Capital One Secured Credit Card Review – Credit Diary Part II

January 25, 2011 By 186 Comments

The following timeline will give you an idea of the progress (or lack thereof) I’ve had with the Capital One Secured Credit Card. It will be updated often, so make sure to check back regularly (last update: April 2013). If you want to know why I chose this card, please read: “Repairing my Credit with a Secured Credit Card – Credit Diary Part I“. I decided to write this article and keep an online diary to have a record of my progress and get feedback from others that are using this card, or have used in the past (or are thinking about applying). If you would like to comment please do so below.

I am not a credit expert and I don’t work for Capital One. This is my personal experience dealing with Capital One and using their secured credit card to hopefully improve my credit.

Update: Due to the large number of comments and questions, I have created a forum section where we can discuss more about this card and other related topics. I will be happy to answer any questions you might have over there. You can access the forums here: www.newdirt.org/forums (you need to register in order to comment).

Credit Score:

  • Starting Credit Score: 568 (Experian)
  • Last Credit Score: 711 (Equifax FICO)

Strategy:

  • Always pay on time
  • Keep credit card balance below 30%
  • Take care of negative items on credit report
  • Increase my credit limit

2011 Timeline:

  • January 9: Applied online and got approved for the Capital One Secured Master Card. Sent my online deposit of $49 plus $150 to raise my credit line from $200 to $350 (please read the security deposit section below for more info).
  • January 14: Received a confirmation letter in the mail from Capital One that my application was approved and that I should receive my new card in 7-10 business days.
  • January 25: Received an email from Capital One with subject: “we’ve shipped your new card”. The email said: “Your new credit card was mailed yesterday, and you should receive it within 7 business days. Thanks for being a Capital One customer.”
  • January 27: Received credit card with a $351 credit line (I was initially approved for a $200 credit line with a $49 deposit, but added $150 to increase it). Enrolled in online banking after completing card activation ($29 annual fee showed as a transaction on my account). Made first purchase without trouble.
  • January 30: Called to enroll in CreditInform (owned by Capital One). Was told I should receive a package within 5 to 7 business days including my user and login information. It took less than 5 minutes and operator was friendly and efficient.
  • February 14-17: Received the CreditInform handbook containing my credit report and credit score, as well as my login information to register online. Credit score shown is 619, which is already an improvement over the 568 I had seen on my last report a few months ago (please read July 29 post for an eye opening update on this). Registered at www.mycreditinform.com (offered free of charge with Capital One’s secured credit card).
  • March 4: Paid first statement balance in full. Online payment took 2 days to get posted on my account and it was easy to set up (purchases seem to take a few days to appear online).
  • May 12: CreditInform update. My score dropped 10 points (from 619 to 609). Not great news, but I’m still positive that my next report will show an improvement. I think it’s too soon to see any major changes on it as I’ve only had the card for less than 4 months (please read July 29 post for an update on this).
  • July 11: My credit score on my monthly report at CreditInform went from 609 in june to 639 in july (please read next post for an update on this).
  • July 29 : Realized that credit scores provided by mycreditinform.com are what they call “FAKO” scores, which are not real credit score. Most creditors or lenders will look at a FICO score and not a FAKO. I’ve been comparing my Experian score, which is one of the “Big Three” major credit reporting agencies, with my CreditInform score for two months, and they differ substantially. While my credit score with CreditInform has been improving and it’s now a 639, my Experian credit score is 588, only 20 points more than my starting score almost six months ago (568). For this reason I’ll stick to posting scores provided by either Experian, Equifax or TransUnion.
  • August 18: First credit line increase! Received an email from Capital One saying:

    “Sometimes being a responsible customer pays off—like right now! We’ve increased your credit line by $100. This increase is unsecured and provided automatically, so you don’t need to send an additional deposit to cover it”

    Not a lot, but a confirmation that I’m heading in the right direction. My new credit line: $450.

  • September 5: Added a forum section to the site so people can post their reviews and timelines. You can access this section here. Everyone is welcome to join!
  • September 9: Checked my Experian credit report. My score hasn’t improved in months (still in the 580′s) and I’m starting to realize that a single secured credit card with a $450 credit limit will not be enough to get me out of this hole. I need to take care of all the negative items on my report if I want to see real improvement. Negative items include: 2 accounts in collections (unpaid medical bills), 1 “Paid Charge-Off” (case closed), 2 closed cards that were past due more than 60 days (1 credit, 1 store card). Currently in the process of taking care of the 2 collections. Will open a second secured card soon (considering Citi, Orchard Bank or Bank of America secured cards). I’m curious to see the impact of these on my report in a couple of months.
  • September 15-27: Made an additional $50 deposit to increase credit limit to $500. Deposit was posted on my account about 10-12 days later and I received a letter on the mail confirming my limit increase.
  • November 2: Credit score went from 579 to 636 after paying off the two collection accounts on my credit report (a 57 point jump!). I had been stuck on the same score for months, so I’ve been working to clean up my report and it’s paying off.
  • November 3: Opened a 2nd secured credit card with Bank of America with a 4k credit limit. I applied for this card at the bank not online. They offered me the BankAmericard Cash Rewards Secured Credit Card. I didn’t even know that a Secured Card with cash rewards existed. I’m hoping that the larger limit will help boost my score and get things going a little faster.
  • November 4: Not even 24 hours after opening the BOA secured card, it’s already showing on my report as “Current”. My score improved another 29 points for a total of 86 points in two days. My new Experian score is 665! I couldn’t be happier.

    • 2012 Timeline:

  • January 18: I’m getting close to the 1 year mark with this card and received my 12th statement a few days ago. I’m still waiting for a second line increase but who knows if it will happen. I haven’t been using the Capital One card as much since I opened a cash rewards secured credit card with a larger limit.
  • January 26: My Experian credit score increased by 11 points from 662 to 673 after a paid medical bill was removed from my report.
  • February 15: Called Capital One after a year of having this account in good standing. I wanted to see if I qualified for a better card, a limit increase or an upgrade. An “account specialist” encouraged me to apply for an unsecured card with them but told me they could not increase my limit, upgrade or graduate my secured account. My only option was to apply for a new card and close the other one or leave it open if I wanted. I decided not to apply as I do not see the point of having two credit cards with the same bank, nor I want to close an account that’s already a year old as this will affect my credit.

    • 2013 Timeline:

  • April 2: Emailed Capital One’s CEO and requested that my secured card be product changed to an unsecured card and my deposit refunded. About ten days later y received a letter stating this was not possible.
  • April 19: Called to close my Capital One Secured card after having it for more than two years. This took about 5 minutes. The representative was helpful and didn’t try to convince me to keep the card or apply for a new one (which I thought was a good thing). He said my deposit will be refunded within two billing cycles, though I’ve heard it takes less than that. I’ll update as soon as I receive my refund. When I log in to my account online, I can see a message right below my account name saying “This account is currently closed”.
  • April 26: Received my security deposit refund check today, just one week after closing my account. My account had a zero balance with no pending charges and I called one day before my statement cut, so I’m sure that helped.
  • Current Status: This account is now closed. I had this card for more than two years. I always paid on time and never went over my credit limit. My credit line was increased once by $100 at around the 8 month mark. I didn’t receive any more line increases after that. After one year I called and asked for my account to be unsecured but I was told I had to apply for a new account instead, as they do not graduate cards. After two years I emailed a CEO and received the same response. Ten months after opening this account, I opened a 2nd secured card with BoA. At fourteen months I was approved for a car loan and just before closing my Capital One, I was approved for a Chase Freedom card. After opening the BOA card, my CapOne card didn’t get much usage. My credit score improved more than 100 points since I started this whole process. Removing two delinquent accounts from my reports as well as paying my secured card on time and letting my other credit accounts age, was key for improving my credit.

Overall Review:

  • In one sentence: A great card to establish credit but once you have done this you will move on to better cards. Capital One is a good option for those looking to establish or rebuild credit. They will most likely approve you even when other banks will not (however a few people do complain about being declined for this card). It is a good starter card, but will not grow with you over time. This means that it will never graduate to an unsecured card and you will have to close your account to get your deposit back. Credit increases are few and not generous when and if they happen. Once you have established some history with Capital One, you can apply for an unsecured card with them or another bank. This is a great card to establish credit history, but once you are able to bring your scores up, you will most likely close it and apply for better cards. The Capital One Secured card would be even better if Capital One offered graduation and returned security deposits to people that prove to be responsible and serious about handling credit.

Security Deposit:

  • Initial Security Deposit: $200. I was initially approved for a $200 credit card with a security deposit of $49. I sent an extra $150 to get a $350 credit line. After 6 months with the card I was given a credit line increase of $100 for a total of $450. I later sent an extra $50 for a $500 CL. A few months before closing my card I brought my credit line up to $3k. This was helpful as other banks matched this credit line when I applied and was approved for other cards.
     
    If you are going to apply for this card and are thinking about making a big deposit, you need to be aware of Capital One’s refund policy. This is what the Customer Agreement document that I received states:

    “I may not withdraw funds or request a refund of my funds at any time, other than by paying all of my obligations to Capital One and closing my account”

    If you are in the market for a secured card that requires a small security deposit, then Capital One is a great option (you can’t beat $49, $99 or $200). If you are looking to put in a bigger deposit to get a higher credit line and would like to get your money back in a fixed number of months, then you should consider other secured cards, like the ones offered by Bank of America (refunds your deposit after 12 months) and Citi (refunds your deposit after 18 months).

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Repairing my Credit with a Secured Credit Card – Credit Diary Part I

January 19, 2011 By 13 Comments

Related Article: Capital One Secured Credit Card Review – Credit Diary Part II.

After 10 years of using credit irresponsibly, I have finally decided to do something about it. The two credit cards I had were closed about a year ago by the issuing banks, and I found myself in a position of not even being able to get an Old Navy credit card after that. Now that I’m married with kids, have graduated college and have a job, I have come to the realization that I’m in no position of getting a loan to buy a house. To make things worse, being self-employed makes qualifying for a loan even more difficult.

Ruining my credit was a combination of being a struggling college student, and not being well informed about the repercussions of mishandling a credit card (paying late, or not paying at all when I didn’t have the money). I decided to keep an online diary of my progress (or the lack of it), so it can be useful to other people in the same situation as well as getting some input from those who can give advice. So, if you are reading this and would like to post a comment, please do so. I am not a credit expert, nor I am interested in selling you anything, and I don’t work for any of the banks named here. I’m just a regular person with bad credit.

After doing some research, I decided to get a secured credit card to hopefully improve my credit score. I’m also trying to clean up my credit report as much as possible by taking care of the negative items on it (still a work-in-progress). To follow a timeline of my progress please read: “Credit Diary Part II“.

These were the three secured credit cards I considered:

1. Orchard Bank Secured MasterCard
2. Wells Fargo Secured Card
3. Capital One Secured MasterCard

I ended up applying for the Capital One Secured Master Card and I will tell you my reasons. Let me start by saying that I was not shopping for the best credit card in the traditional sense, but the best credit card that can get me out of the hole I am in as effectively as possible (hopefully!). Having said that, the different APR’s offered by these banks differ substantially, but are all the same to me. I’m really not interested in a low APR card as my plan is not to buy “things” with it, but to make small purchases and pay everything in full each month so I can improve my credit. Later on, when I have achieved this, I can shop for regular credit cards and will definitely consider the APR as a deciding factor.

The three cards mentioned should probably work well if used properly, but I had to choose one of them. The Wells Fargo card was the first to be erased from my list as it requires you to have a checking account with them or Wachovia, and I don’t nor I want another checking account, thank you (if you do have an account with them, it looks like a good card so check it out). The Orchard Bank card looks attractive, the $35 annual fee is waived the first year and there is a $200 Minimum Security Deposit, which seems reasonable (you do have to mail your application along with the deposit and I would have preferred doing everything online, ’cause it gets things moving faster). So I had to go with the Capital One Card, which though the $29 annual fee is not waived, you can qualify for a $200 limit with only a $49 refundable deposit. This is what their site says:

Credit Line: $200–$3,000. Minimum security deposit gets you a $200 line. Deposit more to increase your line.

I applied for the card online and got approved immediately:

You’re approved – almost done! Just make a $49 refundable deposit and your card will be on its way.

I understand that you can be approved and asked to pay more than $49, so I was happy with the deal. I then proceeded to make this minimum deposit plus $150 in order to get a $350 credit line (if $49 gets me a $200 credit line, adding $150 more will get me a $350 credit line, or so I think). Another positive thing about this credit card, they give you 80 days to make the deposit, and you can make the deposit in full or over time, as longs as you make it before the date given (they’ll give you a date range once you get approved). Also, they give you free enrollment in CreditInform, which supposedly lets you track your credit information (we’ll see about that, I’m sure there’s a catch, but I’ll report on this later). So, this was a no brainer for me.

- Automatic reporting to the 3 major credit bureaus
- Track your credit free enrollment in CreditInform
- Earn credit line increases. You may earn credit line increases based on your payment and credit history.

I have to say that I read lots of bad reviews about this card online and was a little nervous about the whole thing (most people complained about bad customer service and being charged extra fees?). I then spoke to a good friend who’s had a Capital One credit card for eleven years, and told me she has never had any issues with them. She always pays on time, so it makes me think that I should be ok if I manage my card in a responsible way, which I intend to do.

To check out the progress (or lack of it) I’ve had with the Capital One Secured Credit Card, please read: Capital One Secured Credit Card Review – Credit Diary Part II.

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