Should I apply for credit?

[MrNoCreditMan]

Hello all,

I'm new to this board. I didn't realize there was a forum to seek such valuable information. I need some advice, but will explain some brief history. 

I was a fool back in college (1999). There were students or, more like people posing to be students, hanging around on campus with credit apps. Of course, I was thrilled about having my first credit card. I dove in head first, not realizing what I was doing. With no credit history, I had an $1000 credit limit wiht Discover. I felt high and mighty and purchased whatever I wanted. I applied for three more cards some time after. To make a long story short, I had nearly all of my credit cards in collection, my credit history took a major hit, and I struggled to pay them all off. During that time until now, I might have applied for two credit cards, which was obviously rejected, so I simply didn't bother to apply for anything. My only debt at this point is my student loan. I registered to myfico a few months ago, and signed up for the score watch. My score was about 550 for one of the credit bureaus, and when I got the breakdown of what that meant, I wasn't surprised. I did more research (I should have done that years ago) and I have a much better grasp about credit. I have been paying my student loan debt on time for the last five years. But I have no existing revolving line of credit. 

So, I recently got an email telling me that my score went up. When I checked, it, I noticed that it went up to 660. Reading all of the analysis, I felt so good, that I nearly broke down. Yes a grown man almost broke down. I know 660 isn't anything spectacular like 750-850 but I was just happy to see most of the summmary in yellow and green (good and great) instead of orange and red (fair and poor). I'm a good person but I know that's not what gives you credit. I tried the myfico simulators and it showed me that if I apply for credit, I can improve my score by about 20 points.  If I apply for an auto-loan, I can improve it at minimum 15 points. 

I'm more responsible now. I'd like to apply for credit, and even though the report gives somewhat favorable feedback on getting approved for credit, I'm very nervous. Should I apply for credit? And if so, how much of a credit line would I qualify for? Soon after, I'd like to purchase a car, put down a few thousand but apply for an auto-loan. I haven't done this in so long, so any valuable feedback from anyone who is willing to read this post is greatly appreciated. 

Thank you.

[AndySoCal]

I would suggest a couple of ideas. One you can go to creditcards.com to see what is availible for a Visa, Mastercard Discover etc and the credit history needed to get that type of card. The also define what they mean by that type of credit history in general terms.  If you cannot find anything there that meets your needs you could go and get a secured Visa or Mastercard. There are several banks that offer them the bank you bank with my offer one. You could ask your bank what kind of credit history is general is needed to be approved for their Visa or Mastercard.  I hope this helps.

Message Edited by AndySoCal on 12-10-2009 07:03 PM

[Anonymous]

I found myself in a similar boat minus about 50 points. The good people here steered me toward Credit One Bank. (Secured cards seem to be a good option but I did not want to secure a card) so I chose subprime annual fee cards. I have a Credit One Bank and Houshold Bank card. They are both subprime and both have annual fees. But they are easy to get I had a 609 when I got Credit One Bank and in the 620's when I got houshold bank. I also got approved today for a Best Buy Reward Zone Mastercard and was sitting at 623. So these are options depending on how you go.

[haulingthescoreup]

Hi, MrNoCreditMan (soon to change), welcome to the forums!

Do you have credit unions in your area? With a 660 FICO EQ score, I would definitely pull out the Yellow Pages and start checking them out. Credit unions are not-for-profit membership organizations, where the members pool their funds, and they are often very willing to work with those who have shown that they have gotten control of their credit usage.

With a recent FICO Equifax score and report, you can try printing it out (make several copies) and visit local CU's, talking with a loan officer. Show them the report, tell them that it's a Beacon 5.0 (the industry name for the FICO Equifax score), explain your situation, and ask if they think that they might be able to help you out. They might offer a secured card. If so, ask whether it "graduates" to unsecured after X number of months, and whether it will keep the original opening date.

If you decide to apply, they will have to pull another report, of course. They can't just work off your myFICO report But with luck, they could make an educated guess from what they are seeing. At the same time, you can get a feel for each institution and decide with whom you'd like to work. Another handy thing about CU's is that they are often an excellent source for auto loans, so when the time comes to replace your car, you will already have an established relationship.

Not all areas have credit unions, especially big cities. Perhaps banks have blocked their presence; I don't know. But in my small-to-medium size city, we have a different one on every block, and they are fighting one another for business. Many CU's will let you qualify for membership simply by living or working in the county in which they're located. Ours even include if you worship in their multi-county area, so you can see that membership qualifications can be pretty liberal.

Congrats on turning the corner and getting on top of your credit! 660 is not a shabby score at all, especially for those coming back from problems. I had a 651 EQ when I started on the forums two years ago, and I had been at 590 several months before that. With effort, time, and patience, it really does get better.

[MrNoCreditMan]

---

@AndySoCal wrote:
I would suggest a couple of ideas. One you can go to creditcards.com to see what is availible for a Visa, Mastercard Discover etc and the credit history needed to get that type of card. The also define what they mean by that type of credit history in general terms.  If you cannot find anything there that meets your needs you could go and get a secured Visa or Mastercard. There are several banks that offer them the bank you bank with my offer one. You could ask your bank what kind of credit history is general is needed to be approved for their Visa or Mastercard.  I hope this helps.

Message Edited by AndySoCal on 12-10-2009 07:03 PM

---

Andy,

Thank you for the advice. I check out creditcards.com, checked out all of the cards under fair credit and didn't like the initial fees. They mentioned that the starting limit would be $250 but the fees totals $200!! So that would mean, I'd have a credit card with just $50 available? Let me know if I'm wrong. And I don't know if I want a secured card. Again thank you.

[MrNoCreditMan]

---

@Anonymous wrote:
I found myself in a similar boat minus about 50 points. The good people here steered me toward Credit One Bank. (Secured cards seem to be a good option but I did not want to secure a card) so I chose subprime annual fee cards. I have a Credit One Bank and Houshold Bank card. They are both subprime and both have annual fees. But they are easy to get I had a 609 when I got Credit One Bank and in the 620's when I got houshold bank. I also got approved today for a Best Buy Reward Zone Mastercard and was sitting at 623. So these are options depending on how you go.

---

Thanks okstatefan. How have your experience been with Credit One Bank so far? What was your starting credit line when you applied?

[MrNoCreditMan]

---

@haulingthescoreup wrote:
Hi, MrNoCreditMan (soon to change), welcome to the forums!

Do you have credit unions in your area? With a 660 FICO EQ score, I would definitely pull out the Yellow Pages and start checking them out. Credit unions are not-for-profit membership organizations, where the members pool their funds, and they are often very willing to work with those who have shown that they have gotten control of their credit usage.

With a recent FICO Equifax score and report, you can try printing it out (make several copies) and visit local CU's, talking with a loan officer. Show them the report, tell them that it's a Beacon 5.0 (the industry name for the FICO Equifax score), explain your situation, and ask if they think that they might be able to help you out. They might offer a secured card. If so, ask whether it "graduates" to unsecured after X number of months, and whether it will keep the original opening date.

If you decide to apply, they will have to pull another report, of course. They can't just work off your myFICO report But with luck, they could make an educated guess from what they are seeing. At the same time, you can get a feel for each institution and decide with whom you'd like to work. Another handy thing about CU's is that they are often an excellent source for auto loans, so when the time comes to replace your car, you will already have an established relationship.

Not all areas have credit unions, especially big cities. Perhaps banks have blocked their presence; I don't know. But in my small-to-medium size city, we have a different one on every block, and they are fighting one another for business. Many CU's will let you qualify for membership simply by living or working in the county in which they're located. Ours even include if you worship in their multi-county area, so you can see that membership qualifications can be pretty liberal.

Congrats on turning the corner and getting on top of your credit! 660 is not a shabby score at all, especially for those coming back from problems. I had a 651 EQ when I started on the forums two years ago, and I had been at 590 several months before that. With effort, time, and patience, it really does get better.

---

Thank you hauling. Very useful information/advice also. I do know there are a couple of Credit Unions around my workplace. In fact, I believe there is one across the street. I might set up an appointment some time next week. I'd like to get an unsecure card before the holidays, but I don't think that will happen. It's been so long since I have been approved for any kind of credit. Hauling, are the credit simulators reliable in gauging FICO scores? 

[haulingthescoreup]

---

MrNoCreditMan wrote:

Hauling, are the credit simulators reliable in gauging FICO scores? 

---

Oh, gosh, the sim accuracy question.

I have found them to be accurate for me, generally landing in the mid-point of the projected score range. Others have found them ludicrously wrong.

I would say that the less complicated your score report, the more accurate they are. One thing that they don't seem to do is take into account items aging off your reports, whether positive or negative, but I don't think that's much of a factor in your case. I'm also not convinced that they factor in AAoA very well, but that's a fun debating topic.

Certainly, going from no revolving credit reporting to having some does wonders for your scores. I would definitely expect an increase.

btw, don't be surprised if you were able to get some positive results on an app before the holidays. Your local CU's might be looking for business! And they aren't necessarily going to restrict you to a secured card. I threw that in there so that you would know what to ask if you do get offered one. If you've got the cash to deposit to secure them, they're great. They don't result in a lower FICO score than unsecured or anything. It's not unusual for those new to credit or rebuilding to have secured cards on their reports, and frankly, I'd rather have a secured card from a decent lender showing on my reports than an unsecured card from Piranhas-R-Us National Bank. (Just my preference.)

Whichever way you go, good luck!

[MrNoCreditMan]

---

@haulingthescoreup wrote:

---

@MrNoCreditMan wrote:

Hauling, are the credit simulators reliable in gauging FICO scores? 

---

Oh, gosh, the sim accuracy question.

I have found them to be accurate for me, generally landing in the mid-point of the projected score range. Others have found them ludicrously wrong.

I would say that the less complicated your score report, the more accurate they are. One thing that they don't seem to do is take into account items aging off your reports, whether positive or negative, but I don't think that's much of a factor in your case. I'm also not convinced that they factor in AAoA very well, but that's a fun debating topic.

Certainly, going from no revolving credit reporting to having some does wonders for your scores. I would definitely expect an increase.

btw, don't be surprised if you were able to get some positive results on an app before the holidays. Your local CU's might be looking for business! And they aren't necessarily going to restrict you to a secured card. I threw that in there so that you would know what to ask if you do get offered one. If you've got the cash to deposit to secure them, they're great. They don't result in a lower FICO score than unsecured or anything. It's not unusual for those new to credit or rebuilding to have secured cards on their reports, and frankly, I'd rather have a secured card from a decent lender showing on my reports than an unsecured card from Piranhas-R-Us National Bank. (Just my preference.)

Whichever way you go, good luck!

---

Extremely helpful info hauling. I truly appreciate it. I'm still nervous in a sense but feel a bit better because I'm equipped with some info from off of here.

[Anonymous]

---

@MrNoCreditMan wrote:

---

@Anonymous wrote:
I found myself in a similar boat minus about 50 points. The good people here steered me toward Credit One Bank. (Secured cards seem to be a good option but I did not want to secure a card) so I chose subprime annual fee cards. I have a Credit One Bank and Houshold Bank card. They are both subprime and both have annual fees. But they are easy to get I had a 609 when I got Credit One Bank and in the 620's when I got houshold bank. I also got approved today for a Best Buy Reward Zone Mastercard and was sitting at 623. So these are options depending on how you go.

---

Thanks okstatefan. How have your experience been with Credit One Bank so far? What was your starting credit line when you applied?

---

So far so good. I also checked out creditcards.com and you are right its ridiculous. I would never recommend those cards. The credit one has only the AF which I can live with. HOWEVER beware they charge you for online or phone payments so to avoid the fee I mail my check in so it takes a couple of days. I have heard others say if they use their banks online bill pay they dont get a fee but I havent tried so I cant say for sure. It started at $200 CL. Now I have also liked my Household Bank card because I got a $320 limit to start, and there is no fee for paying online. Credit One charges the AF monthly to your account and Household hits you with it upfront. So thats the difference to me in the two. I now prefer Household but am still going to use and garden credit one. I will let them all three get to maturity and hopefully at least some CLI's then start looking into prime NO AF cards. But these are the cards I have to play with. On a positive note I have already noticed great strides in my credit scores since opening and using these accounts so...

Good Luck on whatever you choose.