topic Should I reject Capital One? in Credit Cards

Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 04:08:17 GMT

Long time reader, first time poster to this website. I have a question:

I was accepted for three cards this week:

Discover More for $8600 with a 0% APR until Sept. of 09 and then an 8.9% APR

CITI CashReturns for $5000 with a 9.9% APR

Capital One Standard Platinum for $1000 with a 19.8% APR

I also have a Macys card that has a $600 limit (my only card that I've barely used over the last 10 years).

I have good scores, but never had use for credit until I wanted to buy my own place and increase my purchasing power. I thought I would apply for a few cards that I could use to demonstrate responsible use of credit over the next year as I prepared for my major purchase (use it for things like grocery and on business trips instead of my business card, etc.). I applied to Capital One as a safety in case I was rejected by the other two companies.

With all I've heard about Capital One, I'm tempted to say thanks, but no thanks to Capital One. Is this advisable? If so, is it better to just tell them even before I activate the card? How would this affect my scores? If I do accept it, I probably won't even carry it around because it's such a low limit and I wouldn't want a high utilization and the APR is horrible.

Thanks!

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 04:18:23 GMT

Compared to your other two cards, the Capital One card looks suboptimal. Cards with a CL of $5000 and above will help your credit score even if it is already good, whereas cards below that threshold will draw your score down, at least temporarily.

I don't think Capital One is necessarily bad. Their no fee, no hassle rewards card for excellent credit is worth a look. I think they are also the only credit card issuer that doesn't charge you through the nose in case you use the card on a journey abroad. Other than that, there are better offers.

Re: Should I reject Capital One?

score_building — Thu, 18 Sep 2008 04:52:02 GMT

i think you apped for the tradeline whether or not you activate the 'damage' is done

1. 3 hard inquires

2. new account score hit

both temporary score trimmers. maybe use the card and pif, you sound like the kind of customer they'll do back flips for once they see how you handle your new (and old) accounts. you may be eligible for significant cl increases going forward depending on the card you were approved for w/ Capital One. my apr was reduced at my request from 18.99 to 11.99. they're worth a shot for you esp. since you already took it. whatever you decide: make it work!

when you apped, cap 1 pulled 3 hard inquiries on your report, so, yes, it does have a small impact on your score and it will 'hurt' you slightly scorewise whether or not you choose to activate the card. if that small issue doesn't matter to you and you would rather ditch it from the outset there's of course no major damage. gl.

Message Edited by score_building on 09-17-2008 09:52 PM

Re: Should I reject Capital One?

Miner — Thu, 18 Sep 2008 04:35:25 GMT

I have a question, is the order you listed (by decending CL) the same order you applied in? I was just wondering if the lowering limits was caused by the previous cards inquiry and so on. I know some banks get nervous when they see someone shopping for a lot of credit suddenly though I would have thought Capital One would be less so.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 04:36:35 GMT

Thanks for your response, Ulan. This site has been amazingly informative the last several months.

According to the "How to Close a CC" thread up above, it wouldn't hurt me to say no to Capital One in this instance. I'll wait to see if anyone else doles out other advice on this matter.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 04:39:23 GMT

scorebuilding: Thank you for your response. You're right; the damage is indeed done, albeit temporarily. I went in thinking that I needed to actually take the hits in order to yield long term gains (again, thanks to this forum). I could just use this card as my gym membership card and do an autopay from my bank account to build a solid payment history and just throw it in a drawer for emergency use only should I lose my wallet.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 05:00:56 GMT

Miner: Good question.

I received an 'invitation' to apply for a Discover card a few weeks ago. I usually keep these types of letters for a while and mull it over, but never apply. With the capital markets crumbling, I did some research on the Discover deal and decided to take the chance and applied over the phone on Monday night. I was told to call a number to check the status of my Discover app the next day. The same night (Monday), I applied for a Capital One credit card online as my "safety" app not knowing if having a hit on my credit reports would hurt me later, and was approved instantly with no other specific information.

The very next day (Tuesday) I applied for the Citi CashRewards card because only the Capital One hit one of my reports and I figured that if I was going to take the hits and not apply for the rest of the year, I might as well try for another 'reach' card. On Tuesday afternoon I also called Discover as I was told by the rep to check my status. I called and after giving her my information, the lady on the other end of the phone asked me why I had applied for Discover. I told her my year long goals for homeownership and that I had applied for a Discover based on the invite, the excellent rewards program at many of the stores I frequent (probably how they got my information), and the almost universal high customer satisfaction reports I had read during my research. She then told me that I was approved and basically told me about her love of Discover (she was a really good CSR).

So Capital One told me today that the card was mailed today, 9/18, which is super fast. I know they didn't know about my other inquiries and approved me at $1,000 on a card that has a maximum limit of $3,000. In fact, every time I called Captial One, they couldn't access my app because I had submitted it online. I had to be transferred multiple times before someone could actually tell me my status.

Citi didn't see the other hits (the rep told me nothing showed up), but the rep did say that my $0 balance on my Macy's card hurt me with their internal scoring. I was a bit shocked at that bit of news. She said they couldn't tell if I had used it recently without a balance and couldn't assess my use of credit. I told her that there was only so much you can use a Macy's card for and that I used it every month and paid it off almost immediately. I also told her that I was trying to prepare myself for homeownership. She understood and said that it wasn't preventing me from getting the card and wished me luck.

They do look at your inquiries, though. Citi was very transparent with me about their internal scoring. My limited advice: be strategic and apply for what you need and can use.

Hope this helps.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 05:29:17 GMT

Heh, I see you love Cap1 already . But, maybe, they will exchange it one day for something better.

And thanks for the insight into your application processes. I never did that on the phone, so it's very interesting to see your experiences with the customer service.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 05:46:28 GMT

You're right, Ulan. Maybe they will exchange it down the line.

As for the customer service reps, Citi and Capital One use offshore call centers for intial calls (so does Macy's). Discover used all American based call centers. I think a lot of your interaction depends on that.

I was checking it out, and Capital One has an extended warranty plan included with the card on purchases made. The Citi and Discover cards I received don't mention anything like that on their card pages. I always assumed that was standard with cards, but I guess I'll have to call in and ask Citi and Discover about that. That might be something in Capital One's favor and a reason to keep it around in case of a major electronic/home appliance purhcase.

Re: Should I reject Capital One?

jmbfl — Thu, 18 Sep 2008 06:07:29 GMT

FYI - In the future Cap1 will let you apply for another card, gulp down another three inquiries and then merge them. If they gave you a card that will grow to $3K that's pretty good. No reason to reject it at all.

TL's with CL < $5K do not hurt you FICO scores in any way. That is misinformation. The only way FICO scoring takes your CL's into account is in calculating UTIL. A CL of $5K or more may help you on an MR. That's a different matter.

You got a fat initial CL from Diiscover. Consider yourself lucky - they are not that generous with everybody. Be sure to use the card - they like that.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 06:14:23 GMT

@jmbfl wrote:
TL's with CL $5K do not hurt you FICO scores in any way. That is misinformation. The only way FICO scoring takes your CL's into account is in calculating UTIL.

If this is true, the FiCO Simulator on this dubious myfico page must be plain wrong .

Re: Should I reject Capital One?

jmbfl — Thu, 18 Sep 2008 06:18:07 GMT

@Anonymous wrote:
@jmbfl wrote:
TL's with CL $5K do not hurt you FICO scores in any way. That is misinformation. The only way FICO scoring takes your CL's into account is in calculating UTIL.

If this is true, the FiCO Simulator on this dubious myfico page must be plain wrong .

It's UTIL Ulan.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 06:22:13 GMT

@jmbfl wrote:

@Anonymous wrote:
@jmbfl wrote:
TL's with CL $5K do not hurt you FICO scores in any way. That is misinformation. The only way FICO scoring takes your CL's into account is in calculating UTIL.

If this is true, the FiCO Simulator on this dubious myfico page must be plain wrong .

It's UTIL Ulan.

Did you try the FiCO Simulator? Add a new tradeline. Try CL values below $5000, then try CL values $5000 and above (with a good FiCO). Then tell me the same again.

Message Edited by Ulan on 09-17-2008 11:22 PM

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 06:20:37 GMT

JMFBL, what is an MR? I tried looking it up.

Re: Should I reject Capital One?

score_building — Thu, 18 Sep 2008 06:22:18 GMT

MR= Manual Review

Re: Should I reject Capital One?

jmbfl — Thu, 18 Sep 2008 06:42:12 GMT

Ulan wrote:
Did you try the FiCO Simulator? Add a new tradeline. Try CL values below $5000, then try CL values $5000 and above (with a good FiCO). Then tell me the same again.

Just to humor you, Ulan, I did this and it made absoutely no difference. And I have a plenty good FICO.

1) I would take what the calculators/simulators tell you with a grain of salt.

2) It's UTIL plain and simple.

That being said many issuers will set their CL for you based on what they see others have given you. So having higher TL's on the books may help you get more from others. But that is nor score related.

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 11:45:15 GMT

@Anonymous wrote:
@jmbfl wrote:

@Anonymous wrote:
@jmbfl wrote:
TL's with CL $5K do not hurt you FICO scores in any way. That is misinformation. The only way FICO scoring takes your CL's into account is in calculating UTIL.

If this is true, the FiCO Simulator on this dubious myfico page must be plain wrong .

It's UTIL Ulan.

Did you try the FiCO Simulator? Add a new tradeline. Try CL values below $5000, then try CL values $5000 and above (with a good FiCO). Then tell me the same again.

Message Edited by Ulan on 09-17-2008 11:22 PM

Sounds like when you simulated opening a new account with a CL of less than $5000, that didn't increase your overall CLs enough for the reduced utilization to have any effect on your score (or, not enough of an effect on your score for it to cancel out the ding due to a new inquiry and a new tradeline reducing your average age of accounts). Then when you tried it with a new CL of more than $5000, that hypothetical $5000 would reduce your overall utilization enough to give you a nice score bump.

It won't work like that for everyone. Particularly the OP who already has zero reported utilization. CLs of individual cards have no effect on your FICOs, it's the effect your CLs have on your utilization that matter scoring-wise.

Re: Should I reject Capital One?

haulingthescoreup — Thu, 18 Sep 2008 11:52:54 GMT

@Anonymous wrote:

Sounds like when you simulated opening a new account with a CL of less than $5000, that didn't increase your overall CLs enough for the reduced utilization to have any effect on your score (or, not enough of an effect on your score for it to cancel out the ding due to a new inquiry and a new tradeline reducing your average age of accounts). Then when you tried it with a new CL of more than $5000, that hypothetical $5000 would reduce your overall utilization enough to give you a nice score bump.

It won't work like that for everyone. Particularly the OP who already has zero reported utilization. CLs of individual cards have no effect on your FICOs, it's the effect your CLs have on your utilization that matter scoring-wise.

Great clarification!

Re: Should I reject Capital One?

Anonymous — Thu, 18 Sep 2008 14:14:43 GMT

Okay, sorry guys, point ceded.

I just looked over the numbers, and it was the point that my utilization crossed the 5% threshold that seemed to negate the new account ding. That's an impressive effect of just 2.5% difference.

Re: Should I reject Capital One?

jmbfl — Thu, 18 Sep 2008 17:32:19 GMT

When I simulated that change my UTIL was starting at 8%. There is nothing to be gained there for me. When I go through any simulator activity there is nothing I can do to improve my scores excluding continuing a perfect payment record over time and letting my accounts age.