Best way to obtain credit

[mrsjeffs 0]

I got a Bank of America secured card in Dec 07, Paid $99 and a limit of $500.00. I always paid on time and i always paid double or triple the amount to be paid ( Just my thing). In about 6 months they increased my limit to $1200.00, A few days ago i checked my credit and m y score was 700+.

[featherB 1]

Yikes, this is my first post on VJ in about a gadzillion years.

This is what I did, and it seems to have worked pretty well so far.

I opened a Macy's store card 2 days after I moved to the US (in April 2007) - it would never have occurred to me to apply for one, as I didn't even have an SSN at that point, but I was buying some kitchen stuff in the store and the sales assistant talked me into going for it. They approved me, albeit with a $100 credit limit to start with, but the marvellous thing about Macy's is that they'll keep increasing that limit every three months if you treat the card well. Mine now has a $3,000 limit.

As soon as I got my SSN, I opened a secured Visa card with US Bank (who I'd already set up a checking account with about 30 minutes before I got the Macy's card) - it had a $500 limit for which I had to put down a $500 deposit. I would honestly advise getting a secured card (from a prime lender) any day of the week above accepting some "preapproved" offer from some scammy subprime issuer that charges application fees, monthly maintenance fees, fees to make a payment, blah blah blah - trust me, you'll be getting plenty of offers like this as soon as your fledgling credit history starts to take shape. If you accept one of those "offers", the card will become a major thorn in your side as soon as your credit history starts to build - they won't grow with you and you'll want to be shot of them ASAP. On the other hand, if you get a secured card from a decent lender you've done your homework on, so long as you treat it well you'll be looking at an unsecured card you'll actually want to keep long-term after a year or so - and the good thing is that with most decent card issuers, you'll get to keep the account history rather than having your newly-unsecured card show up on your credit reports as a new account. This is good for your credit scores. My $500 secured US Bank Visa unsecured a year after I got it, and is now a cashback rewards Visa with a $2500 limit.

Um, where was I? Oh yeah - in September 2007 I got a preapproved offer in the mail from Capital One, and took them up on it. They have some pretty good cards for people just starting out (or those rebuilding their credit), and although those cards are notorious for the fact that they just won't "grow" with you (ie in a few years you'll have a ton of better credit cards with nice high limits, and Capital One will be stuck - this is because each card seems to have a "ceiling" when you get it, which it's really hard to budge beyond), they're a far cry from the issuers that'll charge you extortionate fees just for the privilege of having their crappy card, their APRs are usually quite reasonable, and they're pretty willing to offer cards to those with very limited credit history. Oh - and a big bonus with them is that they won't hit you with foreign transaction fees unlike just about every other card issuer out there - for us immigrant types that's a very nice little perk indeed!

Next! Um... a couple of months after I got the Capital One card, I was very surprised to get a preapproval in the mail from American Express for their Gold Delta SkyMiles card. I couldn't resist, and was instantly approved for my highest credit line by far at the time.

Checked my FICO scores a while after that, and was rather amazed to find that they were all over 700. Was even more amazed that with my credit history only a tiny bit over a year, we were able to buy a house last May!

I'd definitely recommend going with something like a Macy's card (easy to get, nice credit lines) and/or a secured card to begin with. That Bank of America 99/500 card (ie you pay a $99 deposit for a credit limit of $500 - you do of course get the deposit back when the card graduates to an unsecured one) that's been mentioned in a few posts above is a very very good one if you can get it - I'm pretty sure you can't apply for it directly, you have to be offered it after applying (and being declined) for a regular BofA card. They do have a regular secured card, too, which I think you CAN apply for via their site. If you start out with just a couple of cards like that, and treat them very very well, you'll start building up a great credit history (and scores) in no time.

Speaking of credit scores... something to watch (but not worry about too much unless they become really important because you're planning on applying for a mortgage or something - but also something to think about once you've got card #1, have built up some history and are considering applying for card #2 and thus want your scores to be as good as possible!) is what percentage of your credit limit is getting reported to the credit bureaus as a balance each month. Most cards will report your balance that appears on your statement each month - so even if you pay your cards in full religiously, if you have a card with a $500 limit and run up a balance of $450 each month then pay it off after you get the statement, anyone looking at your credit reports will see a $450 balance on a $500 card and think you're maxed out/broke/possibly having trouble - not only that, but the effects of that will be very icky indeed FICO score-wise. Sorry for the big ramble and going off on a tangent, but all that score-maximising stuff is something I learned when we were about to buy our house last year and working out what we needed to do to qualify for good rates - seems to have done the trick, anyway!

[nra19 0]

Hello all.

I recently arrived in the States and was wondering how people obtained credit. I have got my SSN, started work, opended a bank account with First Federal and got a Visa Debit card. I now want to slowly get my credit up as I'm starting afresh. I don't want to go in too heavy and apply for Visa or Mastercards as I will more and likely get refused. Can anyone give me advice on how to build my credit history up as I am considering going onto a phone plan with Altel?

Thanks

Alltel will require a deposit (Verizon charges $400, refundable after a year) and so using their phone plan and paying promptly will help you develop a credit rating. Meanwhile, after a few months you can apply for a credit card thru your bank with a very small credit limit ($500 perhaps). In view of the amount of credit fraud in the US, it is not easy for someone from overseas to establish a positive credit rating. A friend, a clergyman, had an excellent record with a Master Card in the Philippines but could not qualify in the U.S.

Phone companies do not report to credit rating agencies every month - so a cell phone wont build credit.

It can, however, ruin your credit. They only report if you run up charges and do not pay for them. Then it will go on as a negative item your report.

[featherB 1]

Hello all.

I recently arrived in the States and was wondering how people obtained credit. I have got my SSN, started work, opended a bank account with First Federal and got a Visa Debit card. I now want to slowly get my credit up as I'm starting afresh. I don't want to go in too heavy and apply for Visa or Mastercards as I will more and likely get refused. Can anyone give me advice on how to build my credit history up as I am considering going onto a phone plan with Altel?

Thanks

Alltel will require a deposit (Verizon charges $400, refundable after a year) and so using their phone plan and paying promptly will help you develop a credit rating. Meanwhile, after a few months you can apply for a credit card thru your bank with a very small credit limit ($500 perhaps). In view of the amount of credit fraud in the US, it is not easy for someone from overseas to establish a positive credit rating. A friend, a clergyman, had an excellent record with a Master Card in the Philippines but could not qualify in the U.S.

Phone companies do not report to credit rating agencies every month - so a cell phone wont build credit.

It can, however, ruin your credit. They only report if you run up charges and do not pay for them. Then it will go on as a negative item your report.

Indeed. Cell phone companies, cable companies, utilities companies etc will check your credit when you want to open an account with them (thus giving you a hard inquiry that will most likely cause a small dip in your credit score), but they do not report the account itself unless you go delinquent on it. They don't report your monthly payments etc, and as such do absolutely nothing to help you build credit.

[Mags 112]

Yikes, this is my first post on VJ in about a gadzillion years.

Feather, luvvy, nice to see you again! Congrats on the house, btw!

[featherB 1]

Yikes, this is my first post on VJ in about a gadzillion years.

Feather, luvvy, nice to see you again! Congrats on the house, btw!

Mags!!!

Tis good to be back, it has been waaaay too long! And thank you on the house congrats (how is yours doing, btw?!) - we have a house, and we have cats - life is good!

[drl 0]

I got a Bank of America secured card in Dec 07, Paid $99 and a limit of $500.00. I always paid on time and i always paid double or triple the amount to be paid ( Just my thing). In about 6 months they increased my limit to $1200.00, A few days ago i checked my credit and m y score was 700+.

I'd like to know how you check your credit? Is there any link?

[Krikit 1,165]

Here's a good site: Credit Info Center

And if you click on the Forums tab there's a message board just like VJ.

[Lappa 0]

Anyone please tell me if I had a credit card (joint) with my husband will destroy my credit history. My hubby has a bad credit history when I have a good credit. Do you think my credit will go bad if I had a card with my husband?

[geezer 1]

Anyone please tell me if I had a credit card (joint) with my husband will destroy my credit history. My hubby has a bad credit history when I have a good credit. Do you think my credit will go bad if I had a card with my husband?

If spouse has bad credit, rather than no credit it better to keep your credit in your own name as much as possible.

[JaEnglishGirl 34]

I first opened a bank account, then applied for a Macy's card. Then a month later a Gap credit card, got a $1000 limit. Then got an AMazon credit card $500 limit. We took out an auto loan and have been paying that back, my credit score says 700, been here 18 months.

[I AM NOT THAT GUY 5,715]

Cash is still king, and credit will get just you in trouble, eventually.

However, remember, no credit is always better than bad credit. Now that everything is based on FICO scores, just paying your bills on time (by the due date, not the last day to avoid late charges) and keeping a job will improve your scores. So will having health insurance and auto insurance. (I was surprised at that one!) Any open lines of credit, even if not used, and even pre-approved credit card inquiries, will reduce your score.

Edited February 14, 2009 by Mister_Bill

[featherB 1]

Cash is still king, and credit will get just you in trouble, eventually.

Umm... bit of a sweeping generalisation, that!

However, remember, no credit is always better than bad credit. Now that everything is based on FICO scores, just paying your bills on time (by the due date, not the last day to avoid late charges) and keeping a job will improve your scores. So will having health insurance and auto insurance. (I was surprised at that one!) Any open lines of credit, even if not used, and even pre-approved credit card inquiries, will reduce your score.

Paying your bills on time will prevent you getting reported to the CRAs as being late, certainly. It may not actually improve your scores, though. Regular bills (utilities, cable, cellphone, etc) aren't ever reported to the CRAs unless you are delinquent/late/in default, so while not paying them will certainly hurt your scores, paying them on time will make no difference one way or the other. And as for credit cards, paying by the due date is good, of course (it means you won't be reported as late), but that in itself won't have a huge effect on your scores. 30% of your FICO score is calculated based upon your utilization of your available credit (as reported at the moment in time the score is generated - it doesn't look at whether you had your cards maxed out last year or last month, just on what each creditor has reported to the CRA in question most recently) - so if you spend $950 each month on a card with a $1000 limit, regardless of the fact you pay it all off in full before the due date, in almost every case (as this is how most issuers report) what is going to show on your credit files is that your card is maxed out. This will KILL your scores, even if you're showing a perfect payment history.

Keeping a job will only help your scores inasmuch as you'll be able to pay your bills.

Having health insurance and auto insurance has no effect one way or the other on your FICOs.

Open lines of credit will not "hurt" your score. Opening new accounts and reducing your average age of accounts can cause it to drop, but having open lines of credit where before you had none will most certainly improve it. In fact, if you don't have any open lines of credit, and don't have anything for a FICO score to be generated from, you won't have a credit score to help or hurt!

If you respond to a pre-approved credit card offer, that will result in a hard inquiry on your file with one or more of the credit reporting agencies, which will in most (but not all) cases cause a slight drop in your score. The inquiries pulled by issuers when deciding whether to send you a pre-approved offer in the first place, on the other hand, are soft inquiries, which have no effect on your score whatsoever.

[I AM NOT THAT GUY 5,715]

Cash is still king, and credit will get just you in trouble, eventually.

Umm... bit of a sweeping generalisation, that!

However, remember, no credit is always better than bad credit. Now that everything is based on FICO scores, just paying your bills on time (by the due date, not the last day to avoid late charges) and keeping a job will improve your scores. So will having health insurance and auto insurance. (I was surprised at that one!) Any open lines of credit, even if not used, and even pre-approved credit card inquiries, will reduce your score.

Paying your bills on time will prevent you getting reported to the CRAs as being late, certainly. It may not actually improve your scores, though. Regular bills (utilities, cable, cellphone, etc) aren't ever reported to the CRAs unless you are delinquent/late/in default, so while not paying them will certainly hurt your scores, paying them on time will make no difference one way or the other. And as for credit cards, paying by the due date is good, of course (it means you won't be reported as late), but that in itself won't have a huge effect on your scores. 30% of your FICO score is calculated based upon your utilization of your available credit (as reported at the moment in time the score is generated - it doesn't look at whether you had your cards maxed out last year or last month, just on what each creditor has reported to the CRA in question most recently) - so if you spend $950 each month on a card with a $1000 limit, regardless of the fact you pay it all off in full before the due date, in almost every case (as this is how most issuers report) what is going to show on your credit files is that your card is maxed out. This will KILL your scores, even if you're showing a perfect payment history.

Keeping a job will only help your scores inasmuch as you'll be able to pay your bills.

Having health insurance and auto insurance has no effect one way or the other on your FICOs.

Open lines of credit will not "hurt" your score. Opening new accounts and reducing your average age of accounts can cause it to drop, but having open lines of credit where before you had none will most certainly improve it. In fact, if you don't have any open lines of credit, and don't have anything for a FICO score to be generated from, you won't have a credit score to help or hurt!

If you respond to a pre-approved credit card offer, that will result in a hard inquiry on your file with one or more of the credit reporting agencies, which will in most (but not all) cases cause a slight drop in your score. The inquiries pulled by issuers when deciding whether to send you a pre-approved offer in the first place, on the other hand, are soft inquiries, which have no effect on your score whatsoever.

Experian was the one that told me about the health insurance issue about ten years ago, so that may have changed. As of two years ago, I had an 800+ with all three agencies, and the only gigs were too many open lines of credit, and too many inquiries for pre-approved credit offers (78 pages worth for previous 90 days). I never knew that there was that much activity on my credit history until I saw the full report.

[featherB 1]

Cash is still king, and credit will get just you in trouble, eventually.

Umm... bit of a sweeping generalisation, that!

However, remember, no credit is always better than bad credit. Now that everything is based on FICO scores, just paying your bills on time (by the due date, not the last day to avoid late charges) and keeping a job will improve your scores. So will having health insurance and auto insurance. (I was surprised at that one!) Any open lines of credit, even if not used, and even pre-approved credit card inquiries, will reduce your score.

Paying your bills on time will prevent you getting reported to the CRAs as being late, certainly. It may not actually improve your scores, though. Regular bills (utilities, cable, cellphone, etc) aren't ever reported to the CRAs unless you are delinquent/late/in default, so while not paying them will certainly hurt your scores, paying them on time will make no difference one way or the other. And as for credit cards, paying by the due date is good, of course (it means you won't be reported as late), but that in itself won't have a huge effect on your scores. 30% of your FICO score is calculated based upon your utilization of your available credit (as reported at the moment in time the score is generated - it doesn't look at whether you had your cards maxed out last year or last month, just on what each creditor has reported to the CRA in question most recently) - so if you spend $950 each month on a card with a $1000 limit, regardless of the fact you pay it all off in full before the due date, in almost every case (as this is how most issuers report) what is going to show on your credit files is that your card is maxed out. This will KILL your scores, even if you're showing a perfect payment history.

Keeping a job will only help your scores inasmuch as you'll be able to pay your bills.

Having health insurance and auto insurance has no effect one way or the other on your FICOs.

Open lines of credit will not "hurt" your score. Opening new accounts and reducing your average age of accounts can cause it to drop, but having open lines of credit where before you had none will most certainly improve it. In fact, if you don't have any open lines of credit, and don't have anything for a FICO score to be generated from, you won't have a credit score to help or hurt!

If you respond to a pre-approved credit card offer, that will result in a hard inquiry on your file with one or more of the credit reporting agencies, which will in most (but not all) cases cause a slight drop in your score. The inquiries pulled by issuers when deciding whether to send you a pre-approved offer in the first place, on the other hand, are soft inquiries, which have no effect on your score whatsoever.

Experian was the one that told me about the health insurance issue about ten years ago, so that may have changed. As of two years ago, I had an 800+ with all three agencies, and the only gigs were too many open lines of credit, and too many inquiries for pre-approved credit offers (78 pages worth for previous 90 days). I never knew that there was that much activity on my credit history until I saw the full report.

Ah, don't know about in the past, but as there's been a few changes in FICO scoring model since then, I guess they've probably changed the way the whole thing works a lot since then. I know at least in the UK (possibly here too, I don't know!) a decade ago you'd pull your reports from Experian or Equifax and be able to see the entire credit history (including all sorts of random stuff) of anyone who lived, or had previously lived, at that address, and you could have difficulty obtaining credit based on the history of any of those people. Not the same thing, I know, but I'm just saying the way they judged creditworthiness then vs. now must be light years apart!

800+, very nice! I think the higher your scores, the more desperately "they" scrabble around to find something to "ding" you for that they can say is doing harm to your scores. As in, with scores that high, there's very little you can do to improve on them (as they're already excellent), so the scoring model can get really picky with "oh well, if you had a couple fewer accounts you might pick up a point or two", or "tut tut, your oldest account is "only" fifteen years old - if it were twenty-five years old then your score would be even higher!" etc. So yeah, at that kind of level, you're going to get all kinds of odd things listed on your report as "hurting" your score (some of which may be causing you to have a score a few points lower than you would in the absence of that factor, and some which they seem to like to wheel out because there's nothing else to pick holes in!)... I think by that point you're very very close to getting the notation that "there are no significant factors hurting your score", when the scoring model really and truly runs out of things to find fault with!

Sorry, rambling! Can you tell I've spent waaaaaay too many hours researching the ins and outs of this stuff? Never took much of an interest in such things before moving here, but figuring out how to establish credit in the US was one of the necessary steps in "how to start existing as a real person" (if that makes sense) and I've spent far more time researching the subject than it really merits!