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

[LSUTiger32]

So some of them do designate on your credit report that it is secured? It doesn't sound like that makes a difference, it should still be a revolving credit tradeline on your report. So why don't more people go this route I wonder?

[backtoschool]

So some of them do designate on your credit report that it is secured? It doesn't sound like that makes a difference, it should still be a revolving credit tradeline on your report. So why don't more people go this route I wonder?

I think many do go this route, but want more than one positive trade line. I do not believe a secured card is any better than an unsecured one, except for the fact that you can have a larger "credit limit" more quickly, which will allow you to get unsecured cards with larger limits more quickly.

[LSUTiger32]

I think many do go this route, but want more than one positive trade line. I do not believe a secured card is any better than an unsecured one, except for the fact that you can have a larger "credit limit" more quickly, which will allow you to get unsecured cards with larger limits more quickly.

Good to hear that, I wish more people would exercise this option. I don't know how people can say they learned their lesson until they do something to prove it. A low limit secured card does everything a unsecured card does for your credit rebuilding and makes it impossible to get back into the same situation.

[CCsAreEvil]

I don't know how people can say they learned their lesson until they do something to prove it. A low limit secured card does everything a unsecured card does for your credit rebuilding and makes it impossible to get back into the same situation.

Good point, although I do have an unsecured credit limit of $300 which I was somewhat disappointed at by when I first got it back in January. But looking back, I'm glad it has a low limit. I'm surprised at the people getting $1,500 or $2k or even $3k limits either right after discharge or within a year of it. That would make me a little nervous.

[Meh]

I knew what got me into the BK situation to start with and once you make the decision that you're not going back there again then you just don't no matter how much credit you have available. I have about 3k worth of avail credit total and im using 1200 of it now. I could pay every bit of that back right now but I want to hold a bit of a balance because personally I still think that holding a balance shows better than paying in full every month. I'll pay it down enough to keep the utilization under 15% before the due date. This credit thing is really just one huge game. You have to get in debt and show you can sustain debt to be offered more chances to get into debt but those that have never had any debt are cast in a negative light credit wise, go figure.

[tobee43]

Good point, although I do have an unsecured credit limit of $300 which I was somewhat disappointed at by when I first got it back in January. But looking back, I'm glad it has a low limit. I'm surprised at the people getting $1,500 or $2k or even $3k limits either right after discharge or within a year of it. That would make me a little nervous.

it does make US nervous...within 8 weeks we have the three cards

1500
1300
2000

in a ny minutes.....but as bts explained ...we never stopped paying our cards for reasons i don't really want to bore you with...so actually, by the time we filed the cc's did not have a negative payment histories to reflect. it's the only thing we can figure out.

our current fico scores ....well actually a month ago or so were 690 and 685....

CCsAreEvil
I'm surprised at the people getting $1,500 or $2k or even $3k limits either right after discharge or within a year of it. That would make me a little nervous.

exactly, just curious why?? now i'm a bit scared...LOL!!!

[backtoschool]

it does make US nervous...within 8 weeks we have the three cards

1500
1300
2000

in a ny minutes.....but as bts explained ...we never stopped paying our cards for reasons i don't really want to bore you with...so actually, by the time we filed the cc's did not have a negative payment histories to reflect. it's the only thing we can figure out.

our current fico scores ....well actually a month ago or so were 690 and 685....



exactly, just curious why?? now i'm a bit scared...LOL!!!

You are getting high limits because your credit was perfect leading up to bk Tobee43. As to being afraid of high limits, well I think about credit and money so differently now than I did in my pre-bk days, that I am not afraid of using those limits. I even charged a new apple laptop on one of the cards when I first got it, and I paid it off as soon as the charge hit. I am not looking for credit to supplant my income, I am merely trying to re-establish my credit history and I will never carry a balance. Ever.

Now some would say that I will be tempted, but I disagree. I live near the best bakery in town. It doesn't mean I buy a chocolate cake every day and eat it whole (yum). I have some very good bottles of wine for when I have guests over. I am able to keep them in my wine rack unopened instead of guzzling them and passing out. Same with my credit cards. I only use them to create a history and I pay them off in full every month. New habits can be learned post bk.

[LSUTiger32]

I just don't get it. If the goal is to rebuild credit why not do it the safe way? I get that every person has changed and they would never make the same mistakes again, but reality tells us that doesn't always happen. I believe it is something like 15% of people who file BK end up filing again.....and that is an enormous number when you figure in the amount of time in which one would have to wait to file again. There is not a person in the world that could tell me that if they have a credit card and they have an emergency that the emergency isn't going on the credit card unless they have an emergency fund. And of course, if you have an emergency fund there is no reason to have anything other than a small secured card.

To not do it with a secured card tells me that it's not as much about rebuilding credit than it is about just getting some credit cards again because you can't live without them.

DISCLAIMER: THIS POST IS NOT SPEAKING OF ANYONE ON HERE PERSONALLY. I AM NOT MAKING A CLAIM ABOUT YOU (THE READER) SO DON'T GET IN A TIZZY ABOUT IT.

[backtoschool]

I just don't get it. If the goal is to rebuild credit why not do it the safe way? I get that every person has changed and they would never make the same mistakes again, but reality tells us that doesn't always happen. I believe it is something like 15% of people who file BK end up filing again.....and that is an enormous number when you figure in the amount of time in which one would have to wait to file again. There is not a person in the world that could tell me that if they have a credit card and they have an emergency that the emergency isn't going on the credit card unless they have an emergency fund. And of course, if you have an emergency fund there is no reason to have anything other than a small secured card.

To not do it with a secured card tells me that it's not as much about rebuilding credit than it is about just getting some credit cards again because you can't live without them.

DISCLAIMER: THIS POST IS NOT SPEAKING OF ANYONE ON HERE PERSONALLY. I AM NOT MAKING A CLAIM ABOUT YOU (THE READER) SO DON'T GET IN A TIZZY ABOUT IT.

Wow, 85% of people never have to file bankruptcy again. That's awesome and very encouraging. Many of that 85% have unsecured credit cards I am sure....

LSU, your way works for you. Great, enjoy your post-bk financial life. I truly mean that. Other have other goals and other ways of doing things. I happen to have an emergency fund too, and I have both a secured card and several unsecured cards. I have not had a balance in 11 months I have had the cards that is not paid off in full each month.

I think the whole point of "fresh start" is that people have the chance to make their own financial decisions. I don't want to live on the fringe of monetary society. I want to be able to rent a car, stay in a hotel for two weeks if I need to (without having to have my company give me an embarrassing travel advance), buy a house, buy a car, do the things that require credit and credit cards.

Your definition of "safe" is avoidance. My definition of doing things the "safe" way is to learn from my mistakes and use credit in moderation, as a tool to help me with my financial goals.

It's great that our fresh starts can accommodate us both.

[WhoDat]

Now some would say that I will be tempted, but I disagree. I live near the best bakery in town. It doesn't mean I buy a chocolate cake every day and eat it whole (yum). I have some very good bottles of wine for when I have guests over. I am able to keep them in my wine rack unopened instead of guzzling them and passing out. Same with my credit cards. I only use them to create a history and I pay them off in full every month. New habits can be learned post bk.

You just summed my entire credit card usage! I like having a credit card, not because I need one, but because they can be a good tool if used properly. I do need them for an emergency, or because everyone else has one. I pay it off when the charge posts. It has become second nature. My largest purchase ever put on a card was an iPad 3G. It was paid off two days after the charge was posted. Impulse buy? Nope. Wanted one for months and had the cash set aside. I never had an issue with credit usage. I never had a secured card, but it looks like an excellent option. There weren't too many of them when I went through my BK years ago.

LSU, the 15% of people you are referring to, well, it sounds like they will never learn. If you took away their credit cards, they would have found another means to go in debt and not repay. Remember, if you can have a credit card and still pay cash for everything. If you are considering a credit card, I would recommend looking into a secured card.

[Meh]

Wow, 85% of people never have to file bankruptcy again. That's awesome and very encouraging. Many of that 85% have unsecured credit cards I am sure....

LSU, your way works for you. Great, enjoy your post-bk financial life. I truly mean that. Other have other goals and other ways of doing things. I happen to have an emergency fund too, and I have both a secured card and several unsecured cards. I have not had a balance in 11 months I have had the cards that is not paid off in full each month.

I think the whole point of "fresh start" is that people have the chance to make their own financial decisions. I don't want to live on the fringe of monetary society. I want to be able to rent a car, stay in a hotel for two weeks if I need to (without having to have my company give me an embarrassing travel advance), buy a house, buy a car, do the things that require credit and credit cards.

Your definition of "safe" is avoidance. My definition of doing things the "safe" way is to learn from my mistakes and use credit in moderation, as a tool to help me with my financial goals.

It's great that our fresh starts can accommodate us both.

Well said!

[LSUTiger32]

You guys think that 15% of people doing stupid again is OK? That's the number that file BK again, not the number that default on a credit card or an auto loan after filing BK. That number is surely much higher.

I just don't know why I try. Yes, I know there are two ways to skin this cat.....and I am with you BTS! I know YOU ARE DOING FINE! I know that YOU HAVE YOUR STUFF TOGETHER. I know you HAVE A CAR LOAN YOU CAN AFFORD. I know you have CREDIT CARDS. I know you have NO BALANCES. I know you PAY THEM IN FULL EVERY MONTH. I GET IT!!!

You used to nail me to the wall when I said things you felt were inaccurate. You posting on here that you will be living on "THE FRINGE OF MONETARY SOCIETY" if you don't get a credit card is just.....well stupid. I am going to call that one like it is. The idea that you keep telling people that they can't rent cars or stay in hotels without a credit card is just wrong. I rent cars, I stay in hotels, they even let me eat in restaurants when I use my debit card or get this....use that green stuff. Shocking, huh?

The bottom line though is that I am not talking to you......the post is meant for people trying to make the decision and for people who think they have to go out and do these things to win again. We already know what you did. Your FICO score is not a measure of your financial wealth.....I think most of us probably had a gaudy credit score at some point with all the credit we had. The point is that you don't need to do the same things you already screwed up doing (IN MOST CASES, please don't quote the number of BK's that aren't CC related, I know the numbers) in the name of rebuilding credit. There are many other ways to get it done without starting another plastic collection.

I guess we are right back where we started. I am back in the corner again with my thumb in my mouth "avoiding" the big bad credit card man because I am scared of him. I thought we were past all of that? Maybe I am just reading the tone wrong, but you basically just told me that I am living on the fringe of monetary society and that I live a life of avoidance.

[Flamingo]

it does make US nervous...within 8 weeks we have the three cards

1500
1300
2000

in a ny minutes.....but as bts explained ...we never stopped paying our cards for reasons i don't really want to bore you with...so actually, by the time we filed the cc's did not have a negative payment histories to reflect. it's the only thing we can figure out.

our current fico scores ....well actually a month ago or so were 690 and 685....



exactly, just curious why?? now i'm a bit scared...LOL!!!

Because after discharge you are debt free and cannot file BK again for 8 years.

[backtoschool]

You guys think that 15% of people doing stupid again is OK? That's the number that file BK again, not the number that default on a credit card or an auto loan after filing BK. That number is surely much higher.

I just don't know why I try. Yes, I know there are two ways to skin this cat.....and I am with you BTS! I know YOU ARE DOING FINE! I know that YOU HAVE YOUR STUFF TOGETHER. I know you HAVE A CAR LOAN YOU CAN AFFORD. I know you have CREDIT CARDS. I know you have NO BALANCES. I know you PAY THEM IN FULL EVERY MONTH. I GET IT!!!

You used to nail me to the wall when I said things you felt were inaccurate. You posting on here that you will be living on "THE FRINGE OF MONETARY SOCIETY" if you don't get a credit card is just.....well stupid. I am going to call that one like it is. The idea that you keep telling people that they can't rent cars or stay in hotels without a credit card is just wrong. I rent cars, I stay in hotels, they even let me eat in restaurants when I use my debit card or get this....use that green stuff. Shocking, huh?

The bottom line though is that I am not talking to you......the post is meant for people trying to make the decision and for people who think they have to go out and do these things to win again. We already know what you did. Your FICO score is not a measure of your financial wealth.....I think most of us probably had a gaudy credit score at some point with all the credit we had. The point is that you don't need to do the same things you already screwed up doing (IN MOST CASES, please don't quote the number of BK's that aren't CC related, I know the numbers) in the name of rebuilding credit. There are many other ways to get it done without starting another plastic collection.

I guess we are right back where we started. I am back in the corner again with my thumb in my mouth "avoiding" the big bad credit card man because I am scared of him. I thought we were past all of that? Maybe I am just reading the tone wrong, but you basically just told me that I am living on the fringe of monetary society and that I live a life of avoidance.

LSU, I don't think anyone on this planet or any other would disagree that you are avoiding credit. What is the mystery in that statement? There is no negative tone at all implied, in fact I put smilies in my post so you would know that there was no negative tone.

It is not financially feasible to rebuild from scratch without establishing positive trade lines. These can be secured credit cards, but they don't have to be. Savings earn less than 1.5%, so it might be financially better to get an unsecured card and put that money in an investment that earns better than a basic savings account.

I am not going to list all the benefits of credit cards. It is not necessary. Even if there were no benefits to credit cards, and I was only getting them because I like plastic rectangles in bright colors, my point is that it is my decision to rebuild my credit post bk. My decision is as sound, and as thought out as the decisions of any credit avoiding David Ramsey fan. There is not a superior choice here, or even a more sound choice. For some, (who didn't reaffirm a house in their bk like you did), getting positive trade lines will help them get a house and a car.

Anyway, people who stand on the street corners handing out bibles, or who go door to door evangelizing and trying to convert people are very committed and convinced that what they are doing is the right thing and that everyone else is wrong and needs "saving". But those people have thick skins, and do not take it personally if someone doesn't answer the door, or walks to the other side of the street to avoid the preaching.

[HHM]

I see a lot of post mentioning how secured cards are "reported", that is not the issue, it is how secured cards are scored that matter. Assuming the card is noted as secured (most do), FICO scores secured credit cards less than regular credit. In essence, a secured card is not really credit at all. Does it have a positive effect on your credit report, sure, insofar as positive from nothing is better than nothing. Just like with student loans, even though student loans appear on your credit report, they have a negligible affect on your credit rating.
The other reason secured accounts are not mentioned as frequently is that the debtor needs to have something to secure it with; most chapter 7 debtors emerge from BK with little or no savings. So, at least from the get go, they have no way of getting such a card.

Also, let's put credit history in perspective regarding closing accounts. It is absolutely a good idea to close accounts that charge an annual fee if you can't get them to stop. If you have a Orchard annual fee card for 8 months, and then close it; that is going to have a NEGLIGIBLE affect on your credit; because the timeframe is so short. Where you start running into credit history problems and it negatively affecting your score is when you close an account that is 10 years old, or 20 years old. A BK essentially restarts the clock on your credit history, so closing a 6 month or 12 month old account to avoid an annual fee is not a big deal.