household bank

Household Bank is an offshoot of HSBC, a UK-based global financial institution that also owns Orchard Bank. These two institutions (Orchard and Household) are known for lending to those with less-than-stellar credit who don’t normally get approved for loans. We’re actually big fans of both Orchard and Household Bank credit cards, since unlike many other credit cards for bad credit, they don’t try to screw you. Here’s a few examples:

  • As far as we know, Household is the only lender to give 2% rewards on a) a credit card for bad credit and b) a secured credit card. Basically, the only other unsecured credit cards that give such good rates are the good-credit-and-above CapOne Venture, Discover Escape and Fidelity AmEx. The only secured credit cards that give rewards at all are for immigrants and military members.
  • The annual fees on the secured credit cards are waived in the first year, giving you a chance to “graduate” from secured cards before you need to pay a fee.
  • They have a pre-approval process. This takes a little explaining. See, one aspect of your credit score is how many recent inquiries there are into your history. But Fair Isaac, the company that issues your score, differentiates between inquiries initiated by you (when you apply for a credit card) or by the issuer (when they check your credit score without your knowledge so that they can mail you those annoying “You’re pre-approved for the XXX credit card!” letters). The first counts against you, but the second doesn’t. What Orchard and Household Bank do is that when you “apply,” you basically ask them to pre-approve you for the card. That way, Household’s inquiry into your history won’t lower your credit score.
  • Household and Orchard will lend a secured credit card to anyone who can make the $200 upfront deposit. They don’t care about your FICO score or whether you’ve just declared bankruptcy. Other lenders will disqualify you until you’re a year out of bankruptcy, or if you have too low of a score, even though a secured card is essentially risk-free from their perspective.