topic Re: Young and trying to establish credit in General Credit Topics

Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 01:42:35 GMT

Hello all!

First, I want to thank everyone on this forum, you guys ROCK!

I am 18 years old and in the process of building my credit. Currently I have 4 accounts:

Citibank Student Card - Opened July 08 94/840 (just paid off the balance)

Macys - Opend March 09 0/300 - (Original CL 100, they gave me a $200 increase in April without asking! yeah!)

CaptialOne Opened March 09 - 0/500

Victoria Secret - Opened March 09 - 0/350

The Cap1 and VS cards are not showing up my credit reports yet.

I have applied for credit and have been denied

My FICO scores are EX 668 and TU 721 (confused about the huge difference) My AAofA is 6 months.

Any recommedations on where I can apply and will be approved?

Thanks!

Re: Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 02:01:45 GMT

Do you need more credit? What some don't realize is there is such as "too much credit". Meaning a creditor may deny you if they feel you already have too much available credit and they see this as a risk-- especially in this current climate.

What is your goal? To just establish credit? Apply for a home? Apply for a car loan?

Message Edited by sidewinder on 04-15-2009 09:01 PM

Re: Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 02:08:46 GMT

Thanks for replying!

I do not plan on making any purchases in the near furture. My goals are to establish a solid credit history so that in 1-2 years I can apply for an auto loan without needing a co-signer and to get approved for a Discover card

I am trying to understand why I am not being approved for credit. I thought my scores were at least decent...

Re: Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 02:15:24 GMT

Did those scores come from this site?

What reasons are you getting on your declines? Your scores may not be the problem.

IMO, only thing I would consider adding is an installment loan from a bank or CU. I wouldn't add anything else and just let things age.

Re: Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 02:21:27 GMT

I ordered both scores from this site one the same day so now I am really confused! Most of the denials were because of not having enough accounts and history. I also received a few denials from WNFB for too many inquires! That was the only reason. I have 11 on my Experian report.

Should I just be patient and wait 6-8 months or so before applying for new credit?

Re: Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 02:24:33 GMT

Unless you need credit, I would stop for now and let things age.

Re: Young and trying to establish credit

Anonymous — Thu, 16 Apr 2009 02:27:06 GMT

Thanks!

Any idea as to why my scores are so different, both the reporting the exact same information?

Re: Young and trying to establish credit

Mzpatient — Thu, 23 Apr 2009 11:42:43 GMT

Please stop applying for credit. You have not established any credit history which takes years. When lenders look at your credit report all they are seeing is that you are applying for credit all over the place. Some creditors look at that negatively and think that you are liability because you appear deseparate in a sense. They could possibly believe that you don't have cash that is why you are looking for other means of paying power. Also stay away from the department store cards. If you have a secured credit card that is enough. You are too young to start developing so many inquires on your report. Also, inquires have a negative impact on your credit score. That may be another reason why you have such a big difference in your scores. One company hasn't caught up on the amount inquires you have obtain than the other. Plus being denied credit affect your score. So please slow down and like previous people have stated you don't need any more credit establish history.

One last thing and I will shut up I promise. With this economy the other reason you may be denied is because companies have restricted their lending practices so don't take it too personally. It is a liability issue.

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 12:19:19 GMT

Stop applying for credit! You are only going to get denials and add more inquiries to your credit report which will decrease your score.

When you apply for new credit, what creditors see when they pull your report is that you have four open accounts. Let's say each account has a limit of $10,000, that means you have a total of $40,000 in credit you can use. When a creditor make a decision it is based on your ability to pay and part of that is to consider if you max all of your lines would you be able to pay.

In this economy many people are applying for credit and then charging to the max and not paying. This is one of the main reasons banks and creditors are failing. Not only are some not giving new credit but they are lower the limit on people that already have credit.

If you want to build credit work with what you have by using the credit and making payments on time. Over time your score will rise. Also the first credit card that you received (unless it has a annual fee) never close it because that establishes your length of credit history.

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 12:43:17 GMT

Ms Patient and Navy:

Thank you so much for your replies! Unfortunately, I think I screwed up! I wish I would have seen your post sooner...

Here's the skinny...

Last Friday I applied for BofA credit card and was approved, so I went on a spree. I added 4 new accounts in a matter of 2 days.

BofA

Discover

State Farm

Hooters MC

Total Credit Lines

Citi

Capital One

Macy's

Victoria Secret

BofA

Discover

State Farm

Hooters MC

I completly lost control and I should be ashamed, but honestly I am still flying high because I reached my goal to get a Discover card sooner that I expected...I figured since I was not applying for any more credit in the near future I might as well take my hits all at once and by the time I am ready to buy my car, they will be gone from my reports.

Trust me, I am done applying for credit until I am ready to buy my car in a couple of years. Maybe in few years I will add one more Prime card - Amex, but I am in no rush! I know Amex cards are pretty hard to get.

So the moral of this story for all newbies is to listen to great the advice the experts have shared here and don't do what I did!

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 13:25:33 GMT

Do your best to control your spending. I've been in your place. Now in mid 30's and finally out of approx 30-40k of revolving debt. It all started with 1 ccd when I was 18 and starting college. Limit was 2500. Kept maxing it out and not paying it all off—carrying balances. Then getting more and more credit increases. Then a well paying job and an then another ccd. Again the cycle of maxing it out and maintaining a balance every month. Then a new car. I was laid off in 2002 when 911 happened. Had to sell the car, move, find new job and carry the debt.

Here's some life advice...you're young, you have the rest of your life to save and buy things. You'll find that when you save the money for what you want, chances are it will be cheaper. You don't need the newest things—own a new car once in your life.

Good luck to you.

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 14:36:02 GMT

stop applying for credit and just use the accounts that you already have and keep them paid

do not carry a balance and pay the charges in full each month

it looks to banks like you are using credit to go on a shopping spree and they do not want to have people that apply for account after account endlessly

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 14:38:09 GMT

STOP APPLYING FOR CREDIT CARDS! Every inquiry you have (including those accounts that you already opened) will affect your credit. Just make sure you keep your balances below 33% of the credit limit and never pay late. Over time, you'll build your credit. Don't keep applying though, or you'll have to wait longer for those inquiries to fall off of your report.

Also, remember that when other companies check your credit (ie apartments, utilities, cell phone company), those show up as inquiries as well. You don't want more than 5 or 6 per year. And that's still not good--but sometimes when you're starting out on your own you can't help but have 5 or 6.....

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 14:43:05 GMT

For most FICO points, balances should be kept at less than 9% of your CL, but not 0%.

osumae wrote:
STOP APPLYING FOR CREDIT CARDS! Every inquiry you have (including those accounts that you already opened) will affect your credit. Just make sure you keep your balances below 33% of the credit limit and never pay late. Over time, you'll build your credit. Don't keep applying though, or you'll have to wait longer for those inquiries to fall off of your report.

Also, remember that when other companies check your credit (ie apartments, utilities, cell phone company), those show up as inquiries as well. You don't want more than 5 or 6 per year. And that's still not good--but sometimes when you're starting out on your own you can't help but have 5 or 6.....

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 14:43:27 GMT

NEVER pay late - EVER

If you want to establish a good credit score, that's the BEST advice you'll ever hear

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 14:44:35 GMT

Thank you so much for taking the time write that email. It really means alot to me that you were so open and honest about you past. By you putting a "personal" touch on your advice really makes me open my eyes to the big picture.

I consider myself to be very good with money. I have had my own checking account since I was 15 years old, with a visa debit card. My mom opened the account for me to teach my how to be financially responsible so that when I went away to college I would know how to manage money. So instead of her giving me cash for lunch money each week, or to go to the movies, etc. once a month she would deposit money into my account and I would have to make it last until the next month. Don't get me wrong, the first month I was like wow! and spent it all in 3 days or so and she would not put anymore money into my account. I was forced to pack my lunch everyday and had miss a couple of weeks of movies with my friends, skating, shopping anything that cost money you could basically count me out!! The one and only time in three years that I overdrew my checking account, my mom made me go to the bank, sit down with a customer service representative and made me explain to HER why my account was overdrawn...Needless to say, I was completely embrassed and it never happend again! Bu it did teach me a value lesson. At the time, I thought my mom was so mean, but now that I am little older and understand money a lot more, I know that she was just trying to teach me to financially responsible.

By my mom giving me so much repsonsibilty at a young age, I feel light years ahead of college classmates. A lot of them have no idea how to manage thier money, let alone how to balance their checkbooks!

I use my Citi card every month and only buy things that I know I can pay in full when my payment is due. When When I use my Macy's or VS card, right after I sign the receipt I pay for my charges at the register and the only reason I use them is because of the rewards

I don't know that future has in store for me, but I know I am on the right path!

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 14:59:14 GMT

Congrats on the new lines. Biggest challenge now is juggling that many accounts and avoiding lates, which can happen if you are using too many lines at once. In a way you did the best thing possible, getting as many account as early as possible, now you need to let those accounts age to 2 years and you will be very set going forward. A good rule of thumb is wait for your reported inquiries, less than a year old, to drop below 3 or 4 and you will be set for some very nice rewards cards. In your case wait till they all drop off and make sure that those new accounts don't sprout any lates

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 15:15:57 GMT

Thanks Reots and everyone else who posted!

I have a question though, I have read conflicting advice on carrying a balance...to carry a balance or to not carry balance, that is the question, but what is the best answer? I always pay my balances in full to keep my utilization as low a possible. I have also read that is best to carry a small balance on 2-3 cards (rotataing cards) to show lender that I am responsible with payments, but if I pay in full each month, doesn't that show that I am repsonible? I also recall someone gave me advice to keep a balance that shows my true spending habits so that I would not get hit CLD if I carry a balance that is different from my normal habits. Any advice is greatly appreciated!

Re: Young and trying to establish credit

star85 — Thu, 23 Apr 2009 15:34:35 GMT

Wow. I remember being where you are. All I wanted was to establish credit so I applied for a bunch of cards all over the place. Today 10 years later, I am TRULY THANKFUL I was denied MOST of them. I don't know what I was thinking, I guess I wasn't thinking. Bottom line is, having a lot of cards WILL NOT give you a high credit score. It will actually make your score low in the beginning. Based on my experience there are two main things that make your score go up, time and ABSOLUTELY ZERO LATE PAYMENTS. Late payments stay on your report for every I think it's 7 years.

If you take anything away from this forum, know this. Never make a late payment. If you must or know it's gonna be late, call them and explain the situation.

Re: Young and trying to establish credit

Anonymous — Thu, 23 Apr 2009 15:56:23 GMT

CMS2012,

It's a little complicated. The best thing for your FICO score is letting only one card report a small balance due on your statement, less than 9% of the credit line of that card.

Best thing to get big fat credit line increases from creditors is to carry large balances and pay interest on them OR charge a bunch through a specific card

What will make lenders happy enough to grant you bigger credit is the opposite of what will make you a FICO High Acheiver but it can be accomplished with a little planning. Consider starting a small side business that will make you more than any interest paid or just wait, they'll come eventually.

EDITne more thing, if you value your credit score avoid all negative option monthly clubs like BMG that don't require a credit card. I had to go through paying them off $60 for CDs I didn't order and didn''t keep and it dinged my score 115 points until it came off this week.

Message Edited by reots on 04-23-2009 08:54 AM

Message Edited by reots on 04-23-2009 08:56 AM