Written by: Mike Senecal
Edited by: Lillian Guevara-Castro
In a Nutshell: The credit system typically rewards the wealthiest consumers with the best rates. Secured credit cards require cardholders to make a security deposit, which the card issuer uses as collateral. They give users new to credit or rebuilding it after a setback a chance to flip the picture. OpenSky secured cards do even better. A division of Capital Bank, N.A., OpenSky works closely with another Capital Bank division, Capital Bank Home Loans, to offer cardholders a seamless path to homeownership. In a world where a home seems increasingly out of reach to many, OpenSky and Capital Bank are doing something about it.
In today’s market, the American Dream of homeownership is out of reach for many because of high interest rates, high home prices, and low inventory.
Unfortunately, dreaming of homeownership is nothing new for those with poor or no credit. Bad credit prevents millions from qualifying for a reasonably priced mortgage and the chance to build lasting financial security and generational wealth.
That’s just one of the problems having poor credit can cause, even though credit setbacks may be nobody’s fault.
Bad credit can make renting an apartment harder and increase insurance premiums. Car payments are higher for those with poor credit. Even little things like avoiding paying a utility deposit are out of reach.
One would think the financial industry works in reverse from how it ought to. Those with top-of-the-line credit receive discounts and perks, while those needing a nudge start from a disadvantage.
That’s what makes the OpenSky secured credit card program so attractive. More than 1.4 million OpenSky cardholders affirm OpenSky’s commitment to leveling the financial playing field for all who strive for a better life.
OpenSky is a division of Capital Bank, N.A. Secured credit cards typically require a savings deposit as collateral. On-time payments help build a stronger credit record at the three major U.S. credit reporting agencies (Equifax, Experian, and TransUnion).
Secured cards from OpenSky add a bonus because of an affinity partnership with Capital Bank Home Loans, another Capital Bank division.
The close relationship between OpenSky and Capital Bank Home Loans enables OpenSky to create a seamless path to homeownership for cardholders.
By working together, OpenSky and Capital Bank Home Loans offer struggling households a better chance to achieve the American Dream.
“What OpenSky is really good at is we’re here for everybody,” said Pamela Kohl, Head of Marketing for OpenSky. “If you have a valid Visa and reside in the U.S., have some income, and are who you say you are — and you haven’t committed bank fraud — we can help.”
With an 89% Approval Rate, Everybody Gets a Fair Shot
Although Capital Bank commercial banking offices are concentrated in DC, Maryland, and Virginia, its federal charter allows Capital Bank Home Loans and OpenSky to cater to a nationwide customer base.
Anyone with the credentials Kohl outlined above is a candidate for the promise of better credit, greater financial well-being, and the prospect of owning a home.
“We have an 89.35% approval ratio, which is very high,” Kohl said. “Moreover, we do not pull credit because we know there’s a lot of shame and stigma when you have a bad credit score, and it can be tough to apply.”
The “base model” in OpenSky’s card lineup is the OpenSky Secured Visa® Credit Card. In return for a refundable security deposit of only $200 and a $35 annual fee, cardholders receive an opportunity to build credit.
The OpenSky Plus Secured Visa® Credit Card increases the deposit to $300 but eliminates the annual fee. Both cards pay up to 10% cash back rewards for purchases at participating merchants.
OpenSky’s rewards program is simple. The bank automatically enrolls new cardholders in the program, and cash back rewards appear as a monthly statement credit. It’s a frictionless way to save with no red tape.
The recently released OpenSky Launch card lowers the security deposit to only $100 and converts the annual fee into monthly payments. With OpenSky Launch, the barrier to entry for credit-building consumers is lower than ever.
“We’re hoping our Launch card will establish us as an alternative to nonbank and sometimes predatory lenders to bring more consumers into the financial mainstream,” Kohl said.
The no-credit-check aspect of the OpenSky program is particularly advantageous. If OpenSky can confirm the applicant has a steady income, understands the applicant’s housing costs, and verifies their identity, they’re in.
“We aim to give everybody a fair shot,” Kohl said.
Step by Step Toward a Home Purchase
Not everyone who applies for an OpenSky secured card needs to build credit. Many are visitors authorized to live in the U.S. on H-1B visas.
They may have excellent credit back home, but it doesn’t mean much if the three major U.S. credit bureaus don’t know about it. However, most OpenSky cardholders are in credit-repair mode.
“Sometimes bad credit happens to good people,” Kohl said. “It could be bad medical debt. It could be a sudden emergency. Or it could be you just spent a lot and didn’t understand the repercussions.”
OpenSky offers successful users of its secured card program credit line increases and a chance to graduate to traditional unsecured credit. The connection to homeownership through Capital Bank Home Loans sets OpenSky apart from the competition.
“What we’re trying to do is meet the needs of the OpenSky customers,” Kohl said. “As we survey and learn about their goals, we find that a lot of people come to us because they’ve reached the point where they want to buy a house and realize they’re not in a position to do it.”
Homeownership is the most straightforward way for most Americans to build lasting generational wealth. Capital Bank Home Loans experts specialize in helping consumers forge a path to homeownership, working with them on down payment assistance, and helping them meet challenges along the way.
Users work with a team specialized in helping OpenSky customers on their Path to Homeownership and receive personalized service throughout the process.
Capital Bank Home Loans offers access to lower-cost FHA Home Loans for first-time homebuyers, VA Home Loans for service men and women, and USDA Home Loans for rural homebuyers. Competitive rates and a 21-day close help seal the deal for many.
“We’re pairing a very specific customer with dedicated professionals on the Capital Bank Home Loan side who know the business and understand some of the tips and tricks to help them move forward,” Kohl said.
Meeting People Where They Are on Their Credit Journey
The customer may be specific from a technical standpoint, but Kohl said there’s no typical credit card customer at OpenSky.
OpenSky welcomes parents interested in establishing a credit line for their adult children and others with little to show on their credit reports who do not have credit history with the bureaus.
Through interviews, it learns about and gets to know consumers wrecked by medical debt. Others are disabled and on fixed incomes. Two out of three OpenSky cardholders increase their credit score by an average of 41 points in just three months.
“One of our benefits is we meet people where they’re at in their credit journey,” Kohl said. “We try to be a lifeline rather than a last resort.”
Kohl said the key for anyone on a credit-building journey is understanding the fundamentals of what the credit bureaus want. Users should keep their credit utilization ratio under the recommended 30%, which is difficult with a card that may have a credit limit of $200 or $300 — or only $100 with the new Launch card.
“What we’re recommending with the Launch card is that you take a streaming service and just put that on there and forget about the card,” Kohl said. “It’s something that comes due every month in the same amount, and you can use our auto-pay feature and just let your credit build.”
Kohl said it’s fortunate that many U.S. states are incorporating financial education into public school curricula because many consumers need it.
Auto insurance can be double the price for those with bad credit. Many corporate apartment businesses won’t accept people with credit below a certain level. Hotels and car rentals are often out of the question because securing them on a debit card ties up money.
“We find that what we’re doing works,” Kohl said. “If you can start to build or repair your credit now, it sets you up to make your life easier in the future.”
