Which would be better for rebuilding my credit a pre-approved or secured credit card?

Question

I've been paying off my bills "Big Time" and would like to get my credit score rating higher. I was thinking about using a secured card and adding to it, but now I just received a letter from Visa saying I'm pre-approved for $200. What should I do?

Answer 1

A secured one would be your best bet. Granted, you would have to place a deposit upfront, but your chances are much higher for getting approved. Not to mention that you're able to increase your limit by adding to the deposit. Keep in mind that whenever you apply for credit regardless of whether you're approved or not, an inquiry is created which drops your score. The secured card would be a more secure (pun intended) option. If you're going to lose points on an inquiry, you might as well make it count.

Answer 2

Secured credit card: - A secured credit cards for people with bad credit requires a security deposit as collateral before you can get approval. Its type of card that best suit the need of people with no or poor credit who are trying to build their credit history. Your collateral must be equal or greater in value of the credit amount you are applying for.



With a secured card you put up your own money (into a savings account with the bank you are applying for credit card) and that amount (or part of it) is the credit line for your card. Put in $500 and you could have up to a $500 credit line. You can deposit anywhere from two hundred to two thousand dollars into an account, and that will be your spending limit. This will give you the flexibility of using a credit card and because if you pay off every statement you are letting creditors know that you can handle credit (again) and your bank may soon begin extending your credit line beyond what you have put in. So you are on your way back to healthier credit, to a status where you will no longer need a secured card. Get more details at: http://www.credit-card-gallery.com/Guaranteed_Approval.html

Answer 3

$200 limit is very low. Most likely it is one of those cards when after all financial charges you are going to end up with $25 available credit (read a fine print). So, instead of waisting these $175 you are better off using this money to open a secured credit card. Make sure that this secured credit card is being reported as unsecured (some banks report them as secured and some as unsecured). With a good bank and a good payment pattern you are likely to receive your deposit back in 6 months (it will be converted from secured to unsecured). And as it was mentioned above you can set (and increase) your credit limit yourself. Therefore, next year, for example, if your payments are good and your card is not maxed out you will be able to apply for another/better credit card (when other banks approve you they try to match your current credit cards limits or make a better offer; that is why you want to be able to get a higher limit for you first card).



Check this link:

http://www.bankrate.com/brm/rate/cc_ratehome.asp?web=brm&state=US&prodtype=cc&R1=1&card_type=Secured&card_class=All&max_recs=50



Bankrate.com has a good secured credit cards rating

Answer 4

READ EVERYTHING on the pre-approved offer if there are no annual fees and no one time set up fees ect then I would try for the pre- approved offer. The only fees you should see would be APR and late fees and over the limit fees. While you can be declined for a pre- approved offer it is unlikely unless something new has come up on your credit report. I got a pre approved offer from capital one for my first credit card and I got it even though I had been denied for other cards and had no credit at that time.

Answer 5

Pre-approved is a marketing statement, not always an entirely true statement. Even the offer says pre-approved, they will not issue any credit card that does not require a deposit to someone who has bad credit.

Answer 6

I would apply with a company that offers both, regular and secured. The "pre-approved" notices in the mail mean SQUAT! They can still deny you, or they might charge huge fees.

Orchard Bank has these fees:

~A one-time fee as low as $0 or up to $49 is due upon application for the credit card.

~Annual Fee - As low as $0 or up to $79 for unsecured credit cards; $35 for MasterCard secured.

~$3.50 per month on closed accounts with a debit balance.

~Cash Advance Fee: $4 or 3% through June 2, 2005. Effective June 3, 2005, the Cash Advance Fee will be $5 or 5% of the advance, whichever is greater.

~Your card could have an annual fee depending on the type of card you have. Please refer to your Cardmember Agreement.

~Late Payment Fee: $29 through June 2, 2005. Effective June 3, 2005 the late fee will vary based on the amount of your outstanding balance on your Payment Due Date and will be: $29 if your balance is more than $0 up to and including $1,000; and $35 if your balance is greater than $1000.



Holy Cow! So, I would apply with a large credit card issuer (like Capital One) that has a variety of products. This way if you are turned down for one, they will probably offer you another. Then you don't get multiple hits on your credit while you are looking for a card.



Good luck.

Answer 7

Go to the website below.They are a great source of information and they have links to find you the best credit card at the lowest possible rates. This is a great place to understand and learn how to clean up your credit score like I did. My score went from 480 to 709 in one year with help from this site and new credit!



I started challenging my credit reports and got a credit monitoring service. Then I went at my credit reports with both shotgun barrels! I'm so very glad I did too!



This site is currently being updated and new information is being added so get the RSS feed and that way you can stay on top of the latest releases of info!

Answer 8

My understanding that being pre-approved still has to be processed, so the secured card would be a sure-thing & help you. Go for the secured card & slowly build up your credit.

Answer 9

If you haven't declared a BK, and only have bills with payments due, I would just go with the flow. Getting your payment score higher involves only getting your bills paid on time.



To avoid disaster, shred all cards, with the exception of one for gas, (If you own a car and it should have a decent rebate) and maybe the same one for grocery bills. If you drive, you always will need to get gas, and if you eat, you will always need to shop at the grocery store.



Then to follow up on this, keep that card at home unless you do need to gas up or go to the store. Then you will avoid impulse buying, such as if you need to take it out of your wallet, like Washingtons, Lincolns, Ben Franklins, etc. and it is starting to hurt, then you won't be tempted to charge it.



This is the best way to get your credit score up. The only reason to increase your credit score is for a mortgage, or have enough credit to go on a cruise.



I do recognize that there are times when you do really need a credit card with a high credit line, but when do we really need a credit card with a $10,000 credit line?



If you plan to max it out, then ignore all that I have said, but do go to Dave Ramsey's site.

Answer 10

six or one -- half dozen of the other!!!