topic Post-School Credit Building in Credit Cards

Post-School Credit Building

Anonymous — Sat, 28 Aug 2010 17:13:22 GMT

Let me introduce myself to all of you as a freshly (December '09) minted graduate that managed to lock up a job prior to graduating. I've been very fortunate financially in that I have never had a late payment and my student loans stand at an incredibly reasonable 30K.

I started with an Experian credit score of 744 as of December 2nd, 2009.

Over the past 6 months, I have attempted to start to build credit. My first big mistake was to apply for a Continental Chase Mastercard, naturally I got declined as I have no "real" credit card history for them to go off of. So instead I went with a Chase Continental Debit Card and opened a pair of accounts up at Chase since the bank.

After the deflation of being declined for a Contential Card I decided to also go and get a Best Buy HBSC card. I got approved for an incredibly low $1Kish balance. I made a purchase on it, kept my debt ratio between 55%-30% and then on down to currently 3.5% in which I'm simply making minimum payments just to keep some sort of balance on the card interest free.

Fast forward a few months and I checked my credit Experian credit report last month with a fairly comfortable score of 731. In my haste to get a REAL credit card because I need one for hotel/car rental purchases, I applied for 2 chase cards in one day. The first being the Continental MasterCard and then when they couldn't provide an instant response, I applied for one of their standard cards. I got a letter in the mail rejecting me for their standard Chase card but I have yet to get the response for the continental card.

AND finally, I had to consolidate all of my student loans over the past 6 years (yeah, i liked school, sue me. ) so i'm concerned about the negative aspect of that, but alas I can't take it back and a more manageable monthly payment is worth far more than missing an unmanagable one.

So here are my big questions.

1) Where do you all suggest checking our FICO scores and our credit reports and what bureaus? I'm tired of paying money for credit reports and score reports and not really knowing if that's worth the month to month payment.

2) Assuming the Continental Mastercard got declined as well, what card do I need to go with that I will not have an issue getting? I'd like something with a decent balance to keep my credit ratio low, but at the same time I really don't want to ding up my credit with any more inquiries. I get enough as is with rental properties.

Re: Post-School Credit Building

Anonymous — Sat, 28 Aug 2010 17:19:27 GMT

PS: After post-reading it, I realized I used balance twice when I really meant limit. D'oh! I have sinned!

Re: Post-School Credit Building

haulingthescoreup — Sat, 28 Aug 2010 17:49:28 GMT

lol, welcome to the forums! Congrats on being an employed new graduate. That's not so common these days.

First of all, unless you got your EX score from a Pennsylvania credit union called PSECU or from a mortgage lender, your Experian score is what we call a FAKO. FAKO's aren't used by lenders (with a minuscule number of exceptions), but they make lots of money for the folks who sell them. Experian stopped allowing consumers to buy and view our own EX FICO scores in February 2009.

You can buy your FICO EQ (Equifax) and TU (TransUnion) scores here at the myFICO site. They're both "real" FICO scores, but the TU model is an older one, TU 98, instead of TU 04 that is more commonly used now. And for your EX FICO, your only sources are as mentioned above.

Three-in-one credit reports are getting bad about genuinely updating your reports every time you pull. Check the Credit Monitoring Service thread stickied at the top of General Credit Topics. As long as you ignore any scores and advice that come with them (all FAKO), they're useful for monitoring changes in your reports.

* Is your Best Buy card a store-only card or a Best Buy Mastercard? If store-only, use the timing in the ~~lined-out~~ parts following. If it's a BB MC, go with the last business day timing. HSBC bank cards update at odd times. *

As for your CC, you don't need to keep a balance on it, either for scoring or to make the lender love you. You can wait till the ~~statement posts~~ last business day of the month, and then pay it off in full, thus avoiding interest but having the balance report. Or you can pay it in full before the ~~statement date~~ last business day of the month, having $0 report. Or you can pay all but $10, let that report, and then don't forget to pay the $10 before the due date.

You do need to have one or two more CC's in good standing for better scores. But I would hold off until your card has reported at least six times to all three bureaus.

Is your college/ university affiliated with a credit union? Or your employer, or are you eligible for one simply by residence? I'd investigate CU's that offer cards and see if you can find a good fit. They're great for people building/ rebuilding their credit, and their CL's are often more generous. But first wait for those six months of reporting.

HSBC bank cards report the balance as of the end of the month, but they don't send it in until up to several weeks later, and sometimes they skip reporting for an entire month. Quite maddening.

Re: Post-School Credit Building

Red1Blue — Sat, 28 Aug 2010 17:50:11 GMT

Best thing is get your latest fico scores and let us know where they stand. We can help you from there.

Re: Post-School Credit Building

Anonymous — Sat, 28 Aug 2010 19:11:00 GMT

Well thank you both for chiming in! I really appreciate it and I've done a bit more reading since my last post. First thing first, I'm going to pay off the remainder $40 on my best buy account. I was under some odd impression that having some sort of low balance on it was better than none, as creditors like to know that you'll actually use it.

I work for a large Fortune 200 firm and the credit union doesn't seem to offer any particular credit cards, just lower interest loans which was a nice surprise. So I'll probably start up an account with them just to build some kind of relationship with them.

As for my best buy card, it's simply the store HBSC card and not a master card as I didn't want a major CC with Best Buy in hopes of getting a Continental card. As you might be able to deduce, I fly with Continental several times a year, nearly monthly and the reward points mean a pretty good deal to me.

I did a recon call to Chase Mastercard and unfortunately they declined me again for lack of history despite my history being completely clean and me explaining that I was a student and got a professional engineering job back in janurary. So that's out of the question at this point and I'm focusing onward and upward with regards to my score.

Speaking of my score, I went ahead and purchased both scores from myfico.com and they are:

TransUnion: 740

Equifax: 723 (New Credit inquiries: Not good, go figure)

Any suggestions from here on out as to where I should head for a CC. My best buy account was opened in 03/2010 so the 6 month period is almost here.

Re: Post-School Credit Building

Anonymous — Sat, 28 Aug 2010 20:46:59 GMT

You might consider Amex Zync. Not a traditional credit card, but a charge card where the balance is due in full every month. Its a good way to get in the door with American Express and once you're in and maintain a good history with them you can apply for a revolving cc. This charge card is designed for young people getting out of school starting their careers. The card itself carry a modest $25 annual fee and you can add "packs" to earn points to use with their membership rewards express program. The biggest downfall is that you can't transfer those points airline frequently flyer programs, However you can accumulate an uncapped amount of points to use in their points mall. If you get the zync and have it for a year or so and decide to get to upgrade cards you can transfer your points to the new card without a problem, thus those points can be used towards frequent flyer points on airline carrier programs. Right now you get 10,000 points after you make your first purchase with the card. It sometime to consider. Many people have been getting approved for this card. I did and love it!

Re: Post-School Credit Building

jforsyth — Sat, 28 Aug 2010 21:02:25 GMT

After 6 months of perfect history you should be able to be approved for Amex Zync.

It's a charge card, not a credit card. The difference is that you have to pay the balance off in full every month. It has a $25 annual fee, but it's a great way to get your foot in the door with Amex. After 6 months of having Zync, you should be able to get approved for their revolvers with better rewards and no AF (Blue/Clear). Plus, all of your future American Express accounts will have the same opening date as your very first card with them, so you won't get hit with a huge drop in your average account age.

I'm an undergrad (Computer Engineering, by the way) and I was instantly approved for Zync after my 6th statement posted on my first credit card. I've had Zync for about a month now.

Re: Post-School Credit Building

Anonymous — Sun, 29 Aug 2010 01:11:47 GMT

I have to admit, I'm not as keen on starting a "relationship" with AMEX given that they're not as widely accepted as Visa and MC. What's the benefit of having a charge card vs having a lowish-limit credit card in terms of our credit worthiness?

Thanks again everyone!

Re: Post-School Credit Building

haulingthescoreup — Sun, 29 Aug 2010 01:28:37 GMT

@Anonymous wrote:
I have to admit, I'm not as keen on starting a "relationship" with AMEX given that they're not as widely accepted as Visa and MC. What's the benefit of having a charge card vs having a lowish-limit credit card in terms of our credit worthiness?

Thanks again everyone!

One thing you might try: for the next several weeks, make mental notes of which cards are accepted at the places that you usually visit. Most people are surprised to find out that AmEx is accepted by more merchants than they expect.

I have found that in my little world of credit usage, the places that don't accept AmEx include my doctor (but my dentist and physical therapist do), a couple of mom-and-pop stores, and my hairdresser/ salon, whatever you call it. Otherwise, I see that blue and white sticker pretty much everywhere.

It's a more expensive card for merchants than Visa and MC, though, as is Discover, so it's true that especially for some people, it might not be very usable.

One place I've always liked using an AmEx card is for online shopping. Again, every online store I use takes it, and their customer support and dispute process make online shopping pretty much pain-free.

It's completely up to you, of course. Anyway, you might try that out.

Re: Post-School Credit Building

Red1Blue — Sun, 29 Aug 2010 01:32:30 GMT

Amex is the best card for customer service and problem resolution. My daughter started school 2 weeks ago and lost her wallet with BestBuy card. She is so frustrated in dealing with HSBC. I called Amex and had them send AU card to her and she got it there by next day. Now I can relax that she is in the best hands when she is away from home. I know there some things many dont like about Amex, but there are enough benefits and peace of mind Amex offers offset the negatives of the Card issuer.

Re: Post-School Credit Building

Creditaddict — Sun, 29 Aug 2010 01:39:35 GMT

I agree an amex charge card if you are looking for something to carry your business expenses, you will probably never run into a place business wise that would not except amex if you are talking airlines, hotels, car rental, etc.

I would consider a capital one card also, probably won't be a great limit but until you have some more history besides a store card, it's going to be tough to get really good limits, that would be the other plus of amex, as you could probably charge thousands right off the bat without much trouble.