Building credit with secured cards

SkyGheNe

My partner has no credit whatsoever (right out of college, never had rent, car payments, student loans, only has a part-time job, etc). The only thing she's had is a debit and savings account with People's Bank. She doesn't want to cosign with anyone and won't get accepted to a regular credit card. Most importantly, she has a few thousand in the bank and will pay her credit card in full each month...she doesn't want credit because she needs money, she just wants to build credit history.

She's looking into a secured credit card, especially from the following banks: Orchard Bank, Citi Bank, Wells Fargo, and Capital One.

Has anyone ever had a secured card? From what bank? How soon were you able to get accepted into a unsecured card? Some of the banks like Citi Bank and Wells Fargo say that after 12 or 18 months the secured credit card holder is eligible to upgrade to an unsecured card...is this a guarantee? Do these banks report the card as a secured card or don't specify?

We've researched it online a lot but I think it would be great to have insight from anyone who has actually gone through this process and has some advice. Or anybody else that has better google skills than we and can find some good info.

MushroomStick

My sister was looking for a secured credit card a few months ago and every bank she talked to told her they don't offer them anymore. She ended up having our dad cosign on something for her.

SkyGheNe

Yeah few do since banks don't make a lot of money off of a secured account, but those 4 listed up there still do thankfully.

MushroomStick

If it were me, I would get whatever secured card they would give me, use it a bunch and pay it off for maybe 6 months or so, and then apply for a credit card with rewards that I like instead of waiting to be eligible to upgrade the secured card.

Glass.Cannon

I've been using one from PNC bank for a while now, as my wife and I had absolutely zero credit history before this so it was the only option we had for building credit. We were approved quickly, and so far it's been great. It works just like a normal credit card and you'll be building credit with it regardless, so it doesn't matter what the upgrade options are. Just use it, pay it off, and upgrade if you like what they offer. Otherwise, there's no reason you can't get something else once you build up some history. There's really no downside to having one.

Jerecho

I work at BofA, and we still offer secured cards, but they can no longer be applied for directly. You have to apply for a regular card, and then sometimes (read:rarely) they'll counteroffer with a secured card.

If you're offered and approved for a secured card, you have to put down $300-$10,000, and will receive a card with an equal limit. The card comes with a $39 annual fee, and will be graduated to a regular card after a 12 month period of good payments.

At that point, the deposit amount is returned.

Hope this helps.

DevoutlyApathetic

Has she applied for a store based credit card?

They are atrocious deals if you don't pay them in full but they tend to be much looser in acceptance standards. You'll often be able to get one of them when you could never get a "real" card.

JHunz

You said she didn't want to cosign with anyone, but adding her as an authorized user on your own card(s) would also build credit. The card companies report on all authorized users for every card - this is how my wife has been building credit even though I'm primary source of income for the household.

It's a way to avoid the deposit and fees associated with secured credit cards, and there's no credit check for adding a user.

DevoutlyApathetic

Be careful about that though. I know the credit reporting agencies were changing around the FICO scores to limit cosigning on random cards increasing your credit score. That you are actually married might get around that but I don't think it is SkyGheNe's case.