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 since then I haven’t even been able to get approved for an Old Navy store card. Now that I’m married with kids, have a degree and a job, I have come to the realization that I have no chance of getting approved for a mortgage loan. To make things worse, being self-employed makes qualifying for a home loan much harder.
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 (not paying or paying late, going over my limit, etc.). I decided to keep an online diary of my progress, so I could help other others in the same situation as well as getting some input from those who have more experience with credit. So, if you are reading this and would like to post a comment, please do so below.
I am not a credit expert, nor I am interested in selling you anything. I do not work for any of the banks mentioned 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 scores. I’m also trying to clean up my credit report as much as possible by trying to remove unpaid collections (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:
I ended up applying for the Capital One Secured Master Card and I will tell you why. Let me start by saying that I was not shopping for the best credit card in the traditional sense, but I was looking for the best credit card that could hopefully get me out of trouble. The different APR’s offered by these banks differ substantially, but they are all the same to me. I’m not really interested in buying stuff with this card, I am interested in using the card for small purchases so I can pay my balance in full each month. I have done a lot of research and this is apparently what you have to do at the beginning to establish a good credit history. Later on when I my credit improves, I can shop for regular credit cards and can consider APR’s, perks, etc.
Any of these three cards should work well if used properly. The Wells Fargo secured card was the first one to be erased from the list. This card requires you to have a checking account with Wells Fargo or Wachovia, and I’m not interested in another checking account. If you do have an account with them, it looks like a good card so definitely check it out. The Orchard Bank secured card looks good as well. The $35 annual fee is waived the first year and there is only 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 to get things moving faster. So I decided to go with Capital One, which even though has a $29 annual fee that is not waived, you can qualify for a $200 limit with only a $49 refundable deposit.
This is what Capital One’s 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 get approved and asked to pay more than $49, so I was happy with the deal. I then proceeded to make the 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). Another positive thing about this secured 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 to CreditInform, which supposedly lets you track your credit score. We’ll see about that, I’m sure there’s a catch, but I’ll report on this later.
So the Capital One Secured Card offers:
– 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 a number of years. She said has never had any issues with them and that she always pays on time. So it makes me think that I should be ok if I manage my card responsibly.
To check out the progress (or lack thereof) I’ve had with the Capital One Secured Credit Card, please read: Capital One Secured Credit Card Review – Credit Diary Part II.