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Valued Contributor
smc733
Posts: 1,262
Registered: ‎05-13-2010
0

College student building credit - need help sorting it all out

Hi everyone,

 

I'm 19, and I just completed my first year at college.  I work at school, to the tune of about $11k/year.  I have four bank accounts, two at each bank:

 

Bank of America:

Checking:  $100

Savings:  $9000

 

Citibank

Checking:  $100

Savings:  $1200

 

I recently, after a long and drawn out battle, got a Bank of America, secured BankAmericard Visa, for $500.  I also have a Banana Republic store card which I've used once, and PIF at the end of the month.

 

Going forward, I've been advised that multiple credit cards are the way to go when building credit.  I've had a number of inquiries on my credit since January, when I got denied for card after card.  Citi sent me an invite to apply for a Platinum Plus, which I did, and was probably a mistake, as I will likely get turned down.  However, they told me to report my parent's income on the card, so I guess we'll see. 

 

Anyway, I'm curious as to what everyone else thinks the best path forward would be:

-Get a MasterCard from Citi, then an Amex down the road (November)

 

or

 

-Move all my money back to BofA, keep all my stuff in house there, getting their AmEx down the road, and only having a BofA Visa, and BofA American Express.

 

Of course any outside suggestions would be more than welcome.

 

Thanks in advance

Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010
0

Re: College student building credit - need help sorting it all out

Good luck on the Citi.  If they deny, I would wait about a year and apply again.  I suggest you keep all the bank accounts and develop history with both banks.. 

 

Two or 3 credit cards is enough to develop positive history.   I would concentrate on using and taking care of what you have rather than trying to add much more.  You might increase the deposit on BofA secured. You might add a store card, if you shop there on a regular basis. 

 

I would wait on American Express until 21.   

Valued Contributor
smc733
Posts: 1,262
Registered: ‎05-13-2010
0

Re: College student building credit - need help sorting it all out

Thanks for the response.  I haven't heard back on the Citi card yet, I called in today (I applied at around 11PM last night), and they said they have not gotten the application yet.  When I dial in, after I enter my SSN and phone number twice, I get "I'm sorry, we were unable to process your request at this time", which I guess means they don't have info on the application yet.

 

I'm hoping here.

 

I just made another purchase on the Banana Republic card to keep it active (polos for $29.99!), so I'm hoping that GEMB will hopefully report my dilligent payment activity.

 

Now, here's another question, should I move some more money from Bank of America to Citi?  Make the difference more like $6000 to $4000?

Valued Member
OptimalFICO
Posts: 203
Registered: ‎07-05-2009
0

Re: College student building credit - need help sorting it all out

It is so great that at such an early age you are thinking of establishing your credit history and maximizing your FICO score! I commend you! Learning to manage credit and protect your FICO score is so important and has become more critical than ever before! Aside from getting credit, your FICO may be used when you apply for a job, student loans, apartment, utilities, car insurance, etc. Guard your FICO score with your life cuz it will have a major impact on your life in ways you can't imagine! Always PIF (pay in full) every month or don't buy it. If you must carry a balance, pay it off ASAP and make sure you are truly distinguishing between NEEDS versus WANTS. Next look at establishing or contributing to a retirement account. If you start early, the money will compound and grow beyond your wildest imagination (and always participate up to an employer's match - this is free money).

 

Now for some more of my two cents:

 

Note that just because you get a "preapproved" offer in the mail, doesn't mean you are truly "preapproved." When you send it in, you are still submitting an application that can be denied based on your credit history or lack thereof.

 

In my experience, it doesn't much matter whether you have a checking/savings account with a bank when you are trying to get credit from them. They are mainly interested in your credit worthiness. I have seen way too many people denied credit despite having a banking relationship and high savings with the institution.

 

From what I have learned about maximizing your FICO score long term, having three major credit cards seems to be the magic number (AmEx, Visa, MC or Discover). One card should come from a national bank. Do not open anymore department store cards as creditors don't like to see these types of lines of credit (unless the benefits you'll receive are worth it -- i.e., you shop there often and will be able to take advantage of additional discounts and promos offered only to cardholders). In the future, it will also help you to have other types of installment credit (such a student loans, auto loan, personal loan or mortgage). Rather than obtaining new credit at this point, focus on managing what you have and obtaining CLIs (credit limit increases) on existing cards. With most companies, you can request a CLI every six months, but check to be sure, some are 12 months. Make sure that when you are requesting this, companies are basing the CLI worthiness on an internal account review ("soft inquiry") rather than pulling a "hard" inquiry on your credit. Hard inquiries ding your FICO for one year, but stay on your credit reports for three years.

 

Because of the new credit law that passed earlier this year to protect students, you may have more difficulty obtaining credit until you are 21. For the future, you may wish to check into the following program below which seems really great:

Check out Digital Federal Credit Union --

They have what's called a Visa CashPak

Includes Free Checking, a DCU Check Card, PC Loan, and more (for members aged 17 to 22 years).
  • Helping young adults manage their finances
  • Preparing young adults for their after school financial lives
  • Giving parents tools to help their children away at college or at their jobs
If your son or daughter is heading for college next semester, tuition, books, and fees are only the beginning. Or if they're at home or in an apartment working they need to financially plan. They'll need to start budgeting for food, supplies, a computer, clothes, entertainment, and maybe even a car. CashPak gives you ways to give your child (age 17 to 22) convenient access to their funds. At the same time, they'll learn how to use the financial products such as checking, using a cash card, a visa card, getting a loan and other financial products they'll need as adults.

You can become eligible to join DCU by joining a variety of nonprofits (tax deductible as a charitable contribution) - first year only, then once a member always a member. Check their eligibility section.

 

You probably have too many inquiries right now to apply for any new credit, but you may want to call Digital and ask. Otherwise, wait at least six months to a year before applying for new credit.

 

Note in the future when shopping for auto or student loans or mortgages, best to get all auto loan inquiries done in a 14, 30 or 45 day period so all inquiries will count as one ding against your FICO score. For more info: http://www.myfico.com/crediteducation/creditinquiries.aspx

I don't know how they distinguish exactly, so if you are going to submit various applications for credit cards, best to do it within a 14 day period and hope they'll only be counted as one.

 

Never use a co-signer. I have read that once creditors see that you can get a co-signer, they will always want one!

 

Finally, if you can do without access to your savings for the next couple years, you may wish to consider getting a secured credit card with as high a limit as you can afford ($5,000 if you can). Both Digital and Addison Federal Credit Union offer secured cards with no AF (annual fee). Or maybe even look into getting a secured personal loan to help establish your credit. Here's a good article to read if you go the secured credit card route with 10 questions to ask before deciding on one:

http://www.bankrate.com/finance/credit-cards/10-qu estions-before-getting-a-secured-credit-card-1.as...

 

I would add -- how high of a limit can I have? You'd think since you are securing the card with your own money you could have as high a limit as you are willing to deposit in secured funds, but this is not the case. Also, if you go this route, be aware that Wells Fargo has halted converting secured cards to unsecured cards and in terms of getting an Orchard or HSBC VISA  build credit , both have halted all CLIs to anyone so these are not good routes to go.

 

Best wishes to you!

 

 

Valued Contributor
smc733
Posts: 1,262
Registered: ‎05-13-2010
0

Re: College student building credit - need help sorting it all out

Thank you for the helpful advice!

 

I did end up moving $2000 from Bank of America to Citibank, so now there's more pairity between my two accounts. 

 

My goal is to pay in full every month, of a balance usually less than 20% of the CL.  As for the one department store card, I do shop there frequently, and though I'll never make the mistake of going for one of those cards again, I guess I'll keep this one active periodically, because on-time payments on it now that it is open will surely help my CS (at least I think).

 

So I'm going to establish some financial goals for the end of the year:

-Get Citibank account to $4000.

-Get BofA account to $7500

 

-Get at least 1 other major credit card (Citi MasterCard or AmEx Blue, though I've been told to hold off on AmEx).

EQ, TU, EX scores of 650+

 

I appriciate the rest of the advice you gave me as well.  I figured it was important to build a score now, as credit is harder to get, and when I need to get an apartment/car, etc. when I graduate, I think it'll help, because at the very least, a good established credit score vs. limited credit will help me get a more affordable rate.

New Member
bigboned
Posts: 1
Registered: ‎04-05-2009
0

Re: College student building credit - need help sorting it all out

Hi,

 

Nice to see another college student who is planning ahead. I just finished my third year (of five) at Georgia Tech. I'll be turning 21 in two weeks. My income during college has come from federal work study one and a half semesters ($10/hr), research assistant one semester ($12/hr), online tutoring on and off for two semesters ($10/hr), full time co-op semesters at GE ($15.50/hr the first time then $18.75/hr the most recent two), and stocks

 

Back in August 2007, I opened up a Bank of America student platinum plus Visa.

Credit Limit was around 1000, after a few months they raised it to 1700.

No annual fee.

I used it for small purchases here and there (like a lunch or groceries) and paid in full each month

 

March 2008, I opened up a Capital One Visa platinum

I think the initial credit limit was also 1000, after 3 months they raised it to 1500.

No annual fee.

Split my small purchases between the BoA card and the CapOne card, always paying both in full each month

 

Now here is where it gets interesting:

In July 2008, I opened up an American Express Gold Delta Skymiles card.

Credit Limit was 2000 and stayed at 2000 (I called for a CL increase last fall, but they said they required an 800(!) fico score)

$95 per year annual fee, waived for the first year

Usually people say for college students to "latch on" to their parents credit card accounts to leverage their parents' high scores to build their own more quickly. I decided to experiment and do it in the reverse. I was the primary cardholder, and my parents were listed as secondary cardholders. Between opening the new account, adding my parents as additional cards, and other bonuses, I got a ton of skymiles out of it. Since July, my family has been using the AmEx in essence like a debit card (charging all our purchases to it, then paying it off in full before the end of each billing cycle) yielding a ton of skymiles. Because of all that, I accumulated 120,000 skymiles last december and booked a roundtrip first class flight to China from Atlanta for the summer and only paid $38 in taxes for it. The only annoying thing about the AmEx is the low limit. Considering that my family charges EVERYTHING to it, I have to keep an eye on the balance to make sure it doesnt get too close to the limit. When it does, I just send in the payments early (usually this happens around two or three times per month ugh). As i mentioned above, I tried to get a CL increase, so I could stop having to stay on top of the account so much and just pay it off at billing cycle's end, but AmEx denied it. Hopefully they'll ease up their requirements by this coming fall.

 

I dont have any other credit card accounts, but I do have some federal student loan accounts that wont go into repayment until 6 months after i graduate ($8500 outstanding right now, will probably be closer to $12000 when all is said and done)

 

Here are my scores as of today:

TransUnion: 755

Equifax: 725

Experian: ?

 

Anybody got any comments on the reverse student/parent situation? At the time, I thought it would be more helpful since it was actually myself establishing my own good credit instead of bumming off of my parents' good credit. I guess it worked out ok? I wonder if this would be a better route to take for the financially savvy/responsible young crowd.

Valued Member
OptimalFICO
Posts: 203
Registered: ‎07-05-2009
0

Re: College student building credit - need help sorting it all out

 


bigboned wrote:

Hi,

 

Nice to see another college student who is planning ahead. I just finished my third year (of five) at Georgia Tech. I'll be turning 21 in two weeks. My income during college has come from federal work study one and a half semesters ($10/hr), research assistant one semester ($12/hr), online tutoring on and off for two semesters ($10/hr), full time co-op semesters at GE ($15.50/hr the first time then $18.75/hr the most recent two), and stocks

 

Back in August 2007, I opened up a Bank of America student platinum plus Visa.

Credit Limit was around 1000, after a few months they raised it to 1700.

No annual fee.

I used it for small purchases here and there (like a lunch or groceries) and paid in full each month

 

March 2008, I opened up a Capital One Visa platinum

I think the initial credit limit was also 1000, after 3 months they raised it to 1500.

No annual fee.

Split my small purchases between the BoA card and the CapOne card, always paying both in full each month

 

Now here is where it gets interesting:

In July 2008, I opened up an American Express Gold Delta Skymiles card.

Credit Limit was 2000 and stayed at 2000 (I called for a CL increase last fall, but they said they required an 800(!) fico score)

$95 per year annual fee, waived for the first year

Usually people say for college students to "latch on" to their parents credit card accounts to leverage their parents' high scores to build their own more quickly. I decided to experiment and do it in the reverse. I was the primary cardholder, and my parents were listed as secondary cardholders. Between opening the new account, adding my parents as additional cards, and other bonuses, I got a ton of skymiles out of it. Since July, my family has been using the AmEx in essence like a debit card (charging all our purchases to it, then paying it off in full before the end of each billing cycle) yielding a ton of skymiles. Because of all that, I accumulated 120,000 skymiles last december and booked a roundtrip first class flight to China from Atlanta for the summer and only paid $38 in taxes for it. The only annoying thing about the AmEx is the low limit. Considering that my family charges EVERYTHING to it, I have to keep an eye on the balance to make sure it doesnt get too close to the limit. When it does, I just send in the payments early (usually this happens around two or three times per month ugh). As i mentioned above, I tried to get a CL increase, so I could stop having to stay on top of the account so much and just pay it off at billing cycle's end, but AmEx denied it. Hopefully they'll ease up their requirements by this coming fall.

 

I dont have any other credit card accounts, but I do have some federal student loan accounts that wont go into repayment until 6 months after i graduate ($8500 outstanding right now, will probably be closer to $12000 when all is said and done)

 

Here are my scores as of today:

TransUnion: 755

Equifax: 725

Experian: ?

 

Anybody got any comments on the reverse student/parent situation? At the time, I thought it would be more helpful since it was actually myself establishing my own good credit instead of bumming off of my parents' good credit. I guess it worked out ok? I wonder if this would be a better route to take for the financially savvy/responsible young crowd.


You mentioned one of the issues you're experiencing is getting a CLI from AMEX. The idea behind being added as an authorized user on someone else's card to improve your credit is that you then benefit from their high CLI on the card and it's good (hopefully) history. Being added increases your total available credit and therefore decreases your utilization (assuming the card is not maxed out, etc.). This is especially useful when one cannot get approved for a card on his/her own. In this instance, the "reverse student/parent situation" wouldn't work I don't think because if I understand it correctly, the student wouldn't be able to get credit or a high CLI in the first place to add the parent as an authorized user. (or did you have your parents co-sign?).

 

 

The fact that you get close to your AMEX maximum a couple times each month could be hurting your FICO depending on when the card reports. Instead of sending in payments a few times a month. you might want to try making payment at the beginning of the month that leaves a large credit on the account (pay in advance so to speak) and manage the account balance in such a way that your utilization never gets over say 10% (definitely never over $50%) if possible.

Valued Contributor
smc733
Posts: 1,262
Registered: ‎05-13-2010
0

Re: College student building credit - need help sorting it all out

Thanks for the replies everyone.  I decided to move my money to Citibank's Ultimate Savings Account, which offers a much better rate.  I kept the checking account at BofA, just because of the free transfers offered by Citibank, I'll have access to BofA ATMs for deposits, and transfer into my Citibank account, BofA's convenience without their horrendous service.

 

Anyway, Bank of America denied me the Student Platinum Plus Visa with Scores of 681 685 and 681 and an annual income of $15k per year.  I'm trying for the Citi Forward card next.  If I can get an unsecured card from Citi, I'm going to bite the bullet and close the BankAmericard Secured, which is not that old, and not the oldest on my account, so I don't get stuck with the $39 AF for life.  

 

I suppose I am going to wait until my scores are above 700 to go for an Amex, as I do not want the Zync and its AF, but I'd love to have a Blue.


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