11-08-2009 02:33 PM - edited 11-08-2009 07:28 PM
I am currently a graduate student and am trying to build credit. I have no bankruptcies, no carried balances (I PIF every month), but I only have one credit card. I graduated from undergraduate in May with no debt because of scholarships. In graduate school, I am technically paid ~$54,000, with all but $26,000 of that going towards tuition, health insurance, and fees, meaning $26,000 is what I have to live on each year before taxes.
I had been using my debit card for my US Bank account for years but decided that it might be wiser to get a credit card for the sole purpose of building credit. My debit card always served its function, since I never spend money I don't have, so it has been easy to pay off my Capital One credit card since I got it in February of 2009.
I keep my utilization between 1-20% and have 9/9 complete payments on my credit card, but I have heard that Capital One isn't the greatest card for building credit since they don't report everything. I found this to be true -- I would previously pay off my card before they even issued me a bill for it, but after looking at my report on CreditKarma, I found that it showed $0 of utilization, even though I had spent several hundred dollars over a few months on it. After three months of having a CL of $300, CapitalOne raised it to $1,000 automatically.
What I want to do now is build credit faster -- the number one issue of why my credit is poor now is because I have only one line of credit on my report and no other loans or revolving credit lines, and it only goes back to Feb of 2009. According to MyFICO, my Experian score is at 703, but it means little to credit card companies -- I thought I'd give AmEx a shot and applied last night. Denied:
Listed below are the reasons that you did not score well compared with other applicants. (For reasons based on information in a credit report, the name of the consumer reporting agency is identified.)
Number of trades (Equifax)
Your consumer credit bureau score from Equifax is too low (See below)
Too few credit card accounts on which, in our estimation, you have paid a majority of the balance in recent months. (Experian)
Amount of credit available on accounts (Equifax)
Your consumer credit bureau score mentioned above was determined using a scoring system that evaluated the information in your file at the consumer reporting agency named above. The following are the primary factors in your credit report that affected your credit bureau score:
Too few accounts currently paid as agreed.
Length of time accounts have been established.
Too many inquiries last 12 months.
Lack of recent installment loan information.
I will now have 4 hard pulls on my account. One from Capital One, one from Scottrade (opened a brokerage account), one from US Bank (my bank -- they offered me a credit card, and of course thinking that I was likely to get in since they offered it, I applied, and was rejected), and now AmEx will surely show up in a few days. I realize that these hard credit pulls hurt my score, but what am I to do? I make enough money to PIF every month, I have over $20,000 in equity invested, and the research I am working on is well-funded (> $5 million dollars), so there is virtually no chance of losing my employment for the next six years. Of course, that all doesn't show up on my report.
My question is this: What do I need to do to gain additional lines of credit/build credit? I have student loans available to me that I can take out that are subsidized, but I don't need them. I own my own car, have no interest in getting a mortgage, etc. so I feel like my only option to gain additional lines of credit is to get another credit card, which I can't seem to get. I realize AmEx is one of the more strict lenders, but it just frustrates me that because I don't have any debt and only a single credit card, my credit history is so little that it makes it difficult to get a nice card and risky to do so - each hard pull is damaging my credit and takes over two years to go away, so the more I try to build credit, the more it hurts me. Any advice?
MyFICO Exp: 703
CK FAKO: 731
11-08-2009 02:41 PM
11-08-2009 02:43 PM
11-08-2009 03:19 PM
I would sit down with a local banker and share the information you have here, preferably with as much documentation as possible.
You said it yourself; all of the most pertinent facts about your financial potential are not in a credit report. Therefore you need to sit down with another real live person and present your case and get that information into someone's line of vision. (btw, you do have a good case) This will also give you some control over the inquiry problem. You can request some degree of assessment before allowing an inquiry and with your credentials, if you come with a copy of your latest report you might end without an inquiry.
11-08-2009 05:27 PM
I agree with the above. Start locally if you can. Does your school have a credit union affiliated with it? Go the secured route if you can't find something locally, but at least locally you can talk with a live person before they pull your credit. It can save some inquiries.
Also, do you have parents or a sig other who has credit card accounts in good standing that have some age to them? You could be an authorized user on a couple of their cards, and that could automatically give you some history. What you want is a card with some age where they don't let the statement show much of a balance. We have put our grown children on some of our cards as authorized users, we pay off the balances before the statements cut, and it has really helped build their histories. It also helps their FICOs. You don't even need to have possession of the card or use the card.
I'll be finishing grad school in May, and I understand the frustration of having to report only partial income. No one asks how much we have in brokerage accounts, equity in our home, etc. The difference is that I went back to school when I was older, so we already had established credit files.
BTW, I looked at panoptics this weekend. I think I'll take the plunge.
11-08-2009 09:30 PM
I don't want to start off sounding too negative, but AmEx was not the best place to start when attempting to build credit. On the positive side, a credit denial automatically allows you to get a free credit report from the company denying you credit. I would also recommend getting the Equifax score and post that here. The Experian score range is skewed to higher numbers, so a 703 Experian FAKO is not the same as a 703 Equifax FICO (According to Experian's website, a 703 is a very low C-minus grade for credit) - http://www.experian.com/credit-education/credit-sc
I started building my credit with a Visa (WaMu) and a Mastercard (Citi). I PIF'd both cards every month, on time. I waited until the cards reported a balance, and then paid it off (never ahead of time, although once you establish credit, keeping a low utilization is a very good idea).
Initially WaMu only gave me $500, but they automatically doubled the CL every 6 months and in less than 3 years it was up to what Citi gave me outright ($8000). Discover might also be a good choice once you establish credit with Visa and/or Mastercard. Eventually you may be "worthy" for the AmEx, but by then you might not want (or need) them.
I don't think there's a "quick" way to help credit, but starting small is always a good idea. Within two years you should be well into the 700's score range (Equifax FICO). Good luck.
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