Tilted Forum Project Discussion Community - View Single Post - Secured Credit Card vs. Home Equity Line of Credit

Stompy · 08-12-2004, 09:40 AM

There's a lot of "how to build good credit" types of threads around here, so I wasn't sure whether or not to make this an entirely new thread or to just post it in one of those... but anyway.

I have a lack of credit history, or rather, a very short credit history. As I mentioned in another thread, I do own a house and have a small loan ($2k) out from when I re-did my bathroom. Both of which I'm paying on time AND making additional payments toward principal ($120 a month for house, $200 a month toward the bathroom loan). I figured I had good credit until recently when I was turned down for requesting relatively small lines of credit ($1500 max).

It seems, at this point, that my only option is a secured line of credit. A friend of mine mentioned to me that since I have owned my house for 2 years now, I should be able to get a home equity line of credit, which is, as he explained it, pretty much the exact same thing as a secured card with a higher limit and better interest rates. Is this true?

Also, I'd like to understand the pros/cons of doing so.

From reading the past threads, I've gathered that a good way to build credit is to run up 60% of your card's limit and pay it off in full each month (or if you don't pay it off, just make sure you don't exceed 60%). A lot of home equity lines of credit have a $10k minimum... would that same logic apply in this case? To maximize building my credit, I'd have to pretty much find $6,000 of stuff to buy, or is the 60% simply a guideline of what not to exceed?

At this point, is it really just preference, or is there one I should favor over the other for any reasons in particular?

08-12-2004, 09:40 AM	#1 (permalink)
Stompy Banned from being Banned Location: Donkey	Secured Credit Card vs. Home Equity Line of Credit There's a lot of "how to build good credit" types of threads around here, so I wasn't sure whether or not to make this an entirely new thread or to just post it in one of those... but anyway. I have a lack of credit history, or rather, a very short credit history. As I mentioned in another thread, I do own a house and have a small loan ($2k) out from when I re-did my bathroom. Both of which I'm paying on time AND making additional payments toward principal ($120 a month for house, $200 a month toward the bathroom loan). I figured I had good credit until recently when I was turned down for requesting relatively small lines of credit ($1500 max). It seems, at this point, that my only option is a secured line of credit. A friend of mine mentioned to me that since I have owned my house for 2 years now, I should be able to get a home equity line of credit, which is, as he explained it, pretty much the exact same thing as a secured card with a higher limit and better interest rates. Is this true? Also, I'd like to understand the pros/cons of doing so. From reading the past threads, I've gathered that a good way to build credit is to run up 60% of your card's limit and pay it off in full each month (or if you don't pay it off, just make sure you don't exceed 60%). A lot of home equity lines of credit have a $10k minimum... would that same logic apply in this case? To maximize building my credit, I'd have to pretty much find $6,000 of stuff to buy, or is the 60% simply a guideline of what not to exceed? At this point, is it really just preference, or is there one I should favor over the other for any reasons in particular? __________________ I love lamp.