How Secured Credit Works

This section contains workflows that illustrate the processes for creating and managing secured credit products.

Secured credit account structure

This flowchart is an example of how you might structure a product with a secured credit account. Your Galileo representative can help you build a process that works in your own system. Steps are described below.

  1. A new customer requests a secured credit account.
  2. You send the Create Account endpoint to create the DDADDA - Demand deposit account. The banking-industry term for an account from which funds can be withdrawn at any time, such as a checking account..
  3. You send the Add Account endpoint to create the charge card account and link it to the DDA.
  4. You send the Add Account endpoint a second time to create the secured credit account and link it to the DDA.
  5. Galileo sends you the CAPP: app_completed event for the DDA .
  6. The account holder deposits funds into the secured credit account. This establishes the account credit line.
  7. Galileo sends the charge card to be embossed.
  8. The customer receives the charge card and requests to activate it.
  9. You send the Activate Card endpoint to activate the charge card.
  10. For a credit card with variance granted, you follow the appropriate PIN-set procedure (see the PIN Set Procedures guide).

Secured credit authorization and settlement

With a secured credit product, a card transaction is settled against the secured credit account, as shown in this flowchart. Steps are described below.

  1. An account holder makes a purchase over card network rails and the card network sends an authorization request.
  2. You or Galileo approve the authorization request based on the available balance in the account holder's secured account, which matches the credit line.
  3. If the authorization request is approved, Galileo places a hold for the authorized amount, which reduces the account holder’s available balance on the secured account. Galileo sends the BAUT: auth event with the available balance in the open_to_buy field.
  4. The card network sends the settlement batch file.
  5. Galileo directs the issuing bank to pay the card network.
  6. Galileo backs out the authorization hold and sends you the SETL: setl event.
  7. The monthly invoice is sent to the account holder and the issuing bank receives repayment.
  8. If the account holder cannot pay down the credit line from the DDA, funds are recovered from the secured credit account. See the Secured credit default and delinquency workflow.

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Note

See About Card Transactions for more information on authorization and settlement over card network rails.

Secured credit account funds flow

This flowchart illustrates funds flow between the DDADDA - Demand deposit account. The banking-industry term for an account from which funds can be withdrawn at any time, such as a checking account. and secured credit account. Steps are described below.

  1. The account holder requests to move funds between the DDA and the secured credit account.
  2. You send the Create Account Transfer request.
  3. Funds are transferred and the secured account balance increases or decreases.
  4. You send Set Credit Limit to update the credit line based on the funds in the secured account.

Secured credit default and delinquency

This flowchart illustrates the process that occurs when an account with a secured credit line goes into default or is delinquent. Steps are described below.

  1. An account with a secured credit line goes into default or repayment is delinquent.
  2. You calculate the default or delinquency and send Set Account Feature twice, to report the amount and date to Galileo.
  3. Galileo prepares a report to be sent to the credit bureaus. You can review and add details to the report before it is sent.
  4. You send Set Credit Limit to update the credit limit.
  5. You send Modify Account or Card Status to update the account status.
  6. The collateral funds in the secured credit account are used to repay the credit line.

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