A client who needed to re-establish credit just received his new Orchard and Capital One cards with $300 limits.
[Added 9/2/11: Another client who filed for Ch. 7 bankruptcy 6 months ago was approved for a $500 Orchard card, Purchases APR 14.90%, annual fee $19. Capital One did NOT have anything for him and there’s no Cap One charge-off on his credit.]
Even people with HSBC and Capital One sold chargeoffs have been approved for the cards and you can get PREQUALIFIED without a hard inquiry, so there is no reason not to give it a try.
Since Capital One recently purchased the HSBC card portfolio, they may soon only approve ONE of the accounts. So if you want to re-establish credit, you may want to act now.
Make sure they PREQUALIFY you without lowering your score. Do NOT apply for a prime card unless you have good credit. A hard inquiry can lower your FICO score 10 – 15 points if your scores are below 680 or so. It’s best to opt in for pre-qualified offers and minimize hard inquiries.
WARNING: I could write books about the horrible Capital One and HSBC business practices, but considering the alternatives, these cards are ok for people with bad credit. No monthly fees, acceptance fees and other garbage as with First Premier and other subprime cards.
You have ANNUAL fees and the interest rates (below 20%) are very comparable with many prime cards. The main difference is that your limit is so low.
You should NOT be carrying a balance. Use it, pay it off in full every month and for maximum FICO scores, make sure one card has a $1 balance on the statement date and that all other revolving accounts have zero balances on their statement dates. It’s SO easy to manipulate FICO scores by paying just a little early.
The banks make their profits on FEES.
Late fees and over limit fees are a huge percentage of the subprime lenders’ profits.
Do NOT apply if you aren’t sure that you can make at least the minimum payments on time.
$200 debts quickly turn into $600 chargeoffs and a couple years later you owe $1,200 due to interest. And they can and likely will hound you with almost daily collection calls until the accounts are charged off.
SECURED CARDS: Orchard also offers a secured low interest card. But WHY pay low interest if you could pay NO interest because you can use the deposit to pay your balance in full?
If you need a higher limit for business, using a bank or PayPal debit card with the Visa / MC symbol often works just as well.
And be aware that secured accounts often can NOT be converted to unsecured accounts and you will LOWER your FICO scores if you have to open new unsecured accounts in a few years.
Please send me the link to any other cards suitable to re-establish credit.
Comments are closed.