Two secured loans or one and one secured credit card?

[steeleb]

This is my first post. I've been lurking a while, but couldn't find the answer to this question on credit repair.

I'm in the process of removing the negative stuff off my credit reports and in the mean time I have already set up one secure loan at a credit union that reports. I'm now trying to figure out if it would be better for my second option to (A) get a second secured loan at a different credit union or (B) get a secured Credit Card. I think it would cost less and be less trouble to just get a second secured loan another credit union but don't know if it’s going to be more beneficial to do the secured credit card. Anyone have a educated opinion?? Thanks

[Lian]

It depends upon your current credit profile. Primarily on how many open lines of revolving credit (CCs, LOCs) you now have.

FICO is weighted heavily towards scoring revolving credit, as they consider your use of discretionary credit as a strong indicator of your payment risk.

If you only have one or two current CCs, then opening a third will give you a thicker file of revolving accounts. However, if you already have three or more CCs, then a fourth wont have much impact.

One installment line of credit is usually sufficient to demonstrate, in FICO scoring, a mix of credit, and adding a second installment loan wont do much to improve your credit mix. As for cost, unless your new CC has an annual fee, it would probably be less money out of pocket to go the CC route. From the day you open a new installment loan, you begin paying interest. You will only pay monthly interest on a CC if you carry a balance.

All considered, I would probably not open either unless you need additional revolving credit.