Rebuilding credit & Secure Credit Cards

[Cardinals.Ken]

Is the use of a secure credit card a viable option as part of a credit rebuilding program?

Does anyone have any pointers as to what to look for when it comes to deciding which secure credit card to get?

I've checked a dozen out so far, and most won't let you see the terms and conditions until you apply, the others seem to be a financial rape waiting to happen.

Any advice would be greatly appreciated.

 

[Ryanwb]

I got my sister a secured card through BofA about 6 months ago. She had to put down $300 bucks and make payments like it was a credit card. It helped her credit big time, also she should get the $300.00 back after a year or so. The interest rate was like 12% or something

 

[Cardinals.Ken]

I got my sister a secured card through BofA about 6 months ago. She had to put down $300 bucks and make payments like it was a credit card. It helped her credit big time, also she should get the $300.00 back after a year or so. The interest rate was like 12% or something

I could probably look this up, but did she need to have an account with BofA to qualify?

 

[Ryanwb]

I could probably look this up, but did she need to have an account with BofA to qualify?

No she banks at a credit union. We did this online, you submit your information, how much money you are willing to put up for your "credit line" and they process the order. We didn't know she got accepted until a few days later $300.00 came out of her account. She had horrible credit, with closed accounts, a repo and multiple open accounts (that we've since closed)

Good luck, Wells Fargo also offers a comparible card as well. I have heard you should stay away from the banks you've never heard of. Of course this all occured before the economy took a dump so I don't know if any of this still applies

 

[dreamcastrocks]

Its funny that we have this thread. We signed up Linda for one just Saturday at Wells Fargo.

There's a $19 annual fee and around 17% interest, minimal finance charges etc. She plans on using it only for gas purchases.

Linda had to open up a checking account with them. She had a checking account a few months earlier, but closed it when we went to a joint account at my credit union.

Our credit union doesn't offer secured credit cards. The fact that the don't absolutely baffles the mind. You get X amount of dollars UP FRONT, and then you have to pay back whatever you charge on it in monthly payments. It's like getting money interest free. I'm shocked that they don't offer it.

 

[Brian in Mesa]

Just say no to credit cards.

 

[HeavyB3]

Just say no to credit cards.

Having good credit is still neccessary. Credit Cards are a good way to help that.

 

[AZZenny]

DCR -- I'm surprised also the credit union doesn't do that -- but maybe they think it's not a secure investment -- or maybe they have other suggestions to rebuild credit.

I heard about the secured cards on NPR recently, and their financial guru recommended them for a guy (a musician in my old stomping grounds of Athens Ohio) who didn't have bad credit, and he had a sturdy bank account -- he just had NO credit because he'd always paid in cash for everything, and the one time he borrowed for a new car years ago, he got (and repaid) a loan from his father. Now he's hitting 40 and wants to build up credit and the woman said this is absolutely the best way to start.

Then next step is to get a very small loan to buy something necessary, not frivolous -- like buy a $500 appliance or something on store credit -- have the cash up front in your account, but pay off the loan from a checking account on the set schedule, not faster, so you look reliable over time. The guy groused about hating to pay the interest to do that, but she said to consider it the cost of 'buying' a good credit rating.

 

[dreamcastrocks]

DCR -- I'm surprised also the credit union doesn't do that -- but maybe they think it's not a secure investment -- or maybe they have other suggestions to rebuild credit.

I heard about the secured cards on NPR recently, and their financial guru recommended them for a guy (a musician in my old stomping grounds of Athens Ohio) who didn't have bad credit, and he had a sturdy bank account -- he just had NO credit because he'd always paid in cash for everything, and the one time he borrowed for a new car years ago, he got (and repaid) a loan from his father. Now he's hitting 40 and wants to build up credit and the woman said this is absolutely the best way to start.

Then next step is to get a very small loan to buy something necessary, not frivolous -- like buy a $500 appliance or something on store credit -- have the cash up front in your account, but pay off the loan from a checking account on the set schedule, not faster, so you look reliable over time. The guy groused about hating to pay the interest to do that, but she said to consider it the cost of 'buying' a good credit rating.

Exhibit 23 on why our banks are failing. Only banks can say that receiving 100% of an investment up front is a non secure investment.

 

[Brian in Mesa]

Having good credit is still necessary. Credit Cards are a good way to help that.

 

[Ryanwb]

Like it or not, many employers are pulling credit reports as part of the hiring process. Obviously things out of your control, identity theft, divorce are exceptions.... So companines are asking, "Why should I hire someone who can't manage their finances?"

 

[HeavyB3]

I don't know about you, but I sure as hell couldn't have paid outright for a house. Thank God I had good credit.

 

[Brian in Mesa]

Like it or not, many employers are pulling credit reports as part of the hiring process. Obviously things out of your control, identity theft, divorce are exceptions.... So companines are asking, "Why should I hire someone who can't manage their finances?"

If I was an employer, I'd hire the guy who has no credit card debt, no car payment, money in the bank (savings and emergency funds), and besides regular utility bills only has a mortgage payment to pay each month instead of the guy with credit card debt, a car payment, very little in the bank, other misc debts, utility bills and a house payment.

I'm just saying.

 

[Jersey Girl]

If I was an employer, I'd hire the guy who has no credit card debt, no car payment, money in the bank (savings and emergency funds), and besides regular utility bills only has a mortgage payment to pay each month instead of the guy with credit card debt, a car payment, very little in the bank, other misc debts, utility bills and a house payment.

I'm just saying.

That would certainly limit your pool of applicants.

Just saying.

 

[Ryanwb]

If I was an employer, I'd hire the guy who has no credit card debt, no car payment, money in the bank (savings and emergency funds), and besides regular utility bills only has a mortgage payment to pay each month instead of the guy with credit card debt, a car payment, very little in the bank, other misc debts, utility bills and a house payment.

I'm just saying.

Sorry I would look at a guy with zero debt as an embezzler that hasn't been caught yet or a guy who inherited a lot of money and has little to no motivation to achieve high performance

I'm just saying

 

[Brian in Mesa]

I don't know about you, but I sure as hell couldn't have paid outright for a house. Thank God I had good credit.

You can get a house without a decent "credit score." It's called manual or traditional underwriting.

It's the way home loans used to be done before computers and punching in numbers (which a trained monkey could likely do).

It's a much better way of telling if someone will be able to make their payments.

 

[Linderbee]

Then next step is to get a very small loan to buy something necessary, not frivolous -- like buy a $500 appliance or something on store credit -- have the cash up front in your account, but pay off the loan from a checking account on the set schedule, not faster, so you look reliable over time. The guy groused about hating to pay the interest to do that, but she said to consider it the cost of 'buying' a good credit rating.

That's an excellent idea. We're going to be needing a washer soon, and we may go that route, and just use the checking acct from Wells that I had to open. I'm in a similar boat as the guy on the show. My parents have a credit card acct that I use exclusively. I bought my car with it, and other semi-major purchases I didn't have the cash for. While I've made every payment like clockwork (and pay more than the minimum), it sure hasn't helped my credit any.

DCR & I would like to buy a house this summer, and I have to get my score up. I have virtually nothing to show that I have made (or can make) payments on time. Our cell phones are in my mother's name, the electric is in dcr's & is the SRP M-Power card anyway. Dish & internet is in dcr's name...all I have is the water bill & my car insurance.

I'll get there; just going to take time.

 

[Brian in Mesa]

That's an excellent idea. We're going to be needing a washer soon, and we may go that route, and just use the checking acct from Wells that I had to open. I'm in a similar boat as the guy on the show. My parents have a credit card acct that I use exclusively. I bought my car with it, and other semi-major purchases I didn't have the cash for. While I've made every payment like clockwork (and pay more than the minimum), it sure hasn't helped my credit any.

DCR & I would like to buy a house this summer, and I have to get my score up. I have virtually nothing to show that I have made (or can make) payments on time. Our cell phones are in my mother's name, the electric is in dcr's & is the SRP M-Power card anyway. Dish & internet is in dcr's name...all I have is the water bill & my car insurance.

I'll get there; just going to take time.

Look into manual/traditional underwriting. It makes your FICO score irrelevant. Even a bad credit history is irrelevant if you can explain it and it is not likely to recur.

Couldn't hurt to at least inquire about it somewhere.

 

[Ryanwb]

M-Power card anyway.

Oh man, my mother in law has that and when we were taking care of her for a while I had to constantly babysit that thing like a heart monitor. It's a pain the rear because during the summer you burn through $50.00 every few days.

There aren't any kiosks with in 10 miles of her house and on top of that, SRP told me they charge a higher per kilowatt hour charge for M-power customers then standard customers. Stupid company!

 

[Linderbee]

Oh man, my mother in law has that and when we were taking care of her for a while I had to constantly babysit that thing like a heart monitor. It's a pain the rear because during the summer you burn through $50.00 every few days.

There aren't any kiosks with in 10 miles of her house and on top of that, SRP told me they charge a higher per kilowatt hour charge for M-power customers then standard customers. Stupid company!

It's a bit much during the summer, but not too bad; at that time we usually throw $100/week on it...but according to SRP the rate for M-Power was the lowest of all their plans; that's why we stuck with it. I didn't think it would be, but I looked it up online. Unless I read something wrong, M-Power is supposed to be cheapest.

 

[Linderbee]

Look into manual/traditional underwriting. It makes your FICO score irrelevant. Even a bad credit history is irrelevant if you can explain it and it is not likely to recur.

Couldn't hurt to at least inquire about it somewhere.

I did in the past. I was told that I had to have some sort of record of making utility payments, etc. on time, "alternative" credit, is what they called it, iirc. I didn't have enough then, even, and I have less now than I did then.

 

[Ryanwb]

It's a bit much during the summer, but not too bad; at that time we usually throw $100/week on it...but according to SRP the rate for M-Power was the lowest of all their plans; that's why we stuck with it. I didn't think it would be, but I looked it up online. Unless I read something wrong, M-Power is supposed to be cheapest.

I guess you = right

http://www.srpnet.com/payment/mpower/comparison.aspx

 

[Linderbee]

I guess you = right

http://www.srpnet.com/payment/mpower/comparison.aspx

There is no monthly service charge with the M-Power card...that chart doesn't make sense. Unless they're sucking it out when I'm not looking

I'm glad I was right; I'd be torqued if we were paying more all this time than we would have with a "regular" bill.

 

[Gizmo Williams]

Then next step is to get a very small loan to buy something necessary, not frivolous -- like buy a $500 appliance or something on store credit -- have the cash up front in your account, but pay off the loan from a checking account on the set schedule, not faster, so you look reliable over time. The guy groused about hating to pay the interest to do that, but she said to consider it the cost of 'buying' a good credit rating.

The only thing you need to be careful with here is that you do not want to use all of your credit limit up since line utilization is very important in calculating your FICO score. This is kind of tricky with low line cards. If you have a $500 dollar limit and charge $500 it will negatively impact your score. You are better off with a $500 limit and only putting $250 on the card to keep your utilization lower.

 

[dreamcastrocks]

The only thing you need to be careful with here is that you do not want to use all of your credit limit up since line utilization is very important in calculating your FICO score. This is kind of tricky with low line cards. If you have a $500 dollar limit and charge $500 it will negatively impact your score. You are better off with a $500 limit and only putting $250 on the card to keep your utilization lower.

If you have more than 30% of your credit line unavailable, it will affect your credit score. How much available credit is also worth 30% of your total credit score.