Credit Tips: Trying to Establish Credit

Posted On: February 27, 2005

Author: sungikca
Joined: 27 Feb 2005
Posts: 1
Posted: Sun Feb 27, 2005 8:25 pm
Post subject: Just got a SSN, no credit history. chances for credit cards?

Hey guys,

I just became a U.S. permanent resident (yeah!!) and am willing to start my credit history by opening a (or a couple, if possible) credit card. I’m 18, my SSN is like a month old, but I have had my checking account with Bank of America since mid-2003.

While I really want to start with a card that earns me miles/points, I’m worried that because I have no credit history for creditors to refer to it would be hard for me to get such mileage cards like United Mileage Plus (FirstUSA/Chase). I’m not in college yet (I’m starting this September) so I’m also worried that I might not be qualified for the college cards too.

My BOA checking account doesnt have much balance (usually stays at around $200-300), and unfortunately I’ve had about 4 bounced check card payments over the last 2 years…….

I was thinking of just going to BOA and open their credit card (the woman there offered one for me before but I couldn’t get one since I didn’t have a SSN then), but I really do want those cards that I can make miles with..

Any thoughts/possibilites? Thanks a lot in advance!

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Credit Tips: Trying to Establish Credit

Posted On: February 1, 2005

Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Wed Nov 03, 2004 3:50 pm
Post subject: Credit Card Woes

Hello, I’ve been trying to get my mother a credit card for a couple of months now. She has no credit history at all. I tried to go through her bank, Astoria Federal Savings but she was denied. I then attempted to have her apply for Macy’s & JCpenny department store card but it yielded no results. What are my options now to get her to start building credit. We’d like to start so we can purchase a house in the future. Please advise me on a direction to folllow….

Thank You
Fess

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Author: Kamperkatt
Joined: 01 Nov 2004
Posts: 9
Posted: Wed Nov 03, 2004 7:30 pm

I would think a secured bank card would be the way to go. Be careful though, they have fees and annual charges…..but it is a way to get started. Since buying a home is asking for secured credit, it may prove easier than you would think.

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Thu Nov 04, 2004 9:27 am

Kamperkatt, Thanks for the input. I’ve read about the “secured bank card”. I don’t like the fees and such the come with that option. Maybe I’ll just have her switch to citibank becaue Astoria Federal sucks.

Fess

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Author: fotomaniak
Joined: 02 Nov 2004
Posts: 18
Posted: Thu Nov 04, 2004 10:14 am

Adding your mother as an authorized user to your cards may help. No guarantee that it will, but it won’t hurt(unless your credit history is not good)

PS My wife has been in US only for less than 3 years, I’ve added her to most of my CCs and she have gotten about 5 CC in her name already(3 from Citi, 1 from Chase, 1 from Discover) + one store card. I don’t know if adding her as authorized user was the only factor, but it certanly helped in our case. When we pulled her report most of my CCs shown up.

Last edited by fotomaniak on Thu Nov 04, 2004 3:26 pm; edited 1 time in total

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Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 536
Posted: Thu Nov 04, 2004 3:09 pm

Fess, Thanks for your post and welcome to the board!

Secured cards will probably be a much cheaper option than a regular/ unsecured option for your mother since she has no credit history.

You can learn more about secured cards here: http://www.cardratings.com/freepersonalfinancecontent.html

Please let us know how things turn out!

Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH 501-301-8474 FX

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Fri Nov 05, 2004 8:27 am

Curtis, fotomaniak Great advice! I’ll carefully explore both your suggestions and see which is more plausible to my situation.

Thank You
Fess

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Author: cabledude
Joined: 14 Aug 2004
Posts: 38
Location: East
Posted: Fri Nov 05, 2004 7:50 pm

Plain ole gas cards are a good option to no/bad credit. Amoco, Exxon, Texaco have on line apps and usually approve with a low limit to start with no fee. After a few months of good payments you may qualify for a good Visa/MC. Adding her as an AU to your account is also sound advice so long as the account you add to her does not have negative information. Add the cards first then try to get her some in her own name. You can add her as an AU and you don’t even have to give her the card so long as YOU have good activity.

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Tue Jan 11, 2005 3:35 pm

Hello, I’ve successfully initiated the credit building process for my mom finally. I went bright & early to Citibank and talked with the assistant manager about what I’ve read over here:

kiplinger.com/basics/managing/cash/firstcc.htm

She suggested a secured loan & secured credit card with options to upgrade. After setting everything up, I’m still concerned about and dangers out there.

I’m thinking of purchasing a book to have the “edge”: Looking at this one now:

amazon.com/exec/obidos/tg/detail/-/0131486039/qid=1103635655/sr=1-1/ref=sr_1_1/002-0351460-2523208?v=glance&s=books

If anyone has any books suggestions, it would be appreciated.

Thanks
Fess

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Author: fotomaniak
Joined: 02 Nov 2004
Posts: 18
Posted: Tue Jan 11, 2005 4:02 pm

IMO: it’s best save your money and don’t buy the book most of the info can be found on the www for free. to improve your score: 1) pay all bills on time 2) don’t utilize more than 49% of your credit line on each card and don’t utilize more than 49% of your total revolving credit limit. 3) have several credit cards in your name(once your mom get’s her first unsecured card, it should be easier to get more unsecured cards) 4) some reported that it’s good to have at least one store card in your name 5) add your mom as authorized users to the card with large CL and low utilization (<30%? defintely less than 50%)

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Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2535
Location: Illinois
Posted: Tue Jan 11, 2005 7:44 pm

Good plan of action to add her to your cards that are in good standing and with low utilization. Just make sure your credit card companies have the policy to report AU Accounts, and that they report to all 3 of the major credit reporting agencies. She don’t have to use the account at all, just ride out the good reporting by your activity on the account. Then it will generate a credit score for her and help her establish her own credit quicker, even if she has to go with secured card at first. Once she has established her own credit for a period of time, then you can call your credit card company and remove her as an authorized user, the account will still show on her credit report, it will just show status T - terminated, that she is no longer on the account, but it will still have that history showing on the report prior to the cancelation. Don’t have her applying for any more credit, until she is in a better position, and ask questions of the lenders letting them know before hand that she has no established credit and how they process these, if it is worth her time applying before they pull credit report. Build up of inquiries will pull her score down, especially now when there is nothing else to outweight the inquiries.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
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Author: fotomaniak
Joined: 02 Nov 2004
Posts: 18
Posted: Wed Jan 12, 2005 12:11 am

NightStar wrote:
Once she has established her own credit for a period of time, then you can call your credit card company and remove her as an authorized user, the account will still show on her credit report, it will just show status T - terminated, that she is no longer on the account, but it will still have that history showing on the report prior to the cancelation.

Unless there is some particular reson(i.e. you are going to start to carry a balance > 50%) there is no reason to remove her. Just keep your mom added to several of your cards. Include your oldest card if possible.

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Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2535
Location: Illinois
Posted: Wed Jan 12, 2005 2:55 am

There is one primary reason to remove authorized users, and that is when it is time to apply for a mortgage loan. The consumer can be turned down if a lender thinks they have more debt then they really do, when I worked at the credit bureau editing credit reports, I would get requests from the loan officers to just remove these accounts off of the credit report. Not all lenders are going to have credit bureaus processing mortgage reports like we did, especially the ones going through fannie mae, they won’t accept a bureau editing, in that case it has to be the credit reporting agency direct and then only the consumer can make the change, unless they put in request for rapid rescoring, then that is costly. It has to do with approal when debt to income ratios are being used, even though they know these are not the responsiblity of the consumer they don’t want it on the credit report, and I know a good many of them don’t even look at the ECOA codes to pay attention to what is not the responsibility of the consumer… so my opinion it is just better to loose the account when you are done with it.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH 501-663-0033 FX

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Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 536
Posted: Wed Jan 12, 2005 9:13 am

Fess, Thanks for your post and welcome to the board!

You can find a comprehensive list of credit related books here: http://www.cardratings.com/bookmain.html

The one you referenced is a good one. Liz Pulliam Weston is a well respected personal finance author.

Out of curiosity, how did you find out about our website?

Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH 501-301-8474 FX

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Wed Jan 12, 2005 4:15 pm

Quote:
2) don’t utilize more than 49% of your credit line on each card and don’t utilize more than 49% of your total revolving credit limit. thanks for responding, she has a secured mastercard with $500 limit. When you say don’t utilize more than 49% of the credit line on the card, she should not exceed $245 or so?
Quote:
Just make sure your credit card companies have the policy to report AU Accounts, and that they report to all 3 of the major credit reporting agencies.
Quote:
Build up of inquiries will pull her score down, especially now when there is nothing else to outweight the inquiries.I wasn’t aware of that. Thanks for the info.
Quote:
The one you referenced is a good one. Liz Pulliam Weston is a well respected personal finance author. Out of curiosity, how did you find out about our website?Thanks for the link, I’ll browse the selections. Glad to hear the author is in good standing. I actually found your website through Google. I found several others but this site had the best graphical layout & phpbb is a good script.

Thanks again everyone for your help

Regards
Fess

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Author: fotomaniak
Joined: 02 Nov 2004
Posts: 18
Posted: Wed Jan 12, 2005 4:33 pm

Fess wrote:
Quote:
2) don’t utilize more than 49% of your credit line on each card and don’t utilize more than 49% of your total revolving credit limit. thanks for responding, she has a secured mastercard with $500 limit. When you say don’t utilize more than 49% of the credit line on the card, she should not exceed $245 or so? if her total credit limit is $500, then yes, $245 is 49% of the credit limit. you also should try not to exceed 49% utilization on the cards where your mom will be an authorized user. If you need to charge more than $245 per month then you can just make additional payments. keep in mind that: a) if you have negative balance(i.e. prepay) it will probably show up as positive balance on your credit report. I.e. if you have -$700 (a credit of 700) balance it’ll show up at $700 which might look bad(and odd) considering you only have $500 credit line. b) if you purchased something with a credit card and paid the balance off, a credit card might consider that by paying of the balance you agree that the charges are legit and you may loose your right to dispute. so, I’d say, to avoid any complications, it’s probably best to use the card to pay a couple of small recurring bills per month (i.e. phone and cable) so that the total amount will be less than 50% and there is no need to check the balance every day. To show more activity your mom can use the card for small purchases once in a while, but for the most part, card can be just kept in the drawer for now.

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Author: jason2004
Joined: 13 Jan 2005
Posts: 7
Posted: Thu Jan 13, 2005 4:45 pm

fotomaniak wrote:
Fess wrote:
Quote:
2) don’t utilize more than 49% of your credit line on each card and don’t utilize more than 49% of your total revolving credit limit. thanks for responding, she has a secured mastercard with $500 limit. When you say don’t utilize more than 49% of the credit line on the card, she should not exceed $245 or so? if her total credit limit is $500, then yes, $245 is 49% of the credit limit. you also should try not to exceed 49% utilization on the cards where your mom will be an authorized user. If you need to charge more than $245 per month then you can just make additional payments. keep in mind that: a) if you have negative balance(i.e. prepay) it will probably show up as positive balance on your credit report. I.e. if you have -$700 (a credit of 700) balance it’ll show up at $700 which might look bad(and odd) considering you only have $500 credit line. b) if you purchased something with a credit card and paid the balance off, a credit card might consider that by paying of the balance you agree that the charges are legit and you may loose your right to dispute. so, I’d say, to avoid any complications, it’s probably best to use the card to pay a couple of small recurring bills per month (i.e. phone and cable) so that the total amount will be less than 50% and there is no need to check the balance every day. To show more activity your mom can use the card for small purchases once in a while, but for the most part, card can be just kept in the drawer for now.Where did you found 49%. Recomennded is 15-20%

Jason
Mortgage Resource: Prime Rate Funding Group, INC.
primerateinc.com

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Thu Jan 13, 2005 4:49 pm

fotomaniak I understand fairly what you’re saying. I need to read up on FICO scoring to gain some confidence on this subject. Thanks for the input

Regards
Fess

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Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2535
Location: Illinois
Posted: Thu Jan 13, 2005 9:49 pm

I thnk step laddering down as need be is fine enough to set goals, like if you are on the hgih side, then worry first about getting ALL cards below 60% utilization, then once you have that down out of critical level, then shoot for below 40%, and go from there. If there are multiple cards, then you want to bring them all down as best you can instead of just one, then moving to the next. Least scoring wise that would be the best approach.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH 501-663-0033 FX

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Fri Jan 14, 2005 8:25 am

Quote:
I thnk step laddering down as need be is fine enough to set goals, like if you are on the hgih side, then worry first about getting ALL cards below 60% utilization, then once you have that down out of critical level, then shoot for below 40%, and go from thereWell, I’m not over 60% on my card. But that just becasue I’m a careful spender. Wasn’t aware that it wasn’t good to ‘utilize’ the limit on the card. I’ve got some work to do in regards to getting some more cards and FICO research. Thank for the input

Regards
Fess

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Thu Feb 03, 2005 11:50 am

Quote:
2) don’t utilize more than 49% of your credit line on each card and don’t utilize more than 49% of your total revolving credit limit.I’ve purchased the book YOUR CREDIT SCORE by Liz Pulliam Weston. Its an excellent read so far…. On P.42 it states:
Quote:
‘Your balances (the amount your carry plus the amount your charge) shouldn’t exceed 30% of your total credit limit at any given time. The higher your score, the lower the percentage of your credit limits you would need to use to improve your numbers’is it 30% or 49% as fotomaniak suggested?

Thanks
Fess

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Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 470
Posted: Thu Feb 03, 2005 12:01 pm

It’s both! There are many scoring models and many different breakpoints. The models aren’t sophisticated–they work in chunks and the breakpoints seem to be at the 30%/50%/70%/90% points. You’ll get a pop in your credit scores in most models if you go from 51% to 49%; you’ll get another pop if you go from 31% to 29%. The Credit PLUS score simulator at Experian figures 0%-29% as the same score, so you don’t get any benefit if the number goes any lower than 30%. I don’t know if that’s true for other scoring models. (I’m pretty sure about the 30% and 50% breakpoints. Some models might be using 75% instead of 70%…) By the way, the Experian Credit PLUS report says it does not consider cards which have no specific credit limit on file. Other models I think take the highest balance on file as the credit limit in the calculation.

Polonius

“Neither a borrower, nor a lender be; For loan oft loses both itself and friend”

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Author: fotomaniak
Joined: 02 Nov 2004
Posts: 18
Posted: Thu Feb 03, 2005 12:48 pm

Polonius wrote:
By the way, the Experian Credit PLUS report says it does not consider cards which have no specific credit limit on file. Other models I think take the highest balance on file as the credit limit in the calculation.Equifax uses highest balance as a credit limit if they don’t know the actual credit limit.

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Author: Fess
Joined: 03 Nov 2004
Posts: 9
Posted: Fri Feb 04, 2005 8:36 am

Quote:
There are many scoring models and many different breakpoints. Yes, the book mentioned the numerous scoring models out there. Wasn’t aware of the ‘chunks’/breakpoints. I’ll keep that in mind, thanks.
Quote:
Equifax uses highest balance as a credit limit if they don’t know the actual credit limit.Confusing. If they use your highest balance as credit limit, they would compare you overall balance to that highest balance?

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Author: fotomaniak
Joined: 02 Nov 2004
Posts: 18
Posted: Fri Feb 04, 2005 11:44 am

Quote:
Equifax uses highest balance as a credit limit if they don’t know the actual credit limit.Confusing. If they use your highest balance as credit limit, they would compare you overall balance to that highest balance?[/quote] yes thats what they did. I have a discover with 10K credit limit. Have not used it for a while. Then charged around $300 in one month, and they’ve used that as a credit limit.

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