Building credit: secured or conventional credit card?
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What’s best for building credit? I have one conventional low-limit credit card (Capital 1, $750 limit), and my credit score has stagnated at 664.
I’m considering applying for another credit card. Would it be better to put 3K-5K into a secured credit card, or should I apply for another low-limit “conventional” card?
With that information, it’s really hard to answer. How long have you had this Capital 1 CC? Do you have other installment loans such as a car loan, student loan or a mortgage? Are the any negatives on your credit report? Etc.
Tnx. I’ve had the Capital 1 for 2 years, and I do have a car loan for about the same time. I do have one late payment (60 days) from a year ago. I don’t carry balances on the card.
Before everything – ask for a CLI
You’ve had the Capital 1 for 2 years with no CLI? Before applying for a new credit card ask for a CLI. Most likely you’ll get one. You can start with customer service, but if you don’t get what you want bypass them and and email the EO directly. Ask for $3k and pc to the quicksilver as a starting point, and they will come back to you with a counter offer.
As to the late payment, it is dragging your credit score down. The good news is that a year from now its negative effect will diminish significantly so you should be able to see your credit goes up, along with the new higher CLI.
As to your question, secured vs conventional credit card, it won’t make too much difference. 3K-5K tied up in a secured card is a lot of money that isn’t working for you, and there are better ways to diversify your credit. For example, you can try a near by credit Union, or maybe a Walmart credit card (and get a free credit score from TU along with it).
Secured credit card should only be applied to as a first CC, if that’s the only card you can get. Certainly not a second or third CC.
Just an update, I heard again from Cap One, and they have indeed increased my CL. While it’s not the amount I requested, it is double what my previoius CL was. Together with the quicksilver upgrade, I’m pretty happy with the result.
I’ll wait a month or two to let the CL report on my credit, and pursue another card. Any tips on which might offer the best initial and future limits?
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