topic Re: Advice and Questions on Building Credit From Scratch in Credit Cards

Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 22 Feb 2016 01:17:07 GMT

I have been lurking here for a while trying to learn what I can. I have learned a good deal but I have some questions and want to make sure I do this right as opposed to just jumping into it.

I am a 20 year old college student/athlete and I turn 21 here in a few months. I graduate in May of 2017. I currently do not have any credit whatsoever. However, I am looking to start building it as soon and as fast as possible. If possible, I would ultimately like to have my credit high enough to qualify for an FHA loan within a few months of graduation (FHA minimum is 580, but I'd like to have my credit much higher than that by then). I would have started sooner but some crazy famly situations prevented me from doing so.

Being a current full time student, I only have an income of about $100 to $250 a month (varies due to athletics and other activities) from on campus jobs which I can verify via paystubs. I have around $1,500 in savings. I currently live off-campus with my mother and thus do not currently have any significant expenses (food and housing taken care of). I also have quite a bit of student loands that I will have to take care of upon graduation.

I was planning on trying to get a secured card to start out with (still trying to figure out which would be best for my situation, any suggestions would be greatly appreciated). Use my card for minor purchases, whatever is 10% utilization and then pay it off every month. After a few months, hopefully I would be able to upgrade to an unsecured (if card allowed it) or at least raise my limits. It is also my understanding that it would be best to ultimately have three different CC's. I have also thought about the possibility of a credit building loan but do not know if it's worth it?

Thoughts? What secured cards would you guys recommend I start with?

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 22 Feb 2016 00:46:18 GMT

Welcome to the board. Base on your situation, start with a secured credit card. Since you are a student, can your parents add you as an AU on any of their cards? If they can do that, that will help you immersely.

Then once you get a summer job, you can apply for cards with companies that like thin profiles.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 22 Feb 2016 02:12:59 GMT

I recommend you try for discover. There's a little known secured card from discover that's only offered if they don't approve you for the regular card.

Why the discover? If you get the regular discover it then fantastic! If they offer you the secured card they will graduate you to the full card in time. It's definitely a product that will grow with you over time.

Not all secured cards available will eventually graduate into a regular card. Since the age of accounts factors heavily into your score, it's best to know if those that will.

Re: Advice and Questions on Building Credit From Scratch

SouthJamaica — Mon, 22 Feb 2016 03:22:49 GMT

@Anonymous wrote:
I have been lurking here for a while trying to learn what I can. I have learned a good deal but I have some questions and want to make sure I do this right as opposed to just jumping into it.

I am a 20 year old college student/athlete and I turn 21 here in a few months. I graduate in May of 2017. I currently do not have any credit whatsoever. However, I am looking to start building it as soon and as fast as possible. If possible, I would ultimately like to have my credit high enough to qualify for an FHA loan within a few months of graduation (FHA minimum is 580, but I'd like to have my credit much higher than that by then). I would have started sooner but some crazy famly situations prevented me from doing so.

Being a current full time student, I only have an income of about $100 to $250 a month (varies due to athletics and other activities) from on campus jobs which I can verify via paystubs. I have around $1,500 in savings. I currently live off-campus with my mother and thus do not currently have any significant expenses (food and housing taken care of). I also have quite a bit of student loands that I will have to take care of upon graduation.

I was planning on trying to get a secured card to start out with (still trying to figure out which would be best for my situation, any suggestions would be greatly appreciated). Use my card for minor purchases, whatever is 10% utilization and then pay it off every month. After a few months, hopefully I would be able to upgrade to an unsecured (if card allowed it) or at least raise my limits. It is also my understanding that it would be best to ultimately have three different CC's. I have also thought about the possibility of a credit building loan but do not know if it's worth it?

Thoughts? What secured cards would you guys recommend I start with?

You probably don't need a secured card. Both Capital One and Discover have cards specifically designed for college students.

Start with those. Use them lightly and pay them off rapidly.

Re: Advice and Questions on Building Credit From Scratch

Callandra — Mon, 22 Feb 2016 03:26:09 GMT

@SouthJamaica wrote:
@Anonymous wrote:
I have been lurking here for a while trying to learn what I can. I have learned a good deal but I have some questions and want to make sure I do this right as opposed to just jumping into it.

I am a 20 year old college student/athlete and I turn 21 here in a few months. I graduate in May of 2017. I currently do not have any credit whatsoever. However, I am looking to start building it as soon and as fast as possible. If possible, I would ultimately like to have my credit high enough to qualify for an FHA loan within a few months of graduation (FHA minimum is 580, but I'd like to have my credit much higher than that by then). I would have started sooner but some crazy famly situations prevented me from doing so.

Being a current full time student, I only have an income of about $100 to $250 a month (varies due to athletics and other activities) from on campus jobs which I can verify via paystubs. I have around $1,500 in savings. I currently live off-campus with my mother and thus do not currently have any significant expenses (food and housing taken care of). I also have quite a bit of student loands that I will have to take care of upon graduation.

I was planning on trying to get a secured card to start out with (still trying to figure out which would be best for my situation, any suggestions would be greatly appreciated). Use my card for minor purchases, whatever is 10% utilization and then pay it off every month. After a few months, hopefully I would be able to upgrade to an unsecured (if card allowed it) or at least raise my limits. It is also my understanding that it would be best to ultimately have three different CC's. I have also thought about the possibility of a credit building loan but do not know if it's worth it?

Thoughts? What secured cards would you guys recommend I start with?

You probably don't need a secured card. Both Capital One and Discover have cards specifically designed for college students.

Start with those. Use them lightly and pay them off rapidly.

I agree. Cap1's Journey and Discover for Students are great places to start. Journey can also be PC'd to a QS later.

Re: Advice and Questions on Building Credit From Scratch

takeshi74 — Mon, 22 Feb 2016 13:31:00 GMT

@Anonymous wrote:
Use my card for minor purchases, whatever is 10% utilization and then pay it off every month.

Don't worry about 10% unless apping, requesting a CLI, APR reduction, etc. Just aim to keep it under 30% generally.

As for which card, it really doesn't matter much at this stage. I'd also suggest trying for an unsecured student card first. If that doesn't work out then try secured. You may want to consider secured cards that will graduate to unsecured.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 22 Feb 2016 19:05:21 GMT

"You may want to consider secured cards that will graduate to unsecured."

That is what I was orginally thinking.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 22 Feb 2016 19:11:53 GMT

@Callandra wrote:

I agree. Cap1's Journey and Discover for Students are great places to start. Journey can also be PC'd to a QS later.

With my current income (stated above) and no prior credit, you think there is a good chance I would get my application approved? Don't want to get denied on my first app as I don't think that would be the best way to start out.

Re: Advice and Questions on Building Credit From Scratch

EAJuggalo — Mon, 22 Feb 2016 20:48:44 GMT

You are almost exactly who those cards are made for. I would think it unlikely that both would deny you, and once you have a foot in the door it's easier to get other cards.

You can now app directly for the Discover secured if you'd rather go that route, but I'd personally at least try for one of the unsecureds first. Who is your banking through? If you don't have a credit union, get one. They can be immensely helpful when starting out.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 22 Feb 2016 22:22:43 GMT

@EAJuggalo wrote:
You are almost exactly who those cards are made for. I would think it unlikely that both would deny you, and once you have a foot in the door it's easier to get other cards.
You can now app directly for the Discover secured if you'd rather go that route, but I'd personally at least try for one of the unsecureds first. Who is your banking through? If you don't have a credit union, get one. They can be immensely helpful when starting out.

I don't currentrly have a credit union. There are several local ones around where I am though. You suggest I get one? Just for a checking account? If you wouldn't mind elaborating on how you found them helpful, I'd greatly appreciate it.

Re: Advice and Questions on Building Credit From Scratch

EAJuggalo — Mon, 22 Feb 2016 23:15:50 GMT

My credit union offers auto loans, mortgages and CC to it's customers. I was able to get an auto loan with a rate 9% less than what the dealer was offering me. The loan officer at the CU flat out told me that the only reason I got approved with no credit score was because I've had a checking and saving there for over a year. CC rates range from 10-14% with no annual fee, cash advance fee or balance transfer fees. I don't qualify right now but plan to app for one in early summer.

I've had much better service from my CU than I ever received at any of the big banks I had accounts with previously, and if you choose a CU that participates in ShareBranch you can go anywhere in the country and find a CU to use as if were your own.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Fri, 11 Mar 2016 17:38:08 GMT

Thanks to the advice. I have decided to go ahead and apply for the Cap1 Journey Student Credit Card, which if accepted, will be my first card.

I've looked through the application and want to clear up a few questions before I go ahead and apply. Want to make sure I get this right the first time.

Monthly Rent

I currently live off campus with my mother to save money. So this would be $0, correct?

Income

My income is pretty small as it is just from working on campus right now, so around $200 a month.
However, in some other threads, it appears to me that financial aid in the form of scholarships and grants (aid that does NOT have to be repaid) can be considered as part of my income. Is this indeed true? If so, that would add up to $35,000+ (scholarships + grants for 2015-2016 year) for me. That seems like a lot to put as income for a college student. Just wanted to double check that.
I'm not 21 yet so I obviously can't include financial contributions from my mother.

Question Regarding "Do you have any bank accounts"?

I currently only have a checking account. Would that be an issue (not having a savings)? I don't think it would be much of a problem for me to open up a savings account if necessary.
That's pretty much it. If anyone has any others suggestions or advice, I'm all ears.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 25 Apr 2016 15:38:12 GMT

HI Thunder12, Did you get approved for this card? If yes did it help your credit and did you see a big improvment?

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Mon, 25 Apr 2016 18:24:06 GMT

Welcome to the rat race.

First, I want to ask: Do you have ANY Student Loans that you applied for and received as Fin. Aid? If so, you might already have a credit history that can work in your advantage. If that's the case, pull your FICO numbers and see where you stand. Also, get your Annual Credit Report and see what your history currently looks like. You can request this report once a year for free. A second request will cost you.

Second, do you have a bank account with any banks? If so, how long? I would talk to your bank to see if you pre-qualify for any of their bank CCs. Don't apply, mind you, just find out if your credit worthy in the eyes of lenders.

The first card I APP'd and received was Discover Student. Nowadays it's Discover It for Students(with 1%, 5% Cashback) and Cap. One Platinum Rewards that are Student friendly CCs, IMHO. Discover is the better choice. They will grow the limit as you grow and mature into your credit profile.

My situation was working PT plus whatever I got from Fed. Work/Study. It came out to 250-300 weekly.

Good luck.

Re: Advice and Questions on Building Credit From Scratch

Anonymous — Tue, 26 Apr 2016 00:36:31 GMT

@Anonymous wrote:
"You may want to consider secured cards that will graduate to unsecured."

That is what I was orginally thinking.

If you go the secured card route - DO NOT apply for the Captial One secured card. As much as I love Capital One - I have had their secured card since 2012 and they do not and will not upgrade this card to an unsecured card. So they have my $800 deposit and I can't get it back until I close the account. I am currently shopping for a home so I do not want to take any chances of having my scores impacted by closing my oldest credit card. But as soon as we close on this house - I am getting rid of the secured card.

Good luck!! I wish you all the best in your credit journey.