topic Re: How bad is Credit One? in Credit Cards

How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 15:58:57 GMT

Hey there

I immigrated from Germany a little over three years ago. I recently decided to apply for a credit card to start building a credit score. So far I don't have a credit history in this country yet since I'm only using my debit card. I applied for a secured credit card with Capital One. It was recommended to me by a friend to start building a credit history. About two days later, I received a "pre approval notice" from Credit One for a credit card with a 300 $ credit limit. It said I could accept this offer online. For some reason (it was late at night after a long day at work) I believed it was from Capital One so I went online and accepted this offer. Later I figured out that I haven't accepted anything from Capital One and I just applied for another Credit Card with another bank. Yesterday, my Credit One credit card arrived in the mail. My application for a secured credit card with Capital One was approved too. I made a 49 $ security deposit for the Capital One credit card and now I'm waiting for the credit card to arrive in the mail.

Now I have one credit card and another one on the way. I'm not planning to use the credit card(s) very often or to pay high amounts with it. It's mainly to build my credit score. I read a lot of bad reviews about Credit One and now I'm unsure if I should even activate this credit card or if I should call to cancel it before I activated it. I read that canceling a credit card might hurt my credit score but since I don't even have a credit history yet, is there even anything that could be hurt? But then on the other side, is it beneficial for building a credit score when I have two credit cards that I plan to always pay off in full and on time? Or is having more than one credit cards not different from having only one? And the main question, is Credit One really as bad as people say? Did anyone have any good experiences with this credit card?

Thank you in advance for your help

Sarah

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 16:07:35 GMT

So bad that I would recommend getting a secured credit card first.

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 16:10:25 GMT

Credit One is not inherently "bad" per se...if they were they would have been shut down by the government. What makes Credit One a bottom feeder is that 1) they changed their name AND their logo to appear very similar to those of Capital One. This can be seen as a calculated effort to confuse people into opening a credit card as they may believe they are applying with Capital One. Capital One is well known, mostly respected and they spend a lot on advertising. It could be assumed that Credit One is saving a lot on advertising by riding Capital One's coattails 2) a lot of Credit One credit cards do not have a grace period which means that the minute you swipe or dip the card to make a purchase your account will start accruing interest charges and 3) they are owned by a collection agency.

If you had an American Express card in Germany you should contact American Express to see if they will allow you to convert your German Amex to an American Amex. They call it Global Transfer:

https://www.americanexpress.com/global-card-transfers/

There are far better cards than Credit One; however, if you use Credit One wisely you can get the benefit of establishing credit and then close the account once you have moved on to bigger and better. You could certainly close the Credit One account. The only bad from closing a card is that its available credit line will no longer be factored into your debt to credit ratio. You have already taken a hit for Average Age of Account-and since you are so new to credit, that really won't matter.

The best secured cards (in my opinion) are Capital One and Bank of America.

Good luck.

Re: How bad is Credit One?

pizzaman1 — Sun, 22 Oct 2017 16:14:36 GMT

Credit One is not the best bank but it helped me get to better credit scores and get better cards after I filed bankruptcy. Just use it responsibly over time

Re: How bad is Credit One?

AverageJoesCredit — Sun, 22 Oct 2017 16:23:54 GMT

As stated above but you see what happens when someone wuick glances at Credit One they think they are apping Capital One, its sickening that they do that and im pretty sure they know thats going to happen but what can you do but really pay attention to what you're apping. Its like having a Walgreens in front, or vice versa, of a CVS, can confuse the heck out of ya once inside lol. Welcome to the forum and the US

Re: How bad is Credit One?

ls2016 — Sun, 22 Oct 2017 16:25:32 GMT

I had a Credit One card. The $75 annual fee was charged to the card immediately, which left me with $225 initial limit. I knew why I applied for the card: because I couldn't do any better at the time, so I used the card to my advantage. Paid the annual fee immediately, then swiped the card once a month and paid in full as soon as the charge posted. It served its purpose the 6 months I had it, with no problems at all. I canceled it after obtaining goal cards and reading comments here. I hope it works out for you.

Re: How bad is Credit One?

AverageJoesCredit — Sun, 22 Oct 2017 16:28:59 GMT

Nice story Is2016, glad you made it work for ya! Some people cant and i think thats one reason many get steered away. One MAY NOT have problems but when there is one, they can be doozies

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 16:42:30 GMT

Credit One isn't 'bad', they're 'expensive'. They have high fees because they specialize in providing credit to high-risk people, so you're basically paying them to take the chance on you not defaulting on however much you spend. This isn't drastically different than getting a high interest rate loan due to a low credit score as opposed to a low interest rate loan due to a high credit score-the creditor is simply trying to limit their perceived risk. When you get past the fees they are just a bank extending someone a line of revolving credit, just like the others.

With that being said, you're still better off with a secured card if you can afford the deposit. With a secured card you pay more up front, but you also get it back making your effective 'cost' zero.

Re: How bad is Credit One?

BurgeoningHope — Sun, 22 Oct 2017 17:39:45 GMT

You are going to want to cancel that Credit One card at some point anyway - if you can do it now and save the fees, I'd suggest now is as good a time as any. That card is never anyone's keeper simply because it's so expensive with no rewards to counter all those fees.

My husband got the Discover secured card and it worked out very well for him. It became unsecured after about half a year, and unlike any other secured card I've ever heard of, it offers rewards - and those rewards are x2 in the first year!

I'd suggest picking up another card, maybe two, and then "gardening", as it's called around here, to make your score grow. Don't apply for anything else for a while. Use your cards every month, and pay in full before the statement cuts. Basically, use them as you would a debit card. Try not to use too much of your available credit at any one time even if you do plan to pay it off immediately. And if you do need to (briefly!) carry a balance, _never_pay just the minimum. Always pay at least 3x the minimum.

Eventually you'll want 3-5 cards and let one report a small balance (between 2-9% of the credit limit on the card) every month.

The longer you hang out here, the more you'll learn. These discussion boards have been life-changing for me - and for my family as I pass these little jewels of knowledge around. Welcome!

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 18:06:34 GMT

Call and cancel it without activating it Sarah.

There is zero value (that I can think of) in that card if you have a Capital One on the way. It would also shorten your average credit age, which is bad for your credit score. Probably not in a major way for you, but there would be a bit of a lower score.

Re: How bad is Credit One?

HeavenOhio — Sun, 22 Oct 2017 18:29:23 GMT

Between your two accounts, there's two days difference in account age. No need to worry about that.

I'd close Credit One and move on. Don't let them use scare tactics, such as telling you that closing will negatively affect your score. Stand your ground.

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 18:41:14 GMT

@HeavenOhio wrote:
Between your two accounts, there's two days difference in account age. No need to worry about that.

Thanks for pointing out. Didn't think that through.

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 19:14:21 GMT

Wow, you guys are awesome. I didn't think I'll get that many great responses in such a short time. I guess I'm going to cancel the credit card. It really doesn't make sense to have a second one with a fee (and bad reviews) if I have one with no fee on the way. I think I was just worried that it might negatively affect my credit score but I feel like the chances of a bad experiences and getting charged any kind of fees are just too high.

And yes, from now on I pay better attention to what I'm applying for

Re: How bad is Credit One?

Adkins — Sun, 22 Oct 2017 19:28:54 GMT

The only ding to your credit score will be the hard pull they did for the card, which probably cost just a few points anyway. You'll recover from the point loss fairly quickly as you start using the other card responsibly.

Re: How bad is Credit One?

Anonymous — Sun, 22 Oct 2017 19:29:42 GMT

You are just starting out, so learning is a key priority. Here area couple of things you should be aware of. The general principle is: people with bad credit are targets of unscrupulous lenders. People with no credit are targets for scrupulous lenders but not high CLs. A couple of terms you should become aware of:

FEE HARVESTER CARD: This type of care is for people who don't know how to add or subtract. A typical Fee Harvester Card will charge a $79 Annual Fee, a $10 monthly fee and who know how much in other fees, typically by giving you a #400 CL then subtracting the fees, so a $300 CL gives you $101 in actual useable credit ($300 minus the $79 Annual Fee and minus $120 in the first years' Monthly Fees). Go a penny over the limit and watch the mountain of fees come sliding down.

TOY CARD: THis is a credit card with a small CL. Hate to say it, but that's what you will get when starting out. Your goal is to get periodic CLI's so the Toy Card graduates to a Useful Card (meaning you don't reach your useful credit limit on a tank of gasoline).

USEFUL CREDIT LIMIT: Figure 8-9% of your actual Credit Limit. That is the "sweet spot" for credit reporting and maximum points on your credit score. Go above that percentage at your own risk. That's why a Toy Card with a CL of $500 isn't useful much beyond buying a tank of gasoline.

Your goal when starting out is to NOT get Fee Harvester cards - you may need to get Secured Cards, but only get Secured Cards that can graduate to Unsecured cards and then get CLIs to get out of the Toy Card category.

Re: How bad is Credit One?

Gidgetmom — Sun, 22 Oct 2017 20:21:15 GMT

I had the Credit One card without a grace period and 24.99% interest. Applied for it before I found this forum. Everything you have read here is true. They are fee harvesters and actually wanted to charge me $19.99 for my first credit line increase of $200.

Knowing what I know now....I never would have submitted the application. I recommend closing the card.

If you don't have a credit file or score, I have read that it takes six months of credit history for Fico to generate a score for you. You can expect the Capital One card to take more than a month to report to the credit bureaus. I want to say it was two months before my first Cap One reported to the bureaus.

I suggest googling "credit card prequalify". Look for major banks. If you are not familiar with good banks in the US, please ask. It does not hurt your credit to see if you are prequalified. If you are prequalied, look for a single APR. In my experience, this has been a solid offer of credit. If it comes back with a range of APR's ( i.e. 13.99% - 24.99%) it is not. (More like an advertisement) Please read all the "terms and conditions" and "offers and rates" before applying. After my Credit One debacle, I learned to read it all!

A prequalify/preapproval is no guarantee that you will get the card. There is always a chance you will be denied. The chance for approval is a little higher with a single APR with the prequal/preapproval.

Save your inquiries for a good preapproval and later for the cards you really want. A young/thin credit file has a harder time getting better cards if you are applying all around town.

You found a great resource in this MyFICO family. It truly starts to feel like a family over time. I may not always post, but can't go a day without checking in my peeps here!

Best of luck to ya and welcome to the family.

Re: How bad is Credit One?

Anonymous — Mon, 23 Oct 2017 13:33:52 GMT

@Anonymous wrote:
Call and cancel it without activating it Sarah.

There is zero value (that I can think of) in that card if you have a Capital One on the way. It would also shorten your average credit age, which is bad for your credit score. Probably not in a major way for you, but there would be a bit of a lower score.

Does Credit One really work that way? With the vast majority of cards, the account is created at approval time, whether you activate it or not. As others have pointed it, it hardly matters in this case because the cards are nearly the same age, but in general I don't think not activating and cancelling has any gain.

Re: How bad is Credit One?

Anonymous — Mon, 23 Oct 2017 13:47:32 GMT

@Anonymous wrote:
@Anonymous wrote:
Call and cancel it without activating it Sarah.

There is zero value (that I can think of) in that card if you have a Capital One on the way. It would also shorten your average credit age, which is bad for your credit score. Probably not in a major way for you, but there would be a bit of a lower score.
Does Credit One really work that way? With the vast majority of cards, the account is created at approval time, whether you activate it or not. As others have pointed it, it hardly matters in this case because the cards are nearly the same age, but in general I don't think not activating and cancelling has any gain.

I already adressed this in a follow up. And the gain is NOT paying an annual fee.

Re: How bad is Credit One?

Anonymous — Mon, 23 Oct 2017 15:07:14 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
Call and cancel it without activating it Sarah.

There is zero value (that I can think of) in that card if you have a Capital One on the way. It would also shorten your average credit age, which is bad for your credit score. Probably not in a major way for you, but there would be a bit of a lower score.
Does Credit One really work that way? With the vast majority of cards, the account is created at approval time, whether you activate it or not. As others have pointed it, it hardly matters in this case because the cards are nearly the same age, but in general I don't think not activating and cancelling has any gain.
I already adressed this in a follow up. And the gain is NOT paying an annual fee.

Yes, obviously not paying the AF is a gain, but that wasn't my point. Your followup was about it not making much difference in this case due to the similarly aged accounts. I am asking (not just you now) if not activating the card really prevents the hit to AAoA in general. I don't think it does, but want to see if that is the case.

Re: How bad is Credit One?

K-in-Boston — Mon, 23 Oct 2017 17:38:29 GMT

I think the account will report whether activated or not but Average Age of Accounts is quite literally 0 months so not really harm done and it may actually help to pad the average age later on if there aren't a ton of new accounts opened. I completely agree with all of the other posters that suggested just closing it and moving on. If you can afford to do it, I would also open up secured accounts with Bank of America and Discover. Both of those will grow up to be real credit cards.

You may also want to decide if opening a Share Secured Loan with a credit union is right for you. Credit mix is an important factor in credit scores and having an open installment loan in good standing could do wonders for a completely new credit file, getting those secured cards unsecured quickly. Essentially, you put money in a savings account, take out a loan against it, immediately pay back almost all of it, then just make a payment every now and again and your total cost of the loan over 5 years works out to a few cups of coffee.