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I've been a lurker here for the last week and a half or so after realizing that a rewards card would help me in saving for (and on) my upcoming trip overseas. All the travel blogs recommended the CSP, and I, with my complete lack of knowledge, cold app'd for it with absolutely no credit history. After the denial letter came in the mail(lack of credit history), I began researching ways to build a credit history, and found you guys. One of the credit builder cards I saw tossed around was the cap1 secured. Again, not entirely aware of the ramifications, I cold app'd, and I was instantly denied. No 7-10 day; flat denial. Even chase had the courtesy to keep me in limbo. I figured I should wait for the letter explaining an auto-denial for a secured card, and I just got it today. It says that my "proportion of revolving account balances to income is too high". Now, this really stinks of bull feces, since, as I mentioned earlier, I didn't have any revolving credit at the time of the app. So their saying that zero debt is too high for a cap1 secured makes me wonder whether they recently decided to become the primest-of-the-prime. Also, they put my TU at an impossible 921(right above the bit about it ranging from a low of 300 to a high of 830).
The only possible explanation would be my mother's cc account, for which I'm an authorized user (emergencies only). It carries a high balance, but there are no payment issues, just the balance. Would that card's balance show on my TU even though I'm not liable for it? Would/should the balance of my mother's account be put into a ratio against my personal income?
Finally, I applied for two more cards after the cap1, and was instantly approved for both. The first is a Discover it with a $1,500 limit and the second a chevron gas card with a $500 limit. I know they aren't the best limits (or cards) by any means, but they obviously had no issues with "high balances", and both are unsecured. However, I don't think either of them pulled TU.
With all that in mind, here are all my questions:
Well, that's all for now. I appreciate every response, and I'm sure that I'll have more questions soon. Thanks again!
Uh, the score is a FAKO(not a Fair Isaac Corporation score), not a FICO.....I'll let the more informed consult on the effect of authorized user's on credit reports.
I guessed as much.... It still doesn't explain the impossible score, though I suppose it's a bit trivial, since it's not FICO. I just think it's funny that they say the absolute maximum is x, and give you score x+91.
Capital one pulls everything when you app with them. That score is not a FAKO. It is a Vantage Score 2.0 which is a competing product sold by the three CRA's. It's not widely used as FICO is used in 90% of decisions but it has gained some ground. WIth your limited history it really doesn't matter which score you get, it will not mean much as there is so little to build the score from.
Yes the high utilization on your mothers card which you are an AU on is hurting your credit profile and this is why capital one likely denied you for the reason they did. Normally an AU account doesn't factor in for much in terms of scoring unless its the only thing on your report. Then of course it will be the only thing to base a decision off of. Ideally I would see if she can remove you from that card and add you on to a different one with a very low balance. If not then if it where me and this is a personal decision, I would take myself off of it seeing as you now have the discover and the chevron card and once you can show 3-6 months of history and payments on those cards then you will likely be able to get a visa or mastercard with another lender.
As for Cap one I would not bother to recon with the secured card. I don't think you'll have much luck and I don't think you need it at this point. I would also not let the denial sour your opinion of them. They are actually one of the most forgiving lenders and are very easy to work with. What I would do is wait for a few months of your new cards reporting and then start checking in with the prequal site. You should definitely be able to be approved for a QS one within 3-6 months. Capital one will also likely grow the fastest for you as far as limits are concerned too.
If your able to wait I would not app for any more cards until at least the six month mark. The discover IT is actually an excellent card with the 5% cash back categories and 1500 is a pretty decent starting limit for them. I think you'll find it is excepted almost everywhere in the US and with the purchase of diners club network you'll likely see its accepted more places overseas than you thought. While it certainly will not a be a Visa/MC as far as acceptability it is usable for sure.
This is all very helpful, thank you.
I think I should be fine for the next five months at least. My plan is to leave in mid-January, so perhaps one or two apps for some no FTF cards a week and a half before? If not, I have a Schwab visa debit, which reimburses atm fees and has no FTF (that one did a HP, ouch). Ultimately, I would be fine with only that, but I like the idea of fraud protection and rewards for things I have to buy anyway.
Once I get myself off of my mom's card, how quickly would I see a reflection on my report? Is it something that would happen the following statement, or would it have to fall off? Also, is a balance through an AU disregarded in manual review just like other AU reporting? These ones are more out of curiosity, since I can definitely wait. I'm just trying to understand the process.
Also, is there any particular reason Discover didn't care about the balance when cap1 did? Could it be only on my TU? Is cap1 just more picky in in that particular area?
@Anonymous wrote:All the travel blogs recommended the CSP, and I, with my complete lack of knowledge, cold app'd for it with absolutely no credit history.
Don't just rely on recommendations from blogs or other people if the recommendations don't take your specific needs, situation, etc into consideration. Selecting a card is always about finding a card that suits the individual. You need to do your own due dliegence. You need to run the numbers for your spend. For a rewards card like the CSP you need to look at its rewards program to see if you can leverage redemptions in such a way to make the most value of each UR point.
@Anonymous wrote:No 7-10 day; flat denial. Even chase had the courtesy to keep me in limbo.
7-10 is not a courtesy. X days just means that manual intervention is required.
@Anonymous wrote:It says that my "proportion of revolving account balances to income is too high". Now, this really stinks of bull feces, since, as I mentioned earlier, I didn't have any revolving credit at the time of the app.
@Anonymous wrote:The only possible explanation would be my mother's cc account, for which I'm an authorized user (emergencies only). It carries a high balance, but there are no payment issues, just the balance. Would that card's balance show on my TU even though I'm not liable for it? Would/should the balance of my mother's account be put into a ratio against my personal income?
If you don't have any revolving accounts of your own then that's certainly it. Revolving utilization is a signfiicant scoring and risk factor. It falls under Amounts Owed:
http://www.myfico.com/crediteducation/whatsinyourscore.aspx
Whether being an AU helps or hurts all depends on the condition of the tradeline. Generally speaking, positive payment history, low utilization and greater age help while negative payment history, high utilization and a shorter age can hurt. Make sure you understand how all this works before you declare what is or isn't valid.
@Anonymous wrote:
Would my mother's balance be factored in to my credit report if I am an AU, even though I'm not liable for it? Specifically my TU CR?
If a creditor reports for AU's then, yes, the tradeline will appear on reports.
Whether or not the tradeline is considered depends on the scoring model and creditor. In some cases tradelines are not considered to prevent piggybacking.
@Anonymous wrote:Would it be a good idea to remove myself as an AU? Will the payment history help more than the high balance hurts?
While Payment History is a bigger factor than Amounts Owed that doesn't mean the high utilization cannot be a significant problem even with good Payment History as you have experienced. Some factors have more of an impact than others but all factors matter. I'd recommend getting yourself removed as an AU from that TL.
@Anonymous wrote:Should I be concerned about fraud, considering that there's an "excessive" balance on my CR, but I didn't have any credit at the time of the app?
One does not necessarily indicate the other. You should always be concerned about fraud and ensure that you're actively monitoring all accounts as well as regularly reviewing all your reports to spot fraud and incorrect data.
@Anonymous wrote:
Is my current wallet enough to start building a history?
A single credit account that reports will start to begin building history. For scoring purposes at least 2-3 credit cards are generally suggested but you have to add them at a rate that is appropriate to your credit profile. Where you're at your profile likely won't support much activity in such a short span of time. Credit cards, however are not the only type of credit that matters for Mix of Credit. That said, it is not recommended that one seek out other types of credit solely for scoring purposes. Add them as you actually need them.