January 2015

Buying Tradelines or Secured Credit Card

So, why would someone buy tradelines rather than secured credit card? Credit scores determine – based on what’s in your report – the likelihood you will repay a loan. So, for example, when you get a loan and pay it back, you’re getting “credit” for doing so. And, new lenders will see that and say “He did it before, maybe he’ll pay back my loan, too.” Then, over the years, your credit report gets really complicated and scoring models, like FICO, spit out a numerical representation of your credit risk, based on the things in your report.

The thing that has the largest impact on your credit score? Revolving credit cards, the authorized user slots we sell you.
Things that have the least (if any) impact on your credit score? Secured credit cards.

Why?

You’re showing zero (literally zero… it’s secured by your own money with zero risks of default) risk. No risk, no evaluation of credit risk. No evaluation of credit risk, no “credit” toward your repayment behavior. No “credit” toward your repayment behavior, no increase in credit score.

Here’s another reason: Unless you have $10,000.00 in cash laying around, you’re likely going to get a small secured credit card; you will be told by your back to open a $300.00 account “just to have something.” This is shooting yourself in the foot… you will have placed yourself in “adolescent” scorecards and likely making your credit score worse than before you had it.

In my opinion, the only circumstances you should have a secured credit card is if you’re very young and/or have no credit at all, because – in most circumstances – you will need at least one primary account to obtain funding (regardless of how high your score goes after adding authorized users).

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