months. Did I have savings to live on and pay my bills? Yes I did...but guess what, they ran out after like month 5. And when I was not even late on any of my credit cards, I called Chase to ask them if I could have a little leeway on my payments because of my situation and guess what they told me? FU & just cause you called us, we're gonna jack your interest rate up from 8% to 30%. I wasn't behind or anything...but just cause I asked them for help they decided it was better to jack my interest rate than assist. I also had a terribly upside down mortgage and bankruptcy just happened to be the best solution for me.

I also do not fault anyone for wanting to live a cash only life... if that works better for you or anyone, I'm all for it. But I'm not gonna tell people its stupid or make snide comments about it.

[backtoschool]

LOL! Please keep spurring!

You two......"if you don't want to rebuild your credit"......blah, blah, blah! There are other ways to rebuild credit than a credit card. BK taught me two things......don't buy things you can't pay cash for and there are more important things in life than your FICO score. As mentioned though......to each his own. I know I won't be back on the other side of this forum because I did stupid again. I think there are some of you that have credit cards that won't either but why risk it? You have the cash, just use the cash. That said, there are many on here that are getting right back on the ride that will lead them down the same path because they couldn't handle it the first time (all of us) and they still can't.

Yes you can just use cash, blah blah blah. Why not have your cash help you though by having a secured card and/or investing it and using an unsecured card and paying off in full every month.

I do agree that no one should get into unsecured credit card debt. I will never carry a balance. Period.

And of course there will always be people who have to make the same mistake multiple times before they learn their lesson. But even your own statistics you gave in another thread pointed out that those people are in the minority. (I believe you said the number was 15%).

[CCsAreEvil]

it may surprise some that there are many people who did NOT get into bk because of poor money management skills or simply by buying luxury items with their cc's.

some people either lost their jobs or got ill or maybe even both.

Of course. That's why BK is not as frowned upon how it once a few decades ago. I had lost my good paying "one earner household" job and was out of work for a year, and we had no choice but to file. Now, I'm making a whole lot less (over $25k less) and the my significant other is working now... but man, it's tough. But as the cliche goes, job is better than no job.

Even though BK is/was a pain, we must all realize we are given (for the most part) a fresh start to do our best to put ourselves in the best financial position as time goes on regardless of how we got to BK.

[tobee43]

Ok I'm gonna start singing songs from The Lion King here shortly... I feel that this is a very ciclical thing we/us/you are talking about. I think ultimately we all agree on the same fundamentals. Just not the practice... and yes there are other ways to build your credit without a credit card but they are difficult and if you do not have any credit cards you will get a flag on your report that says something to the effect of "Your score is being impacted because you do not have any major credit cards". And just because I get in my car and go "for a ride" doesn't mean I'm gonna drive all the way to California... if someone does not have the responsibility, the will power or the self control to handle their finances correctly (especially after bankruptcy) then no amount of belly aching from you/us or anyone will change it.

It is perfectly feasable to over extend yourself even with living a cash only life. Take for example people who get paid once a month. They get this ginormous check once a month and if you are not on your a game with your finances then come 2-3 weeks after you get paid you will find your bank account sitting at zero dollars. No matter what method of money management a person is using its their mentality and their life fundamentals that are going to get them by. Not just by not having a credit card.

Just because you do not allow yourself a credit card does not mean you will be free from making bad decisions with your money. Are the odds less? Sure... but the risk is still there. Strictly exempting yourself from owning a credit card does not elevate you to a higher plane of financial knowhow.

And yes there will be ding dongs that end up in the same situation over again... we cannot control that. But telling people its stupid to try and rebuild their credit is well... stupid. I will not say things like I cannot rent a car without a credit card or stay in a hotel...I will say things like I need good credit for my employment (which I do) and I need good credit to keep my stupid car insurance rates down and I need good credit to avoid paying huge deposits on things when I sign a lease or start up my electric service. Just because I have cash reserves saved up doesn't mean I want to spend it on high deposits for things other people with good credit get for free.

Risks exist every day... not just in finances but in everything we do. We take a risk just breathing the air around us... life is about risk mitigation yes, but they are always there. You can say what you like about credit but in the United States credit is a necessary evil. I hate credit and I think it is the most rediculous thing ever... I have lived in Europe where they do not have credit and I thought it was the coolest thing since sliced bread. But, unfortunately I live in the US again. And while I fully believe and know that people can live perfectly happy lives without paying attention to their credit ... I cannot. Everyone lives in different circumstances and different parts of the US. Where I live and the line of work that I do... my credit plays a large factor. While I could give a shit about the number and limits on my credit cards... they do in fact help me rebuild my credit quite nicely. If I ever happen to get another 10k limit credit card... will I run the risk of charging it up? I certainly hope not...but I'm not really going to worry about it. Specially when I know myself and how I manage my funds.

Believe it or not, some people weren't in this mess because of their inability to keep from charging things. My bankruptcy was caused by being laid off living overseas and not eligable for unemployment in the US and not having any income whatsoever for 8 months. Did I have savings to live on and pay my bills? Yes I did...but guess what, they ran out after like month 5. And when I was not even late on any of my credit cards, I called Chase to ask them if I could have a little leeway on my payments because of my situation and guess what they told me? FU & just cause you called us, we're gonna jack your interest rate up from 8% to 30%. I wasn't behind or anything...but just cause I asked them for help they decided it was better to jack my interest rate than assist. I also had a terribly upside down mortgage and bankruptcy just happened to be the best solution for me.

I also do not fault anyone for wanting to live a cash only life... if that works better for you or anyone, I'm all for it. But I'm not gonna tell people its stupid or make snide comments about it.

great read amy!!! i just purchased the lion king....LOL!! (really we did) so at least i can join in the choir

you are absolutely correct! i cannot agree more. we don't set the rules ...we just have to follow them. we use cash when we can...and OH!! you're point is SO right on that some people get that paycheck, cash it and it's gone!

either one will excise good judgment or not when it comes to their personal CFO duties....CASH or CREDIT!!

again...i NEED to rebuild..i DO want a house...and i will do whatever the rules tell me to do to get it!!