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Secured Credit Card/Building Credit

Mike39

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Ok, gentleman (and ladys), I'm looking to start building some credit. From doing some research, it looks like the standard way to start building credit is to get a secured credit card (please correct me if there is a better way).

So I'm wondering some things like:

Are all secured credit cards the same? Is there a benefit to using one over the other? Anything you've used and been happy with?

Any other tips/recommendations on building credit are welcome, this is new grounds for me.
 

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jon.a

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Once upon a time I needed to reestablish credit. I went to the credit union. Borrowed $500 (signature loan) deposited the $500 into savings and got a CC against the savings account. I got 2 reporting accounts. The card now has zero balance against a 25k limit.
 
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Mike39

Mike39

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Once upon a time I needed to reestablish credit. I went to the credit union. Borrowed $500 (signature loan) deposited the $500 into savings and got a CC against the savings account. I got 2 reporting accounts. The card now has zero balance against a 25k limit.
Awesome, thanks for the info. Wish you had made it out to C&B this year!

I think the biggest struggle for me will be actually spending the money, right now my living expenses are almost zero and I spend very little monthly. Bumping that up would hurt more than help considering I don't have anything that would would be considered a consistent source of income. Can you put apartment rent on a CC, I am probably headed out into the yonder sometime this year and will have rent.

What do you need to put on the card to make a difference, will $200/mo or whatever I usually spend on plugins and crap be enough to see any impact?

Don't feel the need to answer these specifically Jon, they are more directed at everyone. Apologies on all the questions, like I said I know nothing about credit cards, I've always used my debit card.
 

jon.a

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Awesome, thanks for the info. Wish you had made it out to C&B this year!

I think the biggest struggle for me will be actually spending the money, right now my living expenses are almost zero and I spend very little monthly. Bumping that up would hurt more than help considering I don't have anything that would would be considered a consistent source of income. Can you put apartment rent on a CC, I am probably headed out into the yonder sometime this year and will have rent.

What do you need to put on the card to make a difference, will $200/mo or whatever I usually spend on plugins and crap be enough to see any impact?

Don't feel the need to answer these specifically Jon, they are more directed at everyone. Apologies on all the questions, like I said I know nothing about credit cards, I've always used my debit card.
200 probably, we started by just paying for gas and a few small internet subscriptions. Always pay it off or at least more than the minimum.
Rent no, landlords normally don't have a merchant account except maybe larger apartments.
After a year ask for the security to be removed and a small limit increase.

Wait aren't you like 17 or so?
 

DeletedUser394

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Just go to a bank. If you have a history with them and have some kind of reliable income source they'll give you a starter card. If not, just drop a couple hundred dollars on a secured card.

I think my first card had a $1k limit (can't remember). Just had a history with the bank and a part time job so they were more than happy to oblige.
 

The-J

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If you're able to prove a steady income (bring invoices and shit), you could go to a bank and get a very low limit credit card there. Put groceries and shit on it and pay it off in full every month on time.
 

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On my 18th birthday, signed up for a capital one secured credit card for $50.....Got a $250 credit limit. 2 Years later, credit score is pretty good and have enough borrowing power to start a successful business without an investor.

Investors are cool though. They introduce you to other cool people you would never meet, give you pointers/help, and call expensive taxi's that cost the same amount as your monthly phone bill so you can get to the airport on time.
 
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Mike39

Mike39

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@RichKid & @The-J : Awesome I have had an account with my bank since I was like 13 so I can see if they can work something out.

@jon.a Eighteen, yup.

@Darius Agreed, investors are awesome. Not looking to fund something with a CC currently, just something good to have in case you ever need it. Thanks for the info!
 

CarrieW

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I have rebuilt and fixed credit a few times. not all of the cards are the same. the few I have used are applied bank and first premier bank. also credit one.

some make you pay an application fee. don't do it.

I do not have time to go into great detail here but I know A LOT about this subject. feel free to ask any specific questions and I will try to answer :)

I have raised our credit scores from the low 500's to the 740's in a few months. I have helped a few friends as well as family members too. :)
 

Paul Gallo

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What jon.a said is solid. Work your way up the chain. Get a secured card charge on it and pay off the balance. Then flip to a gas card or a department store card, they are the next easiest...then a low level card....etc etc
 

CarrieW

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you never want to pay off balances. the ideal amount of credit you should carry for the peak score is around 30% between 20-30% is ideal. you don't want to max it out. you want to be charging about half your limit monthly and paying it down to and keeping the balance at around 30%
 

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CarrieW

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my first cards were sears and target. from there it was visa and mc.(all regular credit non prepaid)

if you have no credit you may be able to get a store or gas card. if not then a small prepaid is the way to go. the ideal is to carry 3 trade lines. 2 credit cards and a revolving account (like a credit union secured cd loan) or a furniture store... unless you have an existing line car mtg etc.

also if you have a willing family member they can give you the gift of credit, by adding you as a responsible/joint owner on an older existing good credit history account. you get instant aging... in some cases you can have your credit history predate you :)

there are a lot of ways to build credit :)
 

Paul Gallo

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my first cards were sears and target. from there it was visa and mc.(all regular credit non prepaid)

if you have no credit you may be able to get a store or gas card. if not then a small prepaid is the way to go. the ideal is to carry 3 trade lines. 2 credit cards and a revolving account (like a credit union secured cd loan) or a furniture store... unless you have an existing line car mtg etc.

also if you have a willing family member they can give you the gift of credit, by adding you as a responsible/joint owner on an older existing good credit history account. you get instant aging... in some cases you can have your credit history predate you :)

there are a lot of ways to build credit :)
Spot on. We both have different strategies with the same ends in mind
 

jon.a

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Another thing, for years our CC's were our emergency fund. Good limits with low balances. Now days, well it really doesn't matter any more. My credit karma score is only 742. They recommend that I get more accounts, I mistakenly closed some old ones that I shouldn't have. I don't obsess over it.
 

CarrieW

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742 is a really good score. that's a+

the highest credit score I have ever seen or heard is my moms. she has an 823. I think they go to only to 850.

anything over 640 is a credit

link for ranges...

http://www.freescore.com/good-bad-credit-score-range.aspx

heres a link where you can order your reports for free once a year either online or you can print out and mail.

https://www.annualcreditreport.com/index.action

I know a lot about fixing issues. if anyone has any questions about a specific thing feel free to ask :)
 

sbinnc

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742 is a really good score. that's a+

the highest credit score I have ever seen or heard is my moms. she has an 823. I think they go to only to 850.

anything over 640 is a credit

link for ranges...

http://www.freescore.com/good-bad-credit-score-range.aspx

heres a link where you can order your reports for free once a year either online or you can print out and mail.

https://www.annualcreditreport.com/index.action

I know a lot about fixing issues. if anyone has any questions about a specific thing feel free to ask :)



A friend I grew up with back at home is trying to rebuild his credit, so I've been along for the ride with him as he fills me in on every detail on his life..... Not sure if he is looking for help or not, hard to tell.

But the jist, I believe he said low 500s, has a car loan which has been late multiple times, two credit cards that he hasn't paid in months both are around $1,000 each I think? Hmm what else.... I think he said something about a early lease break fee that was under $500 for a apartment years ago. How on earth did you bring a low 500 score up to the 700s in a few months? This guy obviously cannot afford to pay his current debt or just opts not to? I'm not really sure but granted he were to pay the credit cards off, get rid of that early lease fee collection, and stop making late payments on his car- I don't see how even that would bring his credit even into the 600s in less than 1.5 years


I don't use much credit but I know a fair amount.


Please explain as I'm highly curious
 

CarrieW

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we had some minor small collections (Comcast tmobile etc) and a foreclosure of our house. I knew what I was doing so I didn't even attempt to fix things that were unfixable. some things only get better with time. we also had a judgement(from an eviction in 2007) that we had to pay off(that doesn't raise your score but a lot wont give credit if its not satisfied)

when I knew it was time for the foreclosure to come off I paid off the small collections, judgement, and got 2 small secured cards. I contested everything that was out of time. (this can be tricky they like to start the clocks over and play games you have to be on that) and I got things corrected, updated or removed, by disputing the problems, let the old things time out. paid his credit cards on time and kept them at the 30% peak for a few months and that was it...

I was in the 500's and now I am 620ish mid score just from my 2 secured cards and time...(I have several medical collections ready to fall off if they already haven't august is my free rechecks)

I started in January 2013 and paid everything off and started the correction process. by august he was over 700.(we used a usda direct loan they needed 1 yr from any pay off which is why we waited till January) his one secured card we opened with $200 has a credit limit of 750 now. in December we got a best buy card and charged some of the kids Christmas stuff and paid it down to 30% on the first payment. January his mid score was 740 when we got the preapproval on our mtg...

oh and idk if its the same all over, but we lived in pa and ga. and we have been married for 15 yrs and we have only ever held one loan jointly.(the foreclosed house) everything else in our credit is separate. we are not even authorized users on each others cards...

just because you marry someone does not mean you have to have joint credit :) I filed bankruptcy independent of him in 2002. he has bought 2 houses and probably a 3rd as a married man with a solo mortgage... even tho I was not a titled owner they needed my signatures for him to sell it because he held title as a married man :)
 

Silverhawk851

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So my cousin is a mortgage broker and caters to a niche of people with bad credit, helping them improve it over time and then being the go-to guy to provide that mortgage/financing.

A couple of things I picked up that are very important are:

1. Regularity of payments...are you someone that consistently makes payments? Or do you just leave it to be... have late payments going on.

2. Your Credit to Balance ratio ...so how much of your credit limit are you using? This is why have a small amount of credit is bad... if you have only $2000 in credit limit...and have a balance of $1800... that means the credit company sees this guy is always using 90% of his credit, meaning he has no money, meaning he's a bad candidate.

3. How much credit you currently have ..how many other lenders are willing to trust you with their money? I know a guy with $30K in the bank, no loans, all paid off, no credit cards, and he's having trouble securing a loan. The banks don't trust him..why did nobody else trust you with any money?

But if you have $100,000 in credit, and only use $2000, it's damn this guy only uses 2% of his credit, and regularly pays it off. If anything goes wrong, he can pay it, so let's give him more.

The rich get richer, the poor stay the same.

Lol

Hope that helps.
 
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Kak

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Last time I looked I was a 798 :) it took a while to get it there. I open only 2 or 3 cards per year. I make sure my utilization is low compared to my credit limits. I also carry a baby balance to show use on most of the cards. Around $100 should do it. Never miss a payment set the minimum on autodraft even for these baby balance cards because even if you miss a stupid 20 dollar payment it hurts. Most recent addition, Amex plum.
 

socaldude

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Work your way up to a line of credit. Why? High limits and cold hard cash and good rates. Great for building a business.

Start small with a store card or secured card.

Charge basic expenses and pay it in full. No, you don't need to carry a balance and pay interest to build credit.

If you know how to play the credit game right you can make all sorts of good things happen.

I have the AMEX plum card, AMEX plat charge card, Chase cards and a big a$$ line of credit.

Just remember if you can't pay for it cash RIGHT here RIGHT now then you can't afford it.
 
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Kak

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Work your way up to a line of credit. Why? High limits and cold hard cash and good rates. Great for building a business.

Start small with a store card or secured card.

Charge basic expenses and pay it in full. No, you don't need to carry a balance and pay interest to build credit.

If you know how to play the credit game right you can make all sorts of good things happen.

I have the AMEX plum card, AMEX plat charge card, Chase cards and a big a$$ line of credit.

Just remember if you can't pay for it cash RIGHT here RIGHT now then you can't afford it.
What institution did you go with for the big a$$ line of credit? Is it personal or business?
 

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CarrieW

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Charge basic expenses and pay it in full. No, you don't need to carry a balance and pay interest to build credit.
your right you don't need to carry a balance and pay interest to build credit. open accounts and payment history do that with time...

you do that to optimize your credit score. the scoring system is a game. run by the credit companies. they want to see they you are using it and using it smart.

http://www.investopedia.com/ask/answers/05/creditscorecalculation.asp

http://www.bankrate.com/finance/credit-cards/how-to-bump-up-your-credit-score.aspx

I ideally try to keep the few we have under 30% they are small cards, so a few regular payments and they are at 0. if we had higher balances I would carry lower. the best part of that link is where it says that the utilization is only a snapshot. if you have a 500 card and charge 300 every month and pay it off it looks like your carrying that balance. they only report once a month. keeping it between 20-30% is ideal and easy to manage an makes sure its never too high or too low. they like to see you using it and not abusing it. every single company that runs your credit has its own formula for calculating your scores. there is no one correct formula without some killer inside info that most people even within the industry and company are not privy too...
 

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