Denied A Secured Credit Card
by Jenna
What should you do if you’ve been denied a secured credit card? One of our readers, lterenzi, asked this question:
My wife and I completed our Chapter 13 plan! We are 8+ months out. Our scores have crept up slowly and I know with our new found financial knowledge we can feel confident about building an improved credit history.
We have several thousand saved up for emergencies and we have 500+ saved that I want to open some secured credit cards with to start rebuilding.
Our own bank (B of A) and Orchard turned us down for their secured card which blew my mind. I didn’t think you get get denied a secured card. I am not sure if I should head down to my branch and talk to them or look elsewhere…
Applied, New Millennium, Centennial?
If elsewhere – where? With this economy I am so scared of getting ripped off…
Also, is it worth it to take the hard pulls on our report and just apply, apply, apply?
Also should I get a secured card and my wife get one? Or will just one of applying and getting a spare card for the other do?
Thanks for your question, and congratulations on completing your chapter 13 plan!
Because you are taking steps to build up your savings, and your credit you should be able to rebuild everything in a very short period of time.
Unfortunately, Bank of America is a bit notorious for not dealing with people who have a previous bankruptcy – even with their secured credit cards. It’s near the very bottom of their fine print on credit applications.
Orchard bank on the other hand, usually there is no problem.
In your situation, I do have a couple of suggestions that my help.
It really surprises me that you were turned down for the secured cards. Either they are tightening up because of the current economic conditions, or your credit was very badly damaged before your bankruptcy.
Challenge The Negative Information On Your Credit Reports:
So, my first suggestion (if you haven’t already) is to challenge anything you reasonably can on your credit reports. You can challenge items on your credit report for pretty much any reason. If the company doesn’t verify the debt, then the account gets removed off of your credit report completely.
Do be careful not to challenge too many things at once since that can backfire and actually cause your credit reports to be frozen for a little while (until the challenges are resolved).
We have a complete guide for that here:
I would say, over the next few months just challenge a couple of things at a time until you get as many bad accounts off of your credit reports as you can. Your wife should do this as well. It takes some time, but it is well worth it.
If you have already completed that step, and you still can’t get a secured credit card, you can consider this credit building trick:
Use a CD as collateral for a personal loan.
We also have a guide that tells how to do that, so I’ll just briefly go into it.
You will need to open up a Certificate of Deposit (CD) at a new bank – not Bank of America. You may also have to open a checking account with the bank, a sales manager could answer that for you.
Then, you use the CD to secure a small personal loan. You stick the loan amount into savings, and set up an auto withdrawal for the payments.
Then the loan goes on record each month to the credit bureaus. It’s a “set it and forget it” credit repair trick. You end up out a little bit of money in interest, but it does raise your credit score.
Also, make sure that you tell the sales manager at the bank what you are intending to do. Go ahead and be frank about your bankruptcy, and clear everything before you buy the CD. There is no sense in having your money tied up in a bank that can’t help you because of your bankruptcy.
You can learn more about that in this guide:
Pre-Paid Credit Cards:
Another option might be pre-paid credit cards. Most pre-paid credit card programs will report to all three credit bureaus for around $10 a month. That gives you another positive account going on your credit reports each month.
You can learn more about pre-paid credit card programs here:
I would exhaust all three of these options before applying for a secured credit card again. It is not worth it to keep taking hard pulls against your credit at this point. There is something going on that is keeping you from getting these cards – either your score being too low, or the company is not willing to deal with a bankruptcy.
You can’t change the company’s policy, but you can try these methods of raising your credit score first.
Keep a close eye on your credit score as you try these tactics. Once you get near about 600 you shouldn’t have a problem getting a secured credit card. If your scores are that high already and you can’t get a secured credit card, then it’s the bankruptcy that’s the problem, and you can simply keep trying new cards at the rate of one application every couple of months. That will keep the damage from the inquiries to a minimum.
Also, the first unsecured credit card that I got after my bankruptcy was actually from Target. (Retail stores often have more lenient policies on lending). So that might be an option for one of your trade lines.
As far as you and your wife sharing credit accounts:
My honest advice is don’t share your accounts. Authorized user accounts keep getting shifted around by FICO, first they counted, then they didn’t, then they did, then they didn’t. So I wouldn’t count on doing things that way.
Having joint credit accounts while you are rebuilding credit can actually burn you too. If you charge too much on one card or make a late payment it hurts both people’s credit.
Every step that you take individually to raise your credit score, your wife should take as well. Even if you decide to share one joint account, try to make sure that you have at least two individual credit accounts that are not shared.
Now, obviously it will take time to establish these accounts, so don’t stress over it. Just mark the ideal dates on a calendar, and put in a new application at that time.
It’s entirely possible to raise your credit score back up and never have a secured credit card, so please don’t be discouraged. Just keep doing what you are doing, saving, and learning. You will come out on top faster than you think!
Good luck on everything. If you have any questions, please feel free to email, or come back and leave a comment.
Have a question for us? Leave a comment below!
Keep Reading and Grab our Free RSS Feed.
- Can Your Spouse Hurt Your Credit Score? The Good, The Bad, And The Ugly
- Do You Know Who Is Looking At Your Credit Score?
- Make A Statement (On Your Credit Report)
February 7th, 2009 at 17:20
Hey great info,
I think you hit the nail on the head. Its unusual to get turned down for even a secured card and I do think the current economic situation has a lot to do with it also. But some of your suggestions should help.
The one thing that your reader (who asked the question) should understand that unlike the infomercials, there are no quick fixes when credit is concerned. Your best weapons are commitment and consistency.
C. Wright, Financial Cancer Specialist
GoodCreditApproval.com
Blog.GoodCreditApproval.com
February 8th, 2009 at 02:36
Hey there…
Jenna – thanks for all the info.
ChrisW – I definitely understand nor am I looking for a quick fix. I was just expecting to get secured cards with no problem. Our scores are in the 590′s and low 600′s already so hopefully with some work we can keep raising them up.
February 10th, 2009 at 10:59
[...] CC Ask Mr. Credit Card’s Blog Denied a Secured Credit Card A couple tries to rebuild their credit after a Chapter 13 [...]
February 10th, 2009 at 15:30
Thanks for the info, I too was turned down for a secured card and I have been banking at this particular bank for years now. I don’t get it. I have a substantial savings account there, and they still would not deal with me. I am going to try and get a CD and try going to loan route.
April 11th, 2009 at 07:34
[...] Denied A Secured Credit Card [...]
September 4th, 2009 at 02:13
I have my doubts about BofA and the incompetence I dealt with on their part in the past. Needless to say, almost 15 years later I decided to give them a shot again with an online account. What a mistake! Besides having terrible results with the account I later applied for a Secured Credit Card and also got denied. I did file for BK about 9 years ago but my FICO is now 675 and I wanted to boost it up. I saw no information on their terms stating that a BK would result in denial. Boy do I really really really HATE BofA. I just noticed that Citibank has a CD funded Secured Credit card and I think I’ll give that a go. Their rates are also better. Go luck to all that have to deal with credit Bull, the same people that can’t manage themselves and then need government supervision to prevent them from stealing more from Joe Publlic. Where is the justice?
January 13th, 2010 at 18:06
I tried getting the CD secured card from Citibank (my bank for over 10 years) and I was denied becuase of past delinquent accounts on my report. Go figure.
February 5th, 2010 at 19:41
I just received a denial letter from Citbank for their secured credit card as well. I filed for bankruptcy about 6 years ago and that was the worst mistake of my life. I have gotten denied by my credit union and now Citibank, and now I wont even try BofA. I will try to follow with what Im read so far.
February 5th, 2010 at 19:58
try orchard bank mastercard
February 15th, 2010 at 10:09
Great Advised may I say! He hit right on the nail. I have bad credit all my life, I guess teenage years and no supervision. I just got my first credit card thru Premier Bank, google it, believe me they will send you a card even if you’re a 520. Im not affiliated with this people just a commenting on subject, but also like Ken stated; orchard Bank is a good one as well for seucured credit cards! it’s a little costly with premier but helps the purpose. I wonder if they will ever change the scoring system and scores, since almost 80% of the population has damage credit this days? Just a thought! Good Luck my friends….Luis Ft.Lauderdale Fl
June 2nd, 2010 at 12:39
Just got off the phone with BofA credit card services. Their current requirements for a post-bankruptcy secured card is that the bankruptcy needs to have been discharged for at least two years. According to the representative I spoke to, the economy is a driving factor in this policy.
June 24th, 2010 at 22:45
How do you know that $10 per month will allow a prepaid credit card account to be reported to the credit bureaus?
What is your source?
June 25th, 2010 at 21:57
Before filing for Ch 7 I had a FICO of 640, but with lots of small blemishes, and a high debt to income ratio. Since I received my discharge approx. 1-2 months ago, I have been able to open a checking/savings at B of A, then applied for a secured card the same week and it was approved instantly. I’m not sure what the method to their madness is but it worked for me and I’m grateful!
July 7th, 2010 at 00:56
I was just denied a secured credit card too. If i was denied a secured credit card, why would a secured loan be any different? At any rate i need to rebuild my credit. Can anyone suggest some banks i could try to get a secured loan through. Or any suggestions on a pre-paid card company that will report to the credit bureaus?
Also if anyone knows of any other ‘tricks’ to boost credit scores I’d love to hear them.
July 7th, 2010 at 16:00
To reply to Steve C; New Millennium is an excellent avenue. It boosts your credit score tremendously in less than ninety days (thirty to fifty points). The key is debt ratio. After putting your secured deposit down, you are automatically charged a fee of $89. Remember to set up your account on auto pay to avoid late fees and DO NOT charge over thirty percent of your credit line. It worked for me when I was trying to qualify for a lower interest rate when purchasing a home (March 2010). Good luck!!
August 1st, 2010 at 01:12
Thanks Belle, but it looks like New Millenium has stopped their credit card services as of May 2010.
Any other suggestions?
August 1st, 2010 at 09:06
I filed for Chapter 13 bankruptcy in January of 2009 and was discharged in August of 2009. Now after a year, I applied for both a Bank of Am and Capitol One secured credit card and was turned down by both. I was however gave an UNsecured credit from Orchard Bank. To be honest, I would much rather have the secured credit card than deal with HSBC and their less than desirable business practices. The Orchard Bank card only has a pathetic limit of $300 and from what I have read from other posts, the likelihood of them ever increasing the credit limit is practically nonexistant. There is so little you can do with $300, I don’t know that you can even rent an automobile which is a big concern for me since I travel a great deal and have to find other means of transportation. It is extremely disheartening to read how many people have suffered financial setbacks- often through no fault of their own. My bankruptcy was from a medical emergency/surgery that wasn’t covered. Yet so many individuals continue to pay dearly for an inability to obtain credit or for being lured into contracts with predatory loan institutions. I will continue to look for a means to improve credit while staying away from the loan sharks. Good luck to all. Continued suggestions are very welcome and appreciated.
August 16th, 2010 at 18:54
I don’t think it is that unusual to get turned down for a secured card. Wells Fargo is my own bank, I got turned down for their secured card – and I’ve never even had a bankruptcy!
No recent delinquencies either, just a few my ex spouse put on there about 5 years ago.
One other thing to note – don’t assume bad credit will fall off after 7 years. A new collection agency can buy the account and that starts the clock ticking all over again. Seen it happen to at least 4 people I know who had major credit problems due to their own or their wife’s serious medical conditions.
August 22nd, 2010 at 19:09
I recently went through a lawsuit with former business partner. I had to file business and personal bankruptcies. The only reason for BK was the legal judgement. Pre BK, my credit score was high 780′s. Immediately after BK, it dropped to 660 and one month post BK discharge, it is now 690 (sold our home and paid off mortgage).
I sent $5,000 to Citibank for secured credit card and was DENIED. Pre BK I had been with them for 15+ years in the premier rewards programs. They dropped me upon filing of the BK. They did return the funds but I’m more than frustrated. I’ve never been late on any payment, ever. Luckily, I was approved this month for a auto loan with $10,000 down and a 3.9% interest rate (pleased and surprised).
Any advice on securing a credit card (necessary for life) and continuing to rebuild credit. Financial responsibility is not the problem – the lawsuit was but creditors don’t seem to care.
Help, please.
August 26th, 2010 at 20:32
Have any of you applied for or heard of Applied Bank Platinum Zero?
Copied from their ad slick:
————————————————————-
Apply Now Platinum Zero® Secured Visa® Credit Card from Applied Bank® – By Applied Bank
* ZERO – 0% FIXED APR on Purchases – No Intro Rates!
* ZERO – 0% Rate Won’t Change – Even If You’re Late!
* ZERO Application Fees
* ZERO Worries – FREE Personal ID Theft Protection
* ZERO Delays – Timely CREDIT Bureau Reporting
————————————————————-
Anyone?
August 26th, 2010 at 21:47
problem is that they have a monthly maintenance fee of $9.95 ($119.40 annually)…there though there is technically no annual fee, there is a high fee you have to pay every year (which they call monthly maintenance fee)..
most secured credit cards do not have application fees anyway so that point is irrelevant anyway!
September 3rd, 2010 at 21:25
I got denied by B of A for a secured card and my own bank that I’ve had a check account with for 21 year — Citibank. I applied with Capital One and got a secured card with no problem. I also applied with First Premier and got a secured card with no problems. However, I’ve never had to file bankruptcy. Capital ONe would be your best. they only require a minimum of $200 as Premier. All you need is one secured card but I decided to get 2 to get my score up higher and faster. Hope this helps.