Brent’s Credit and Debt blog

Often, when you are starting out to build or rebuild credit, you will have a very difficult time getting a credit card. The creditors look at you and see that you are too large a risk to work with. When that happens, you can either keep trying different creditors, or you can try to get a secured credit card or secured loan through your credit union or bank.

There are really two types of credit available. ‘Secured’ credit means that the lender holds something of value so that if you default, they can get their money back. ‘Unsecured’ means that the lender is taking a bigger chance, and will have nothing they can take from you if you default. Because they have less recourse, a lender will typically charge a higher interest rate for an unsecured loan than for a secured loan. This is why a car loan often has a lower interest rate than a credit card; if you stop paying for the car, they take it back.

Getting a secured loan still requires a credit check. When I got mine, Wells Fargo would give me a secured loan, but not a secured credit card. They apparently considered one line of credit enough, and wanted me to prove myself after my bankruptcy. I got a $500.00 secured loan. Here is how that worked:

I game them $500.00 in cash to open a new savings account.

They gave me a secured loan for $500.00, which meant they game me a $500.00 check.

For the next 12 months, about $48.00 per month came out of my checking account to pay off the loan.

At the end of the loan, I got my $500.00 back.

You can see how the process works. Wells Fargo protected themselves by keeping $500.00 of my money, while they gave me a $500.00 loan. It cost them nothing, and in fact they made interest over the next year on my money!

What I ended up with was 12 entries on my credit report that showed on time payments, at all three credit bureaus. My scores went up a LOT (along with other work I was doing), and I ended up coming out ahead of the game.

I ended up with a line of credit for $500.00. What I should have done was go back when it was over to get a $1,000.00 loan, and then a $2,000.00 loan. I should have kept adding money to the loan to get a much higher line of credit open, and I should have kept making payments for as long as the loan was open.

If you are looking for a secured loan or credit card, I would suggest using your bank or credit union as a first stop. If you have a balance in your account, they are likely to work with you. After that, try Orchard bank or Capital One for a secured credit card.

To learn more about how to fix your credit and keep it clean, get my e-book ‘Credit Cleanup’ by clicking the link. ‘Credit Cleanup’ will walk you through how to repair your credit, and tell you how to keep your credit clean.

To get a copy of my FREE e-Book ‘The Top Ten Ways You Can Wreck Your Credit’, just click the link. You will be taken to a page where you can get more information about downloading the e-book. This book tells you what you should avoid doing concerning your credit, and what negative impacts can occur if you treat your credit wrong.

After my bankruptcy was filed, I made a huge mistake. I didn’t apply for any credit. In fact, I waited two long years before even attempting to get a credit card. My credit scores didn’t go up much, and I was in pretty bad shape from a personal credit standpoint. Then, I discovered the sub-prime credit market.

One of the little secrets about credit is you have to use credit in order to build your scores. If, after a bankruptcy, you don’t have any credit, your scores will stay very flat. In order to fix this, you have to get credit, and use it responsibly. Each month that you make an online payment, you will get a small boost in your scores. This small boost, over time, will give you a much better credit score. You will also have access to more credit as your scores build. You HAVE to make sure your report stays clean!

The first thing you can do is try to apply with a couple of different creditors. Orchard Bank, Household Bank, and Target will all give a person a chance on rebuilding their credit. However, they may want your bankruptcy to be discharged before they will talk to you. Orchard bank usually gives a starting credit limit of $300.00 to $500.00, and Household bank is at about the same level. Target starts most people with a $200.00 limit.

You can apply for all of these cards online. They are real credit cards, unsecured, and they all report to all three of your credit reports monthly.

If they turn you down, try for a secured card. In my next blog entry, I will give you more information about that.

Here are links for the banks I mentioned:

Orchard Bank: http://www.orchardbank.com

Household Bank: http://www.householdbank.com

Target Redcard: http://www.target.com

The important thing is to make sure you can handle the credit! If you get cards and use them irresponsibly, you will ruin your credit. Make your payments on time, and don’t go over your limits!

To learn more about how to fix your credit and keep it clean, get my e-book ‘Credit Cleanup’ by clicking the link. ‘Credit Cleanup’ will walk you through how to repair your credit, and tell you how to keep your credit clean.

To get a copy of my FREE e-Book ‘The Top Ten Ways You Can Wreck Your Credit’, just click the link. You will be taken to a page where you can get more information about downloading the e-book. This book tells you what you should avoid doing concerning your credit, and what negative impacts can occur if you treat your credit wrong.

I’m so excited, I can’t hardly stand it! My book, Credit Cleanup, is available for sale!

This e-Book will show you how to read a credit report,  how to find errors and items harming your credit scores, and how to fix those items that can be fixed efficiently and effectively.  You don’t have to pay someone else to do this work!  Credit Cleanup will teach you how to manage your credit report and keep it clean, and it will do this for hundreds or thousands less than you would pay a credit repair company, and with better results!

If you want more information, you can get it here:

http://www.mycreded.com/products.html

Make sure you download the free chapter so you can see what the book looks like.

Brent

Let me know if you have questions!

Brent

I just posted a video on YouTube for your viewing… um, pleasure. Right, pleasure.

This is a foundation video and gives you a bit of information that you might like. Please let me know what you think!

Here is the link:

http://www.youtube.com/watch?v=do3AIEAu94k