One secured card or two?
June 18, 2011 11:46 AM   Subscribe

Given about $1,500 to use on rebuilding my credit, should I get one or two secured credit cards?

An aborted bankruptcy left my credit score in tatters, though I have been paying on student loans and two car loans for the roughly two years since the bankruptcy was dismissed. One car loan was paid off in the last month, so it doesn't yet show as paid-in-full.

I have $1,500 that has been earmarked for acquiring a secured card or two to help rebuild my credit. Please be assured that the funds aren't better served doing something else; all bills are current, I have money in savings, contribute to my 401k, car repairs are planned for, etc. A local credit union has a no-annual-fee secured MasterCard with an 8.9% interest rate (not that I plan on paying interest, of course). I considered putting the entire $1,500 into that since it would give me the most flexibility in credit line if I actually did need to put something large on it, such as a plane ticket. For day-to-day use, however, I plan on having small bills (Internet service, satellite radio, and the like) auto-charged and then paid with the funds that would have been used to pay them directly.

However, I've been wondering: should I get one secured card or two? If two, would it be worth it to have a $1,250 credit limit on one and a relatively low $250 limit on another, or should I balance it between the two?

I've been browsing CreditBoards but haven't posted the question over there for a personal reason.

Anonymous because of actual-money financial info. If you'd like to converse offline, e-mail
posted by anonymous to Work & Money (4 answers total) 2 users marked this as a favorite
When I applied for a secured credit card from my credit union, there was a $1000 minimum, so I couldn't have done the split you're suggesting. I don't think having two secured cards for the same total limit and the same length of time will do more for your credit history than a single larger card would.

Also, WATCH OUT for fees (application fee, annual fee, payment by phone fee, etc.).
posted by shiny blue object at 11:53 AM on June 18, 2011

If I recall correctly, the "X number of accounts" thing helps you and "has $X of credit available" doesn't consider how many accounts the credit is spread across. So as long as you can avoid fees, two cards is better than one.
posted by SMPA at 12:04 PM on June 18, 2011

It seems to me the best thing you can do is to secure the credit *yourself*. Get ANY credit card you can, particularly from your credit union, and pay it off in full - every month. If you are doing that, the interest rate doesn't matter.

There are a number of things that matter to your credit rating and score:

- are you current, every month?
- how much credit are you exposed to, relative to income?
- how old is your oldest credit line?

The problem with the secured card is that you will eventually want to close it to free the money securing it. When that happens, the credit history for that card will disappear, see rule #3, reducing your credit score.
posted by scolbath at 5:55 PM on June 18, 2011

I'm not sure secured cards really help. If you get one, get it from a credit union.
posted by theora55 at 9:32 AM on June 19, 2011

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