Help I'm not anywhere in the credit system! What should I do?

[Anonymous]

Hey everyone! I'm new to the forum and I wanted some advice. I'm 21 years old almost 22 and I'm no where in the credit system. I was told to check my credit just to make sure no one has stolen my identity and I got a letter from all three credit reporting places that said they couldn't find me anywhere. In the letter it told me to call them and give them my information and the lady I spoke with told me that they couldn't do that. She asked me if I ever used my SSN for anything and I said yes then she said the easiest way possible would be to apply for a card. Ever since I turned 18 I've always gotten pre approval letters from Discover, Capital One and several other banks. I know people always recommend a secured card for starting out but I'm not sure on which one. I already currently have a bank account and also a savings account at a credit union. The banks I'm currently close to are BOA, Chase, BB&T, PNC,Wells Fargo,Regions,etc. What do you guys suggest I do? Also before all of this I did apply for a VS credit card. The first time I didn't receive a letter then the second time it said not approved then at the bottom it said my credit score is a 418. I'm just so confused right now. 

[Anonymous]

The 418 probably wasn't a FICO score; does it list any more information on the letter? I tried applying for a couple before I finally applied for the secured card from Disco. Have any of your mailers shown a solid APR rather than the regular range? If your Disco mailer has a solid APR or the 3-point range, I'd apply with them. Usually you can use the pull for their secured card if denied. I applied directly for the secured card and it graduated like clockwork and has grown like a weed. Look at my siggy now. BofA also has a good secured card, but it carries an AF.

[Anonymous]

Do you realise that in order to have a credit profile you have to have used any sort of credit product before(loan,credit card etc)?

[Anonymous]

I'm guessing OP would have at least one report with HP(s), but that wouldn't be able to generate a FICO score.

[Anonymous]

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@Anonymous wrote:
The 418 probably wasn't a FICO score; does it list any more information on the letter? I tried applying for a couple before I finally applied for the secured card from Disco. Have any of your mailers shown a solid APR rather than the regular range? If your Disco mailer has a solid APR or the 3-point range, I'd apply with them. Usually you can use the pull for their secured card if denied. I applied directly for the secured card and it graduated like clockwork and has grown like a weed. Look at my siggy now. BofA also has a good secured card, but it carries an AF.

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They gave me 3 reasons of why I was denied it says: 

Distance between prior residences 

Length of residence too short

Risk associated with address history

None of those make sense because my residence now I've been at for almost 4 years and prior residence was 15 years.

I can't recall at this moment what the APR was but the most recent Discover I got was information about applying for the Disco secured card it was more like a slip instead of a letter. Oh wow I didn't know you could graduate so quickly. I know the discover has a $200 minium deposit would you recommend doing that or something higher? The credit score they gave me they said it was the scoring system they use. They didn't specify any further details. The letter came from Comenity Bank by the way.

[Anonymous]

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@Anonymous wrote:
The 418 probably wasn't a FICO score; does it list any more information on the letter? I tried applying for a couple before I finally applied for the secured card from Disco. Have any of your mailers shown a solid APR rather than the regular range? If your Disco mailer has a solid APR or the 3-point range, I'd apply with them. Usually you can use the pull for their secured card if denied. I applied directly for the secured card and it graduated like clockwork and has grown like a weed. Look at my siggy now. BofA also has a good secured card, but it carries an AF.

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If your talking about the VS letter these were the reason I was denied:

Distance between prior residences

Length of residence too short

Risk associated with address

Which all the reasons listed were wrong because the residence I'm at now I've been for almost 4 years and my prior residence I was there for 15 years. The letter from the credit reporting places said to go online and register my information but when I tried to do that it told me to call. Then she stated she couldnt do that over the phone. All I had to send was a Valid social security card and a drivers liscense which I have both so that was confusing to me.The bottom of the letter I got from Comenity Bank says the scoring is from their own system so its defintely not a legit score. I can't recall at this time what exactly the APR was but I know they claim it was a good offer. My most recent thing I got from Disco was a slip to apply for a Disco Secured Card. It said something about "We found the perfect Discover card for you". I'm glad to know your discover card graduated fairly quick. I know there's a minimum deposit of $200 would you recommend putting that or something higher? I'm just looking for something basically to help establish my credit. I defintely won't be buying a whole lot on whatever card I choose.

[Anonymous]

Personally I would recommend Discover, they're a good institution to start out with. My first card was with them. I'm not sure what your income situation is but personally I would try to provide the most accurate number when you apply for a card (i.e. being 21 you can probably factor in any regular support money from parents etc. into that income figure if that applies to you). Starting limits seem most tied to the income you state which ties into my next point. Don't apply for more than 1 or 2 cards now. Others might advise differently but you're just going to get shafted with these tiny  $500-$1,000 starting limits which are a real pain in the ass come a year down the line if they haven't grown because it's something for other banks to look at when you apply for more credit (and return the favour with 500/1000). Discover will grow with you. They're pretty consistent with automatic credit line increases every 4 months for me (I've seen 3/6 months for others and then also people that don't get them at all so your mileage will vary). My Disco started at $500 and has grown to $8,800 in three years and honestly my reported income hasn't changed too much between then and now.

I'm also a fan of credit unions so looking at your current credit union to see if they have a card wouldn't be a bad idea. Without knowing more about your situation I can't really speculate further, but generally what I tell friends (I'm a similar age to you) is open one or two cards now and then reassess a year from now. Hopefully your credit line(s) will grow a bit by itself between now and then at which point you'll have a nice young credit history with no red flags (pay your bills, don't carry a balance if not needed, etc.) to use to apply for whatever you need/want a year from now, be it more cards, loans, etc.

Don't worry about that 418. Not sure what that is but it's not a fico score. Unless this has recently changed, you won't have a credit score until you've got 6 months of credit history on record with the bureaus. Also note, those "pre-approvals" you got in the past few years were more likely "pre-selected" or some other verbage... they can't send out pre-approvals until you hit 21 but I did get similar at 18 (it was the Discover one that I decided to follow up on). 

Good luck to you.

[Anonymous]

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@Anonymous wrote:

Personally I would recommend Discover, they're a good institution to start out with. My first card was with them. I'm not sure what your income situation is but personally I would try to provide the most accurate number when you apply for a card (i.e. being 21 you can probably factor in any regular support money from parents etc. into that income figure if that applies to you). Starting limits seem most tied to the income you state which ties into my next point. Don't apply for more than 1 or 2 cards now. Others might advise differently but you're just going to get shafted with these tiny  $500-$1,000 starting limits which are a real pain in the ass come a year down the line if they haven't grown because it's something for other banks to look at when you apply for more credit (and return the favour with 500/1000). Discover will grow with you. They're pretty consistent with automatic credit line increases every 4 months for me (I've seen 3/6 months for others and then also people that don't get them at all so your mileage will vary). My Disco started at $500 and has grown to $8,800 in three years and honestly my reported income hasn't changed too much between then and now.

I'm also a fan of credit unions so looking at your current credit union to see if they have a card wouldn't be a bad idea. Without knowing more about your situation I can't really speculate further, but generally what I tell friends (I'm a similar age to you) is open one or two cards now and then reassess a year from now. Hopefully your credit line(s) will grow a bit by itself between now and then at which point you'll have a nice young credit history with no red flags (pay your bills, don't carry a balance if not needed, etc.) to use to apply for whatever you need/want a year from now, be it more cards, loans, etc.

Don't worry about that 418. Not sure what that is but it's not a fico score. Unless this has recently changed, you won't have a credit score until you've got 6 months of credit history on record with the bureaus. Also note, those "pre-approvals" you got in the past few years were more likely "pre-selected" or some other verbage... they can't send out pre-approvals until you hit 21 but I did get similar at 18 (it was the Discover one that I decided to follow up on). 

Good luck to you.

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Thank you so much for all your advice! I was so conflicted on what to do because I would rather start establishing credit now instead of waiting until I desperately need it. I've been hearing a lot of good things about the Discover card so I think I'm going to go with the Secured option to try that out first. My plan is to always just have one credit card that I can use I think maybe eventually I will get another down the line that offers more. I'm also glad to know your experience as well with Discover as far as credit line goes that was one of my main concerns with the card is being stuck at a low limit. My credit union has a few credit card options, but I really don't want to do business with them anymore because of the issues I've had with my basic checkings and savings account. I only plan on using the credit card for paying for things like fast food or light grocery shopping. I plan on getting the Discover card next month so hopefully around summer/ early fall I will have a good credit history. Again thank you so much for your advice it was really helpful! 

[finfree]

I’m in no position to give advice because it’s been 35 years since I started my credit journey and I don’t know current conditions, but I started with a green card from AMEX. Do they not still issue those? Because it’s a charge— and not a credit— card it forced me to be responsible by paying off the balance in full every month. This was in the pre-FICO days, but wouldn’t an AMEX card help a young person to establish credit?

[HeavenOhio]

AMEX likes to see a bit of history. They don't require much history, but they need more than zero. Keep in mind that their charge cards all have an annual fee while some of their revolvers don't.

Discover secured is a great place to start. You can back it up with as much as $2,500. The advantage of backing it up with $2,500 is that it will graduate with a $2,500 limit.

Definitely move slowly. I'd grab the Discover card right now. In six months, you'll generate a score and could be well positioned for a handful of unsecured products. Use the six months to do some research.

Chase deserves a special mention. They have great cards. But they like to see some history, so don't consider them now. They're also sensitive to too many new accounts, and if you have opened five cards within the past 24 months, you're almost certain to be denied. 13 months of history and six months with no new cards gives you a good chance of getting in. The moral of the story is that if you'd like a Chase card or two early in your history, go slowly. If Chase isn't important to you, you can build a little more quickly.

And as mentioned, avoid store cards right now. They tend to start with low limits, and many of them come from banks that are a pain to deal with. Also, if lenders see too many low limits on your report, they're less likely to approve you for a higher limit that you might otherwise deserve. Down the road, if you see a store card that's a good fit, go ahead and grab it. But keep in mind that many people do just as well sticking to Visa/MasterCard/Discover/AMEX.