Will I Build Credit Faster with a Secured Credit Card? – Credit Card Insider

Will I Build Credit Faster with a Secured Credit Card? – Credit Card Insider


Hi my name is John Ulzheimer and I am a
credit expert who contributes to CreditCardInsider.com. If you have any
questions for us please submit them in the comments section below. Today’s
question is pretty lengthy so I’m going to have to read it. Here it is: Is a secured
credit card as good for my credit as a regular credit card? Now I’m assuming a “regular credit card” is a credit card that is not a secured card where you did
not have to put a deposit down with the bank in order to get them to issue a
card in your name. And then it follows with: Is there any difference in how
beneficial it is for my credit score whether it is a store card, like a retail
store card, a rewards card, a business card, or a gasoline card? All very good questions. Generally speaking the type of card on a
credit report is not terribly important. Yes it’s considered and it is seen as a
different type of account, but a credit card is a credit card is a credit card
and what’s more important about the card, there’s two things that are more
important about it. Whether or not you’re making a payment on time, but
that’s relevant to any type of account whether it’s a credit card or a mortgage
loan or an auto loan. And second, this is where it really becomes important, is the limit on
the card. The credit limit on the card is very influential in your credit scores and
both FICO scoring systems and VantageScore scoring system there is a metric
called the debt-to-limit ratio or more formally referred to as revolving
utilization that considers the balance on your cards relative to the limits on
your cards. And the lower your balances are in relation to the limits the more points
your going to earn for that particular category and it’s a very influential component
of your score or so it’s not chicken feed that we’re talking about here. These
different types of cards that we just talked about are generally going to have
very different credit limits. The credit limit on a retail store card, when
you open it, might be less than a thousand bucks. The credit limit on a
secured card, when you open it, might be only a few hundred dollars because you
have to actually put a deposit down that’s going to be equal to whatever credit
limit they’re going to give you and most people aren’t going to give five or ten grand to a
bank just so that they open a card in your name with that credit limit. Normally you’re going to open it with just
a few hundred dollars, so again, very low credit limit. Gasoline credit cards almost
always have very low credit limits. Business cards: in most cases business
cards don’t even show up on your personal credit report unless you miss
payments, and so we probably should take them out of the equation altogether. Now
we get to what was referred to in the question as a “regular credit card” which
I’m assuming is an unsecured card like your Visas, your MasterCards, your Discovers,
and your Amexes. Those are the cards that are generally going to have really high
credit limits and they’re generally going to have really high credit limits if they’re
being issued by a mega bank, like you’re B of A’s and your Citis and your Wells
Fargos and your Chases. Those are the types of banks that are going to generally give
really high credit limits. Those types of credit cards are also available through
credit unions. The problem is that credit unions are generally not going to give
you those really really high limits. It’s not uncommon to get a credit limit from
a mega bank that’s 15, 20, 30-grand. It is more uncommon to get that type of credit limit from a
credit union. It does happen from time to time, but you’re probably gonna see
things more like $2500, 5 grand, $7500, 10 grand and that’s kind of a high-end of it. So where
this is important is even though you may be using the card consistently
month-over-month, the limit on that card you actually be chewing up more
of that limit on the card that’s got a lower limit, which is going to be
detrimental to your credit score, however the same spending done on a card that’s
got a really high limit might be much less problematic or in some cases it
could be completely immaterial and may not have any negative influence on your score at
all. So keep that in mind if you have a choice between a card issued by a mega
bank that’s going to have a really high credit limit, versus a card issued by, for
example, a regional bank or credit union, they’re perfectly fine,
don’t get me wrong I’m not bashing them, but if they’re going to issue you a
credit limit that’s very very low, you need to at least acknowledge or consider
how that’s going to be detrimental to your credit score, especially if you’re
going to be using that card and you’re going to charge on it considerably, I would
always choose the card that’s going to give you the higher limit because it’s going to be
much less problematic for your credit scores. So if you have any other
questions pertaining to credit or financial topics, then please submit them
to CreditCardInsider.com or in the comments section below. Thank you for watching and have a nice
day.

79 Replies to “Will I Build Credit Faster with a Secured Credit Card? – Credit Card Insider

  1. I'm a full time college student working park time. I have enough money to open a secured credit card with a credit limit of $1000, which I'm planning on doing soon. I have a few questions before I open it though. I'm only going to be using around $100-$150 of my credit limit a month, which I can pay easily in full and on time. My question is, does it matter what I use my credit card for? Like if I usually only use it for gas and food (only an example), would the lack of diversity be bad or less effective than if I were to diversify what I use the card for?
    If you can answer this with a mere reply or a video I would be so grateful. Thanks for your time.

  2. How accurate are pre-qualified applications? For credit cards, applications like capital one, chase, American express, etc.

  3. Hello. I have a secure card. Is it true you should only spend 30% if your card is $500. Should I spend only $150 and every month pay back $145 and keep a $5.00 balance owed? and keep rolling the 5 over every month? this is what I've heard. and what if I pay back the 30% that I used for that month can I still use another 30% before the month is up and pay it back before the due date?

  4. Im a doctor (not american) who recently got a job offer from a hospital in the united states , as you may imagine i dont have any credit in US banks… what can i do to apply for a credit card, what type of credit card can i apply to and what would be my best strategy….

    Thanks for all the videos they are very informative…

  5. Here are a few points you failed to mention in your video.
    1) Know 100% who you are sending your money to to get
    a secured credit card account in as much as if the institution
    who you sent your hard earned money to goes bust, you loose
    all the money that you sent in as a security deposit to.
    CREDIT CARD DEPOSITS are NOT covered by FDIC insurance.
    2) If you owe money to other financial institutions, your credit card
    deposit is fair game for the other financial institutions to go after
    as a source of your assets by way of a court issued asset seizure
    order.
    3) Never enter into any verbal agreements at all….Everything must
    ABSOLUTELY and POSITIVELY be made in writing with all terms
    and conditions laid out clearly in writing. Never accept a
    credit card collection representative's claim that the terms have
    been verbally recorded. They may have NEVER even taped the
    conversation, and you will have no proof whatsoever that the
    conversation even occurred, or anything was actually agreed
    to by both parties.
    4) Make your monthly payments online using the creditors own
    website. Never ever use 3rd Party websites. If you feel more
    comfortable you may use your bank's own payment website,
    but even then you have to allow sufficient time for your
    bank to complete the transfer to the creditor's institution.
    Remember the time zone you are in and the time zone
    your creditor's payment center is located in. Some creditors
    can take several extra days to credit your account, and until
    that is done, as far as the creditor is concerned, payment HAS NOT
    BEEN MADE.
    5) Never ever have your tax refund direct deposited into your
    credit card account. Have the money direct deposited only
    repeat only into your own personal bank account.

  6. so I'm gonna be getting my very first credit card and because I don't have any credit I'm getting a secured credit card.. my question is: if I get my card with a $200 line of credit would it be best to only use 30% of that 200 so that my credit score increases faster? I am pretty confused, any help is appreciated

  7. I'm trying to figure out why when you mentioned the debt to limit ratio you didn't then tell us what that ratio should be…. I think that's pretty important don't you? I don't know what it is exactly but I think you shouldn't use more than 30% if your cards credit limit. please add this information in.

  8. Hi I have a credit card with a $1000 limit, is it best to spend $100 a month on it then pay it off in full or do minimum payments until it's paid off then put another $100 on it? Either one I can do easily I just want to know what's best for building credit faster.

  9. Very good question obviously the Secured credit card is the easiest credit card to get since your putting up the credit limit.

    but what would you say is the second easiest credit card to get I'm changing 1 of John's answers from (retail store card to charge card since that's the way it's put on credit reports)

    so what's the second easiest charge cards that can only be used at 1 location
    example Macy's, Jc Penny, Walmart , Target, Lord&Taylor, Gap , Ann Taylor, Kohls ect

    or store credit card like Macy's American express, Walmart Discover, Ll bean visa, Gap Visa, Ann Taylor whichever logo they have ect?

    or Bank credit cards. I know everybody has different local banks so we will discuss what John had to say. for the banks which would be easier a low intrest card like the chase slate or a rewards like the freedom and sapphire, city cards, Bank of America, Capital1,
    Discover , American Express?

    or union credit cards?

    as what John metioned in another video what if Macy's gave you there charge account and you walked into Macy's and you bought a suite for 500.00 and your credit limit is a thousand and then let's say you bought some other things you could be in trouble.

    But also what John said you could get a Bank of America card and you could go to the ritz carlton, Waldorf Astoria , you can buy hockey tickets, clothes at Nordstrom's and you can run up a big bill, so after secured credit cards what cards are the easiest to get?

    Charge cards
    store credit cards
    banks or financial credit cards
    Union credit cards?

  10. I have a question if I have a $500 credit limit on a secure card and I use $400 but pay it off the same month would that hurt or help?

  11. I hear a good rule of thumb is to keep your monthly charges to your credit card around or under 30% of its maximum limit, and pay off your charges at least 5 days in advance. is this a good idea?

  12. Hey John….
    Does the TYPE of credit card make a difference in your credit score ?? Do you get more points from Bank cards ??
    Like … is a CHASE credit card better than Citi, barclay card, Capital one ?? Is a Discover card better than one from US bank ??

    I heard that there is something to this, but i am NOT sure what the true answer is. Any thoughts ??

  13. is there a difference in getting a $1k credit line or a $10k credit line on a credit card ? what I'm asking is do u get more points bc there is a $10k line ?

  14. Hi! Feels really great to have these videos to guide us towards proper handling of our credit cards. Just have a question about credit utilization. It was said that we need to have our utilization between 1%-10% to be considered as EXCELLENT, my question is what if I use my card like upto 70% of the limit so that the bank see me as a profitable client, but pay 69% of my debt before the statement due date so that when my bill comes, my utilization is still 1%, do you think that would be a good strategy or not? Really looking forward for your thoughts.

  15. hello, i have had my secured credit card with bank of america for 2 years, i keep my utilization below 30% and i have never been late on a payment, i also pay every month in full amount, i contacted bank of america to see if they would unsecure my card the request was denied the reason the request was denied was because of a few collections (medical) on my report, since then i have got 2 unsecured credit cards with different institutions, how much longer should i wait for bank of america to refund my deposit and unsecure my card?

  16. Might you know about the situation with Discover It? I'm a student who'd probably qualify for their unsecured student Discover It but didn't, though I did qualify fine with the secured Discover It Chrome (was not a counter-offer) w/ the minimum deposit. After how long of having a very good relationship with the company should I be waiting to see about possible 'graduation' to the normal unsecured student series (asking about Student as I'm a college student who did get the Good Grades GPA reward & would like to keep that for as long as I am in studies at least)? Are you familiar? Thanks.

  17. excellent i love the web site and youtube channel, i have learned a lot, by reading and watching all the videos, i have learned almost all from these videos from zero to now, and after watching them i tried to consider what was told to do, i did and i raised my limit of both cards
    one from $500 to $1500
    second $ 1000 to $ 2000
    and not only this, they responded to all my questions and help me to understand much more than before,
    even now i had helped my friends and family to learn more and they all were also benefited from the same.
    PLZ NOTE :- this for the people who watch this video and read the articles, i am just a person who read and watched and i am sharing my experiences, so the way i got help how to learn and make my credit good you all should get the same, i am not working or getting paid for this. but yes i also like to help ppl by sharing my side.

  18. I'm new to the credit building. Let's say I have a secured credit card with $300 and I only use about 30% a month of my card. Would my score climb higher if I had a higher limit, say $700 credit limit and use only 30% or would it grow the same. Thank you.

  19. If I have a secured card with a available balance of 200$ , what percentage of that should I use monthly so it won't hurt my credit ? I'm building my credit back up and am using my card for that reason . I was told to make purchases of about 10$ a month and pay it off right away . Is that pretty accurate ?

  20. I have a 512 score and I kept hearing about secured credit card that it works..can someone in here make me believe it's true??

  21. I had a small loan that was charged off At a point in time in which I'm trying to repay can it be reported to the credit agencies that payments were late after being in charged off

  22. hi, in layman's terms can you explain to me Joe a secured credit card works to build or rebuild my credit/credit score? please and thanks.

  23. Hello Credit Card Insider.  I am under the impression that for building credit, secured credit cards with a CL as low as $200, are actually ideal for building credit only.  That's to say, you aren't going to be making any major purchase with the card at all, and are only using the card to establish credit history, good credit utilization ratio and payment history.

    So lets suppose I have a credit card with a $200 limit.  Theoretically, my credit score should benefit from using up to 9% ($18) (because that's what I'm told potential lenders like to see when pulling your credit report) and paying it back during the billing/statement cycle after the card issuer has reported to the big 3 credit bureaus.  Even if it isn't a high credit limit, the rules for credit score building would still apply and you could easily bring your credit score up with this method, correct?  Furthermore, after 6 months to a year that issuer should usually increase your credit line and/or offer you an unsecured card with a higher limit, thus diversifying the types of credit accounts you have open, if that is a factor, since I believe secured credit card, and unsecured revolving credit card are two different types of accounts that factor in the FICO formula for credit scoring…..so what I'm asking and hinting at is this:

    Is a secured credit card an efficient and good way to start building credit?/ Can it definitely boost your scores?/ If so I can see this as a gateway for qualifying for small personal loans then auto loans and later home mortgages if you maintain responsibility in payments and keeping a good portfolio of diversified accounts.

  24. hello I have a question I have 5 credit cards two of them are secured credit cards but they all have low limits but my credit score is very good what credit card should I apply for that's will give me a high credit limit thank you

  25. Hello I jus got approved for a secured credit card for $200 and I want to kno will it help bill my credit faster if add more than $200 probably $1000 for my deposit?

  26. Can you use a secure credit card to get another secure credit with the same limit and they keep paying each other off

  27. Can i build credit with an secured credit card with a $100 deposit and if i need to use all of the $100 limit or just $20-$30 every month? And what happens to my credit if i don't use it for 2 months? How about i just use it to fill up gas $20-$30 once per month?

  28. I am curious, if I were to get a credit card with a limit of 300 for example is it bad for your credit to utilize it for all purchases even if you are paying it multiple times per month to keep the loan amount or borrowed amount low and avoid interest?

    Would greatly appreciate a response- I have very new credit and am looking to improve my score.

  29. Hi, I recently just got a secured credit card, and I'm curious if I should pay my credit card bill before the due date (about 2 days before) or on the due date? A reply would be greatly appreciated

  30. I love getting advice. Here's my plan:
    I owe a couple hundred to a bank ($800.00)
    I owe $125.00 to another bank
    I owe apprx $300.00 to a clothing store
    I think it'll be best to get a SCC with a $900.00 credit line.
    Use this credit to satisfy my lowest debt first.
    Make payments to the SSC – killing the first debt and increasing credit with one stone.

    I plan to use a balance transfer at some point to take care of my highest debt,
    I seen a promotional that offers 1.99%APR for 15 months- more than enough time to pay the balance transfer rate.

    is this a good strategy? is there a faster, honest, way?

  31. I am still waiting for my cap one secured card. My plan is to use that card to make my payments to snap on tools credit. They both report to the credit bureaus. I was wondering if it would hurt my credit to pay this way or do you think it will boost my credit up faster?

  32. Wow I watched at least 3 of these videos about a secured credit card, and none of them mentioned not to charge the full amount on the card. I'm finding that reading the comments is so helpful, thanks to those who posted about this.

  33. You didn't talk about the topic of the video. You tlked more about other cards than the secured credit card. You should change the name of this video. What a waste of time

  34. I have a Wells Fargo $9,600 secured credit card (keep adding funds yrs ago to build it) have had it now 8YRS! Never told me WHY I'm not graduated! My fico score is 800! (It was lower when I first started getting cards BUT not because of anything negative) Never late,ect. When I came then they say nothing. If I cancel it..it shows negative on my credit. I have NEVER had anything late or deliquesce on my card or credit report!!!! I have 17cards now! My credit utlilatazion is less then 1% I use all my cards 3-12 times a month and pay them off every month! I don't understand.

  35. if i put 200 on a secure credit card and use 1-5% utilization would that help my credit score just as much as i would with the 300?

  36. So if I had a card with a $200 credit limit and I spend $100 on it but I paid it off in full by my payment due date, would that be reported as 50% or 0% (since it was paid in full and not really revolving any debt)? And will it still build my credit if I pay off everything in full and don't actually have any revolving debt on my card?

  37. I have a secured credit card with a $300 credit limit, utilization ratio doesn't go past 5 or 7% ,will this card help my credit score rise?

  38. Incredible video! Very informative and clear information. I agree that secured credit cards can help your credit improve. I actually have 2 secured right now and it has already benefited my credit score. I subscribed to your channel to may sure that I don't miss out on any future videos! Thanks again for this video!

  39. Do they still do a hard inquiry with secured cards? I'm a student that stopped working(the end of last year) to go to school full time. I have good credit according to my transunion report. But I want to get a credit card with a 1000 dollar limit and with some cash back or other perks because my only other credit card doesn't give any. I guess I'm just asking for some general advice for my situation. I'd prefer to keep my hard inquiries at zero, because I plan to move next year and may have a few added when I try to find a place to rent.

  40. I have a secured credit card on capital one , and this is the only bank that could approve me for a credit card , and it's been 3 months , how long do I wait to get me a regular credit card ?

  41. Hi there, I had a secured bofa credit card , and they gave my security deposite back into my account. When i checked my credit limit it increased by 2000 $. I had 300 first they increase it by $100 then $200 , now , they game my deposite back and increawe my limit to 2600. Is this means now my secured credit card changed into unsecured credit card. Ps. It happend by itself. I didnt ask for it.

  42. You can build credit with chargeoffs and collections..hears how to do it open a my jewlers account open a self lender and get 3 secured 200 dollar credit cards..i did this 6 mounths ago my score was Equifax 555 exp 528 tu 527…now tu 707 Equifax 716 exp 702

  43. I hanve american exspress card some one tell me that I have a grand from us goverment like $900,0. dollars . And I felt for it believe instate i been scam He toke the money out from card
    I did give him the number on the back of the card.( appStore & ITune) the american exspress would not refund for me..I do not want to use the card any more..I know not suppose to be like that..

  44. im disabled so bare with me. just did bankruptcy. got sec cc with 200 limit but transfered 500 as well. will like having a higher limit & using this card for everything HELP with a bigger bal every month to pay?. also getting diff views, do i want to pay off full bal each month ? 1 site sd making payments shows up more on credit score? me confused a lil. thks

  45. Rule of thumb: Take your current credit limit, divide that number by 3, then make that your NEW credit limit (and don't go over that number). This will always keep you under 30%

  46. i'm an authorized user on someone else's credit card if I was to call and asked to be removed how long will it take for it not to show on my credit repot anymore?

  47. So when trying to use a secured credit card to rebuild your credit would it be best to place the largest deposit (such as $5000) and then only use it minimally… if so how long would this be helpful… a year?

  48. So if you have a secured credit card with a $200 limit and only use %30 of the card, $60 and pay off the balance monthly on time. Will that boost your score just as effectively as an unsecured credit card? Doing the same the thing based on the overall limit of the card?

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