Friday, May 22nd, 2009 |
Reader’s Question
Hi,
I read your blog and thought that it was interesting regarding secured credit for people with imperfect credit. I am currently in the process of repairing my own personal credit from a student loan default and they are in the rehabilitation process. I am extremely interested in located a secured card that doesn’t report as secured on my credit report. Can you please suggest some to look at?
Thanks!
[name removed]
My Response
Dear [name removed],
Absolutely. I recommend that you check out some of cards offered on Credit.com. Most of these cards will not show up as secured on your credit report. Here is a direct link to their secured cards.
Hope this helps,
Ryan
Take Home Point
If you have ever said to yourself, “How am I suppose to build (or repair) my credit when no one will issue me a credit card”, the answer is a secured credit card.
Secured simply means that the credit line is secured by you (i.e., you have to deposit the money before they will issue the card and when you close the account, the money is returned to you). Thus, the credit card companies will issue the card to people with poor credit because it doesn’t represent any risk. The advantage to you is that they (in most cases) report monthly as simply a credit card on your credit report.
I used a secured card as my first “credit repair card” and kept it open for two years to accrue some age on the account. This is a great way to start the credit repair process.
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Thursday, October 9th, 2008 |
I have been receiving a lot of emails from folks asking how authorizing another person (usually a friend or relative) on their credit card will affect both party’s credit score. Well, the news is that the folks over at Fair Isaac (they own the algorithm that generates your FICO score in case you don’t know), have decided to take authorized users out of the FICO calculation. I suppose there were a handful of people who were taking advantage of the system.
Basically authorizing another person on your credit card will have no affect on either person’s credit score, which was usually the reason people did it in the first place –in another words, by authorizing a person with bad credit, the payment history would show up on both credit reports while only the primary account holder would be responsible for the payment.
Authorizing someone on your credit card is risky!
I don’t care how much you trust this person, here is what you are doing by authorizing someone else on your credit card:
- You are solely responsible for every aspect of the account –including the payment!
- With the new FICO changes, the other person will see NO positive changes in regards to their FICO score
- If they charge up a huge balance on the credit card, it’s your responsibility to pay it off.
Sign up for a Joint Account instead!
While creditors may look more closely at a credit score when opening a joint account, setting up one of these accounts can be a much safer bet. Plus, both people will see the positive credit score gains!! And, since it’s a joint account, both people are responsible for the payment and both names are on the account.
Get a secured credit card otherwise
If you are unable to get a joint account with another person, I suggest (as I have suggested many times before) signing up for one of these secured credit cards that I have used myself and been very happy with.
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