Secured Credit Foundation

I found your site about 3 weeks ago and I’m almost addicted to it; I review it every night for about an hour. Your site has information about practical, every day situations and I thank you for making this important information free for some many people that need it.

I have two questions, the first is, if I have a secured credit card with a 18 “pays as agreed” history and I want to convert it to an unsecured card, and the only way, according to the lender is to close the secured account and open an unsecured account, what would you recommend? My thought is to lower the $2,000 security deposit (credit limit)to $500 so I can get back $1,500 and keep the account open, instead of closing it and cancelling this credit history and just apply for the unsecured one. Any suggestions?

My second question is, if a car loan was not reaffirmed after bankruptcy and I want to turn tha car in, and it is upside down about $4,000, can the lender damage my credit report for the $4,000?

Robert

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Hello Robert,

Answering your questions in reverse order, the automobile’s credit reporting tradeline is required to be frozen as of the date of the bankruptcy case number was assigned.  You shouldn’t have any late pays recorded after that date. 

From a credit reporting standpoint, you’ll want to keep the secured credit card open with the full $2,000 credit limit.  If the credit limit is reduced to $500 it will appear as if the lender evaluated your condition and lowered your ability to borrow.  You’ll get dinged for amounts owed.  My suggestion would be to open an additional unsecured tradeline first and then after six months, open another unsecured tradeline.  After the second unsecured tradeline is open, close the secured account completely.

Thanks for the questions and hope this helps.

Paul