I have had a secured credit card with my credit union, Self-Help FCU for 6 years. Every so often, I add more to the deposit, and it is now at $1750. I recently asked them if I could take the deposit off of the card, and they declined, saying that although my student loans are in deferment, they are required to calculate an estimated monthly payment based on the current balances.

These balances are fairly high, however, I was planning to take advantage of the Public Service Loan Forgiveness Program (PSLF) along with Income-Based Repayment once I graduate. It seems, though, that they aren't taking into account Income-Based Repayment or PSLF when calculating how much they think I'll owe once I'm out of school.

I guess I'm wondering; they didn't tell me what the formula is for computing this estimated monthly payment or for deciding how much income I would need in order to pay my student loans. I get the sense that this is a standard calculation performed by lenders, and so I am curious how to find out what my income would need to be in order to re-apply.

Second, I'm wondering if anyone has had luck getting credit unions or banks to consider your actual payments while in-school instead of these imaginary payments they think you need to be paying. I get the sense that this is the reason that other lenders are denying me as well, but I'm not really sure where to go from here.

Finally, given that I have 5 other cards, maybe I should just close this one and get my deposit back? But on the other hand, that would mean a closure of a 6 year account and a drop in total credit by $1750, which seems terrible. It just seems unfair that I won't ever get that deposit back despite having paid on time for so many years and demonstrating I can handle that level of credit, but I guess there's nothing "fair" about the credit game...

1 Answer 1


If it were me, I'd close the account and get the deposit back.

Take that $1750 and bank it up.

Your credit score is only useful when you need credit - that $1750, if saved, is one step closer to preventing you from needing to borrow money the next time, which would make your credit score a bit less relevant. Especially with those loans and 5 other cards - one account closing now might lower your average age of accounts, but it shouldn't make a significant difference to your score or report

Also - if you're relatively young and have a thin credit file, and are looking for a new unsecured line to open, try capital one s journey or other "student" cards. They have relatively low criteria for entry and will be unsecured, with automatic credit line increases (that's what I started with)

If you already have 5 open cards, I wouldn't worry too much about closing one. Keep your balances in check, NEVER MISS A PAYMENT, and you'll be perfectly fine.

That debt to income calculation they're doing sounds weird, I would imagine you'd be able to overcome that with other card issues but I'm not sure.

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