Secured or Unsecured? Which is best choice to build credit?

Submitted by SeanChuck on Fri, 02/27/2009 - 00:26

Hello again,

Well, I am about to get my first credit card and I could use some advise...

I think I am going to go with Orchard Bank for my first card. IDK if anyone knows this bank, but I found a few recommendations for it, geared toward credit repair.

So, my question is this: Should I go with Secured or Unsecured?

I found one reference that suggested Secured, because the $200 one would put down as the available credit limit, is equivalent to the fees and charges one would have with an Unsecured card! Plus if one would close a Secured card, they would get the original credit deposit back.

Also, (with this bank in particular) the APR is 7.9% on their Secured card, and 8.9-15.9% on the Unsecured ones. also the Secured card has much lower fees than the Unsecured cards.

So which is better?
Does one build credit better than the other?
Does one's credit limit increase better than the other's?
Is it better to deposit more than $200 as the credit limit on a Secured card?
Is there something I didn't think of?

Well as always, any advise would be greatly appreciated!

Sean C.

Either one is going to help you build your credit, I always thought that the credit card company decided which card the card holder was issued, not the card holder but I could be wrong on this.

Establishing an account and maintaining a good strong payment history is a good way to raise your credit score. Good luck, hope you can find enough information here to make an informed decision.

Fri, 02/27/2009 - 03:33 Permalink

Both secured and unsecured credit cards will help you to build up a good credit. However, you have to go for secured credit cards because you do not have a credit history. Since secured credit cards are backed by your own money and you get credit limit equivalent to the amount deposited with the credit card company, the risk level is low and so the interest and other charges are also low on such cards. Now in order to make the secured credit card an instrument to build up your score, you should make regular monthly payments with these cards and repay it off within the due date. This will help you to develop a good credit history on the card and build up an impressive credit score.

Fri, 02/27/2009 - 05:23 Permalink

I also believe I've read that to increase their score quickly one should maintain a balance of 20-30% of their available credit amount.
Is this true?

Sat, 02/28/2009 - 06:25 Permalink

Yes, since the "amounts owed" factor contributes about 30% in your credit score, you should try and spend less than 35% of your credit limit on the card. In addition to this you should also try and pay off the existing credit card debts and other debts on time to build up a good credit history which will help you to increase your credit score.

Mon, 03/02/2009 - 09:52 Permalink
crorkz (not verified)

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Tue, 08/05/2014 - 21:43 Permalink
crorkz (not verified)

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Tue, 08/05/2014 - 23:07 Permalink