topic Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do in Credit Cards

26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do?

Anonymous — Mon, 04 Feb 2013 17:55:35 GMT

Hi everyone,

I'm a 26 year-old graduate student who has been trying to establish credit. I have been denied for three cards--two US Bank Visa cards I had been preapproved for and one US Bank Secured card.

I have about 20k in student debt and was 3 months delinquent four years ago. I have either been a student or working (for cheap) at academic institutes my entire life. Except for those three months, I have been in a state of deferment for my education loans. I have no other credit history whatsoever.

I'm super-overwhelmed by all the info out there and have no idea what I can do to begin building credit. I've been reading the posts from this forum (which is where I got the idea to apply for the secured card), but as of now am entirely clueless on how to move forward.

I would deeply appreciate a shove in the right direction.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

WhyDidntIListentoMom — Mon, 04 Feb 2013 18:05:07 GMT

Have you pulled your credit report? What is your score?

Also, I completely understand the situation you are in. I had limited credity history and a plethora of Sallie Mae dings in my credit but you can overcome these challenges!

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

lithium78 — Mon, 04 Feb 2013 18:17:45 GMT

I would recommend joining a credit union. They will be much more likely to approve you for a secured card (unless they are one of the very, very conservative credit unions like DCU or PenFed). Since your loans are deferred, you don't qualify to rehab your loans, so you'll probably have to tough it out for 3 more years until the baddies drop off your report.

(Also, if you join a credit union, you will be able to get better rates on savings accounts, possibly get interest-bearing checking, and in time qualify for low-rate loan products.)

It's not the end of the world. I defaulted on my loans many years ago, but I was able to get back on track. I would highly recommend that you stick with secured credit cards for the time being, since you won't qualify for any good unsecured cards until you have built some history and cleaned your report. Don't give up! All your hard work will pay off.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

Swapmeet — Mon, 04 Feb 2013 18:20:12 GMT

You were right in thinking that a secured card is the next step. BofA has one that graduates to unsecured, or there are many secured card companies that approve everyone. I recommend getting at least two. A few months later, Wal Mart..... Then, you will be on your way.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

Anonymous — Mon, 04 Feb 2013 18:26:30 GMT

Thanks for the response.

Experian and Equifax report "no score available," but my Transunion "PLUS" score is 609.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

mnavas — Mon, 04 Feb 2013 18:39:07 GMT

Hi sanc0174!

I'd recommend you to apply for a Cap 1 secured card, the annual fee is only $29 and they evaluate your situation and if they feel confortable with your credit profile they'll ask you to pay a deposit of $49 for a credit line of $200

The only bad thing about this card is that it will never become insecure which means if you want to get your secured deposit back you will need to close the account

One great feature about this card is Cap 1 report it as "credit card" not "secured card" in your credit report which looks better in your report...

Additionally i've heard some people applying for a Cap 1 insecured card three months after they've gotten this secured card... just make sure to apply for a credit card that meets your credit profile which would be "average"

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

Anonymous — Mon, 04 Feb 2013 18:44:49 GMT

Thank you so much for your responses, everybody. I have a few more questions now.

- I have 3 hard inquiries from within the last two months. Could applying for more credit cards hurt me? How can I be "sure" that I can use my next inquiry to get approved?

- I'm naturally wary of annual fees. Am I just going to have to suck it up? Isn't it bad to cancel credit cards--will I be paying a fee for the rest of my life?

Again, thank you everyone for the advice. In particular, I've never heard the thing about credit unions. I'll have to read up on that.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

jake619 — Mon, 04 Feb 2013 18:52:28 GMT

Isn't it odd you have old student loans but "no report available"?

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

Anonymous — Mon, 04 Feb 2013 19:02:35 GMT

@jake619 wrote:
Isn't it odd you have old student loans but "no report available"?

My report is totally available. I have a report from each of the three organizations. However, my score is not available.

Is that weird?

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

jake619 — Mon, 04 Feb 2013 19:08:24 GMT

@Anonymous wrote:
@jake619 wrote:
Isn't it odd you have old student loans but "no report available"?
My report is totally available. I have a report from each of the three organizations. However, my score is not available.

Is that weird?

Grrr, report, score... misquoted you. I meant score. Yea I think it is odd. I don't see how there were lates from years ago yet no score. The lates would indicate data was reported so that's why I find it odd. if you didn't have six months of reported info then OK but that seems to not be your case.

I'm sure somebody smarter than me will chime in. I'm curious.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

mnavas — Mon, 04 Feb 2013 20:07:15 GMT

Well yeah paying an annual fee for a credit card sucks but sometimes there's no other option and well maybe a credit union might give you a credit card without paying any fee...

You don't need to have a secured card open for a long period of time, one or two years are enough to build a great credit profile and remember this: even if you close the account, the whole payment histoy will stay in your report for ten years

Im sure you have a good shot if you decide to apply for a cap 1 secured card or any other secured card just don't apply for prime cards cuz you'll only end up with more hard credit inquiries in your report (which will be bad)

Anyway my other recommendation is: you should get two credit cards (it doesn't matter if they're secured) use them for small purchases and within a year you'll get a good score which will help you to apply for insecured cards like Discover, chase etc

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

Swapmeet — Mon, 04 Feb 2013 19:19:29 GMT

I stand by my earlier advice. To your new questions about inqs, do not be frivolous with them, but don't worry about the 2 more that you are going to get with the two secured cards -- they can't hurt your score until you have one right? First focus on getting a score. Six months of secured cards will do that. After six months you will most likely have a GE approvable score, and you can apply for an unsecured revolver a couple months later. Don't worry about the AF because most companies will waive your first year, and you will have it closed within that year anyhow.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

slippy84 — Mon, 04 Feb 2013 19:22:19 GMT

Three questions:

1. What's your income? If you're not apping for student cards, you could be denied based on not meeting an income requirement.

2. Do your parents have good credit? If so, can you convince them to add you as an authorized user on one or two of their old cards?

3. Each denial should result in a letter sent from the lender telling you why they denied you. What reasons did US Bank give for the denials?

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

Anonymous — Mon, 04 Feb 2013 22:28:36 GMT

@slippy84 wrote:
Three questions:
1. What's your income? If you're not apping for student cards, you could be denied based on not meeting an income requirement.
2. Do your parents have good credit? If so, can you convince them to add you as an authorized user on one or two of their old cards?
3. Each denial should result in a letter sent from the lender telling you why they denied you. What reasons did US Bank give for the denials?

1. About 17k per annum; I'm supported by my assistantship. This will (hopefully) increase once I join the work force at the end of the summer.

2. Unfortunately, parents aren't an option. Good idea, though--thank you for the suggestion.

3. "Number of accounts currently or in the past not paid as agreed" and "Lack of recent info on rvlvng/open accts, or lack of rvlvng/open accts". I have another denial from Bank of America (I was wrong about all three of the cards being US Bank) that says, "current or past dilenquency with one or more of your creditors and you do not have sufficient credit references with recent payment history."

Thanks again.

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

daybreakgonesXe — Mon, 04 Feb 2013 22:54:59 GMT

@Anonymous wrote:
@slippy84 wrote:
Three questions:
1. What's your income? If you're not apping for student cards, you could be denied based on not meeting an income requirement.
2. Do your parents have good credit? If so, can you convince them to add you as an authorized user on one or two of their old cards?
3. Each denial should result in a letter sent from the lender telling you why they denied you. What reasons did US Bank give for the denials?
1. About 17k per annum; I'm supported by my assistantship. This will (hopefully) increase once I join the work force at the end of the summer.
2. Unfortunately, parents aren't an option. Good idea, though--thank you for the suggestion.
3. "Number of accounts currently or in the past not paid as agreed" and "Lack of recent info on rvlvng/open accts, or lack of rvlvng/open accts". I have another denial from Bank of America (I was wrong about all three of the cards being US Bank) that says, "current or past dilenquency with one or more of your creditors and you do not have sufficient credit references with recent payment history."

Thanks again.

With 17k you're a shoe-in for student cards. However, i'm not sure if they'll look at your negatives favorably. Of the top student cards, here are your most likely shot at approval, in order:

Cap One Journey, Citi Forward Student, and Discover IT Student.

Best of luck in your credit journey!

Re: 26yo grad student; never had a credit card, denied for preapproved and secured cards--what to do

lithium78 — Tue, 05 Feb 2013 00:57:10 GMT

@Anonymous wrote:
Thank you so much for your responses, everybody. I have a few more questions now.

- I have 3 hard inquiries from within the last two months. Could applying for more credit cards hurt me? How can I be "sure" that I can use my next inquiry to get approved?

- I'm naturally wary of annual fees. Am I just going to have to suck it up? Isn't it bad to cancel credit cards--will I be paying a fee for the rest of my life?

Again, thank you everyone for the advice. In particular, I've never heard the thing about credit unions. I'll have to read up on that.

1. Having more inquiries will negatively affect your credit score. However, having no credit cards makes it really difficult to improve your score anyway, so you will probably have to take another hit or two. Unfortunately, there's no way to guarantee that a hard pull will result in an account, so you have to take an educated guess on who will accept you and roll the dice.

2. Unfortunately, when you are starting out with defaulted student loans, you are probably going to have to pay annual fees on credit cards that accept you. From their point of view, they are taking on a significant risk by loaning money to somebody who is statistically likely to default, so they are really cautious. Even most secured cards will require an annual fee at first. Your best chance to avoid an annual fee is to get your secured credit card with a credit union. Credit unions are not-for-profit, so they will be a lot more helpful for someone with bad credit. Many credit unions will also graduate the secured credit cards to unsecured in time.

You can look up credit unions in your area and check their requirements for membership at www.creditunion.coop.

I would also second an earlier suggestion to use the secured credit cards for a year and then go for the Walmart credit card. If you build your credit file a little bit, Walmart is an excellent partner for people rebuilding their credit. While I was recovering from my student loan defaults, I got a Walmart retail card and it grew over time and eventually graduated to a Walmart Discover card with cash rewards (not great rewards, but significant, and they grew to become my biggest credit limit.) The Walmart card will also save you money on checking your credit scores, because they provide a free TU04 FICO if you sign up for online statements.