Credit Gardening Opportunity (i.e. I have questions regarding first CCs)

[Anonymous]

Reading through these forums, I am beginning to comprehend for the first time some of the nuances of credit cards and their effect on credit scores.  Kudos to everyone, especially haulingthescoreup.

I now want to ask for your input on some lingering questions regarding my personal situation.

I am a fourth-year college student.  I have been using debit cards for years, but my father and I started talking about me getting my first credit card several months ago.  The application process puzzled us at the time (it isnot helpful to a first-time applicant that Amex’s Blue Card for Student’s application is online only) and, to makea long story short, I ended up as an AU on my father’s Amex Blue Cash CC.

I requested one of my free annual credit reports about 2 months ago, and my father's excellent credit history on that card showed up on my report.  (I have not, however, ordered any credit score reports.)

The main confusion I still have is about the process is how to report my income on a credit card application: as a full-time student I don’t have much personal income of my own, yet my parents provide for my non-discretionary expenses at the moment and would stand behind me should I for some reason fall into credit card debt.

To solve that problem, I am going to the Chase branch north of campus on Monday to apply in person, or at least ask how to answer certain questions (Income, Rent/Mortgage Amount) on the online application.  I have had an account with Chase for almost 4 years, and want to get a Student card before I graduate college.

What else should I do after that?  My intention is to use my credit card sparingly (but regularly) and pay it off every month without fail.  At some point I would be interested in having an Amazon CC, as I often order books (and occasionally CDs/DVDs) from them.  Does it matter that Chase would be the bank for both my Chase Student Visa and the Amazon Card from Chase?  Is there an optimal time to apply for the Amazon card? (i.e. right away, or after several months of good credit history on my first real CC?)

The only loans I imagine I might apply for in the next few years are student loans for graduate school, but that will not be for at least a year, perhaps two, and I have parents who would co-sign, both with very good credit histories (I don't have first-hand knowledge of this, I am extrapolating this from my personal impressions and the very good history reflected on my credit report from my father's Amex Blue Cash CC).

Finally, my father also has an Amex Gold card and has offered to add me on as an AU—would it be worthwhile to be an AU on both his Amex CCs, assuming the Gold has the same stellar record?

Recap: AU on father's Blue Cash for 4 months, applying for Chase Student Visa (my first CC) on Monday.

When should I apply for an Amazon CC? (And is anyone going to try to talk me out of doing so?)

Does it matter that both my CCs will then be from Chase?  Do I need a diversity of cards, or a third card for anyother reason?

and finally (for now)

Should I tell my father to go ahead and add me as an AU for his Amex Gold?

Thank you.

Message Edited by VinnyKolya on 04-10-2009 02:56 AM

[Anonymous]

Vinny - welcome to the forum!

Yes, Haulingthescoreup is somebody you should listen to.  She has great advice!

1.  Your income is all sources, including your job (full or part-time) and the "allowance" your parents pay to you or on your behalf.

2.  You may wish to begin at your student credit union, or other credit union like Alliant, because they can work with you based upon your circumstances.

3.  Many student cards are issued with "limited" or no credit on file.  The fact that you have your father's AU will help a bit, but you are correct that you need to establish personal credit as the AU only goes so far (mostly for utilization and age of accounts for FICO) but does not really count as a credit reference because you are not financially responsible for the payments.

4.  Savings secured cards can also be an ideal way to start out.  Possibly your parents may be willing to put $500 to $1000 in savings with your credit union in order to have a secured visa/mastercard issued.  After a period of time (usually 9-12 months) you can request to "graduate" the card to unsecured and have access to the savings.

5.  If your parents have substantial credit, and if one of those happens to be Bank of America....it is possible to add you to one of those accounts as "Joint Responsibility" and then eventually request to remove your parent, essentially "gifting" the account and its history to you.  However, the removal of the parent would require you to be credit worthy of the account financial responsibility.  And both your use of that account affects them, and them you until this occurs.  So, this is an option that needs very careful management and planning if you elect it.

6.  Other starter card companies such as Capital One, Orchard Bank and some HSBC backed cards are relatively easy to get, even with little or no credit.  They will be lower limit cards and most likely never increase much, but they do establish personal tradelines on your credit report allowing you to eventually obtain prime or better quality cards.

There are a variety of methods and combinations....but you need to have a plan and end result.  Make sure you have a budget so that you do not misuse credit.  Use them for convenience and credit building, not as a source of money counting on minimum payments.

Good luck and keep us informed on the plan, progress and results.

[Anonymous]

As far as income is concerned for your application I don't know much about that. Maybe someone else can shine some light on that.

But the AU is a good thing if the account is and has alwasy been in good standing. How long has the account been opened that you are an AU on? How long has he had his AMEX gold card open for? I would recommend you become an AU on the card that has the longest history. This adds to your AAoA.

About the amazon CC. Are there certain advantages when it comes to getting that card as opposed to any other CC? What is the advantage of having the Amazon CC? If you aren't saving that much money I would probably recommend another CC because you'll probably get a higher CL.

[haulingthescoreup]

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VinnyKolya wrote:

... The only loans I imagine I might apply for in the next few years are student loans for graduate school, but that will not be for at least a year, perhaps two, and I have parents who would co-sign, both with very good credit histories (I don't have first-hand knowledge of this, I am extrapolating this from my personal impressions and the very good history reflected on my credit report from my father's Amex Blue Cash CC).

One of my daughters is in medical school, and I never had to co-sign for her small undergraduate loans or her incomprehensibly gi-normous med school loans, thank God. (We're talking graduating from med school with a quarter million dollars in SL debt.) You're doing well to get your own credit going now. You shouldn't need co-signers on your SL's.

Finally, my father also has an Amex Gold card and has offered to add me on as an AU—would it be worthwhile to be an AU on both his Amex CCs, assuming the Gold has the same stellar record?

Yep, I'd do it.

Recap: AU on father's Blue Cash for 4 months, applying for Chase Student Visa (my first CC) on Monday.

Good luck! I do hope they'll work with you. Student cards aren't so dependent on income. My belief is that they do look at your major, though. I think that engineering and computer science majors probably get a warmer welcome than French majors.

When should I apply for an Amazon CC? (And is anyone going to try to talk me out of doing so?)

I won't. I have a Borders Visa from Chase, and I like it, but if I'd known better, I would have gotten the Amazon. Or better still, the Chase Freedom. You might need a bit more real history for the Freedom, though. I would wait until you have 6 months' worth of credit reporting in your own name, though. Your chancs of approval will be better, and you'll get a better deal on CL and APR.

Does it matter that both my CCs will then be from Chase?  Do I need a diversity of cards, or a third card for anyother reason?

I don't think there is a problem in having two cards from Chase, but I wouldn't want them to be my only two cards. I would get a third card from a different bank or credit union. There are an awful lot of posts here from people who have wound up on the "fecal chart" of one of their lenders, and I would hate for it to be my one and only lender.

and finally (for now)

Should I tell my father to go ahead and add me as an AU for his Amex Gold?

 I would. It will help strengthen your credit profile until you get your own stuff going.

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[Anonymous]

Thanks!  Now I have a good idea what I'll be doing for the next few months.  By then I should have had time to ask the right questions here to have a better idea what to do after that.

[WhirledPeasPlease]

Great post, OP! You've done your homework!

I'll piggyback off of Hauling and agree that you need to diversify at some point.

I have the Chase Amazon Visa and I LOVE it. Triple points from Amazon purchases, double from restaurants, gas stations, drug stores and office supply stores, and single from everything else. All rewards are doubled for the first 90 days, plus there's usually a $30 bonus. There's no cap on points, but there is a cap on how many points you can redeem for cash in a year.

Good luck! And good luck in school!

ETA:  carriage returns -- I hate it when they don't show up!  And I don't even use FF!

Message Edited by WhirledPeasPlease on 04-11-2009 11:39 PM

[Anonymous]

Update: walked into the Chase branch north of campus today, and asked about applying for a Chase Student Visa card.  She checked, and I had been pre-approved for two cards,  neither of which was the Student card.  I opted for the Chase Freedom card over the Platinum, as I do not intend to carry a balance, and would prefer rewards to a slightly lower APR.

We'll see what the exact terms are when I get it in the mail (she said to expect it in about a week).

Woot!

[Anonymous]

I've liked my Chase Freedom Visa.  I got it a little over two years ago, the magnetic data (not the physical card) was stolen last year but they quickly replaced it.  I also got my first $250 check from them last year (had a ton of hotel charges from a long-term contracting stint, and once you reach $200 cash-back they automatically give you an extra $50).

My only concern, I would check the account balance online every few days,  just to make sure nobody has stolen the card info.   Unfortunately Chase doesn't immediately post charges; they wait a day or two and leave the amount in an obscure "pending charges" field, which can change drastically for seemingly no apparent reason.  

When I saw the "pending charges" on my account became $800 last July, I ignored it thinking to myself, "There goes Chase again, randomly putting in 'ghost charges' and removing them the next day."   Unfortunately in about a business day or two they became REAL charges.  I can only assume someone stole my card's magnetic info at a gas station swiper...Chase never told me the details of the theft, they only removed the illegal charges.  So watch your back.

Dan

[Anonymous]

Congrats!   With this as your "personal" card and being added to a couple of your Dad's cards as AU.....you are well on your way to establishing some great credit.  Just use it wisely....don't let the shiny objects lure you in

Good luck and good job!