A newbie looking for some advice

[Anonymous]

Hey, all! I've recently been doing a lot of research on credit, since I'm interested in building some up. This seems like a community filled with knowledgeable and kind folks, so I figured I'd give it a try. My father has destroyed his finances with debt, and is just now evening out after 15 years. He's strictly against discussing these matters with me, and I have no one to speak with. But I think I'm ready to handle the responsibility, and I NEED to start building credit.

Background: 22, not currently a student (going back in fall,) a waitress. I am interested in building credit because my 6-year-old, 250,000 miles, hand-me-down car is beginning to show troubling signs. I don't have a good sum saved for a reliable used car, so I intend to finance a ~$10,000 used car. I still live with my father, and my cost of living is not high (and I don't spend much recreationally,) so I can easily afford a 36-48 month agreement. I just would prefer a non-nightmarish rate, and establlishing credit history seems like the way to do that.

I'm not interested in obtaining a credit card to pad my income or assist me in making daily purchases. As a waitress, my income is reliant upon my effort, and can be increased in times of need by picking up shifts. I recieve cash daily, so there's no need to spend based on speculative future funds. I intend to charge a set percentage of my credit limit on my card monthly, and pay back in full.

I started my current job last month, and don't intend to leave. I was employed at Target seasonally between November and January. Before that, I was unemployed since June, living off of sizable savings accrued from my previous job. That was also a waitressing job, and I was there for three years.

My credit history is highly limited. I only have 2 accounts, both of which are student loans, totalling only about $2000. I have made all 72 payments on time and in full. There are no inquiries or other items. Both Credit Karma and Credit Sesame report my "score" as 692. MyFico claims that I don't have a score and that I don't have credit history, and said that they were unable to verify my identity during my last purchase attempt. I'm not sure if this means that I don't have enough history, or it may have to do with a fraud alert on my account (recently issued for tax refund identity theft.)

Concerns: Firstly, I am concerned about my limited credit history. I have been "pre-qualified" for several offers from Chase, Discover (can't determine if this one's legit, as it just says "offer,") AmEx, Citibank, and those shady lenders I'm not interested in. I think this is based on my fair score and solid repayment history, but I fear they will reject me after reviewing my thin file. I've recieved mail in the past, all of which were shredded and trashed, but I checked these on their respective websites recently.

I also fear that my low income ($11,000 last year, ~$20,000 the years before,) recent unemployment, and recent job change will make me an unvaluable candidate for credit. I am confident that I will be able to spend and repay within my means, but I'm sure a representative will not be able to see that.

I don't have a strong relationship with any banks, so I can't pursue them for a credit line. I've been checking with PNC for around 5 years, but I've overdrafted on numerous occasions in the past due to mistakes. I always corrected the overdrafts immediately, and now track my spending in a journal, but I don't think they view me as a valued customer. I am dissatisfied with my bank for multiple reasons (had vastly incorrect dollar amounts deposited by tellers many times, as well as personal gifted checks from family members withdrawing funds from my own account,) and am considering switching, but they pretty much have a monopoly in my area in terms of branch locations and branded ATMs (important for someone leaving work at 11pm with a bundle of cash.) There is a CapitalOne bank near my work, and their free checking is very attractive. If their ATM accepts cash deposits 24/7, I am basically sold and ready to build a new relationship, although that would take some time.

Desires: I guess I can't afford to be extremely picky. I would prefer a card with no annual fee, because I would like to keep the line open for as long as possible. But I can handle one if necessary. Rewards seem nice, since I intend to pay in full, but a low credit limit coupled with an annual fee would make these savings moot. Since I figure my credit limit will be very low, I am not interested in a rewards card. APR isn't a huge concern of mine, for the same reason as before, but the introductory offers and forgiveness for first late payment seem attractive for a new credit user. I don't wish to establish poor habits, but mistakes do happen. Finally, balance transfer and cash advance fees mean nothing to me.

I would prefer an unsecured card, for the simple fact that I intend to leave the account open for as long as possible. For a secured card, I feel as though I am paying a lump sum for the privledge of establishing credit, which is entirely understandable.

If secured is necessary in my case, I'll go for it. I just basically want to know if I have any chance of obtaining an unsecured card. I don't want to blindly apply for cards I'm not even nearly qualified for and blemish my credit history (especially when I'll likely be applying for a loan sometime during the year.) But I also don't want to sell myself short and make an unfavorable investment I'll carry with me for years.

Would it be beneficial to wait until I've established a few months with another bank? Or until I've spent a bit more time at my new job and my unemployment is further behind me?

I can jump in 4 directions:

1. Wait for more favorable conditions and jump for an unsecured card

2. Leap for an unsecured card

3. Jump for a secured card

4. Jump for a secured card, apply for an unsecured card after a few months of history, close secured card

Where do I go? Is there another direction? All I know about credit has been learned in the past 2 days (lol.) Help!

[Anonymous]

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@Anonymous wrote:

Hey, all! I've recently been doing a lot of research on credit, since I'm interested in building some up. This seems like a community filled with knowledgeable and kind folks, so I figured I'd give it a try. My father has destroyed his finances with debt, and is just now evening out after 15 years. He's strictly against discussing these matters with me, and I have no one to speak with. But I think I'm ready to handle the responsibility, and I NEED to start building credit.

Background: 22, not currently a student (going back in fall,) a waitress. I am interested in building credit because my 6-year-old, 250,000 miles, hand-me-down car is beginning to show troubling signs. I don't have a good sum saved for a reliable used car, so I intend to finance a ~$10,000 used car. I still live with my father, and my cost of living is not high (and I don't spend much recreationally,) so I can easily afford a 36-48 month agreement. I just would prefer a non-nightmarish rate, and establlishing credit history seems like the way to do that.

I'm not interested in obtaining a credit card to pad my income or assist me in making daily purchases. As a waitress, my income is reliant upon my effort, and can be increased in times of need by picking up shifts. I recieve cash daily, so there's no need to spend based on speculative future funds. I intend to charge a set percentage of my credit limit on my card monthly, and pay back in full.

I started my current job last month, and don't intend to leave. I was employed at Target seasonally between November and January. Before that, I was unemployed since June, living off of sizable savings accrued from my previous job. That was also a waitressing job, and I was there for three years.

My credit history is highly limited. I only have 2 accounts, both of which are student loans, totalling only about $2000. I have made all 72 payments on time and in full. There are no inquiries or other items. Both Credit Karma and Credit Sesame report my "score" as 692. MyFico claims that I don't have a score and that I don't have credit history, and said that they were unable to verify my identity during my last purchase attempt. I'm not sure if this means that I don't have enough history, or it may have to do with a fraud alert on my account (recently issued for tax refund identity theft.)

Concerns: Firstly, I am concerned about my limited credit history. I have been "pre-qualified" for several offers from Chase, Discover (can't determine if this one's legit, as it just says "offer,") AmEx, Citibank, and those shady lenders I'm not interested in. I think this is based on my fair score and solid repayment history, but I fear they will reject me after reviewing my thin file. I've recieved mail in the past, all of which were shredded and trashed, but I checked these on their respective websites recently.

I also fear that my low income ($11,000 last year, ~$20,000 the years before,) recent unemployment, and recent job change will make me an unvaluable candidate for credit. I am confident that I will be able to spend and repay within my means, but I'm sure a representative will not be able to see that.

I don't have a strong relationship with any banks, so I can't pursue them for a credit line. I've been checking with PNC for around 5 years, but I've overdrafted on numerous occasions in the past due to mistakes. I always corrected the overdrafts immediately, and now track my spending in a journal, but I don't think they view me as a valued customer. I am dissatisfied with my bank for multiple reasons (had vastly incorrect dollar amounts deposited by tellers many times, as well as personal gifted checks from family members withdrawing funds from my own account,) and am considering switching, but they pretty much have a monopoly in my area in terms of branch locations and branded ATMs (important for someone leaving work at 11pm with a bundle of cash.) There is a CapitalOne bank near my work, and their free checking is very attractive. If their ATM accepts cash deposits 24/7, I am basically sold and ready to build a new relationship, although that would take some time.

Desires: I guess I can't afford to be extremely picky. I would prefer a card with no annual fee, because I would like to keep the line open for as long as possible. But I can handle one if necessary. Rewards seem nice, since I intend to pay in full, but a low credit limit coupled with an annual fee would make these savings moot. Since I figure my credit limit will be very low, I am not interested in a rewards card. APR isn't a huge concern of mine, for the same reason as before, but the introductory offers and forgiveness for first late payment seem attractive for a new credit user. I don't wish to establish poor habits, but mistakes do happen. Finally, balance transfer and cash advance fees mean nothing to me.

I would prefer an unsecured card, for the simple fact that I intend to leave the account open for as long as possible. For a secured card, I feel as though I am paying a lump sum for the privledge of establishing credit, which is entirely understandable.

If secured is necessary in my case, I'll go for it. I just basically want to know if I have any chance of obtaining an unsecured card. I don't want to blindly apply for cards I'm not even nearly qualified for and blemish my credit history (especially when I'll likely be applying for a loan sometime during the year.) But I also don't want to sell myself short and make an unfavorable investment I'll carry with me for years.

Would it be beneficial to wait until I've established a few months with another bank? Or until I've spent a bit more time at my new job and my unemployment is further behind me?

I can jump in 4 directions:

1. Wait for more favorable conditions and jump for an unsecured card

2. Leap for an unsecured card

3. Jump for a secured card

4. Jump for a secured card, apply for an unsecured card after a few months of history, close secured card

Where do I go? Is there another direction? All I know about credit has been learned in the past 2 days (lol.) Help!

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Welcome to the forums.

Realistically your options are very limited due to your lack of credit history and income.  Your best bet is to try to get one or two secured cards, build history and then down the road apply for unsecured ones,  you rightly understand the dangers of applying for credit and being denied.  The inquiries will  hurt you unnecessarily.  Get the secured cards and keep reading these forums and soon you will be able to get some prime credit cards.  Best of luck 

[Anonymous]

Thanks for your reply! I've been thinking about this for a short time, but very hard, and secured seems to be the way to go. I'll begin shopping around. Third day without my car, and my need for credit is increasing.

If anyone wants a good laugh, my car is stuck in the shop for diagnosing what I suspect to be head gasket/rear intake manifold failure. I say "stuck" because the ignition key is suddenly no longer valid (locked out by anti-theft after leaving it with the mechanic,) thus no diagnosis can be made...

[Anonymous]

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@Anonymous wrote:

Thanks for your reply! I've been thinking about this for a short time, but very hard, and secured seems to be the way to go. I'll begin shopping around. Third day without my car, and my need for credit is increasing.

If anyone wants a good laugh, my car is stuck in the shop for diagnosing what I suspect to be head gasket/rear intake manifold failure. I say "stuck" because the ignition key is suddenly no longer valid (locked out by anti-theft,) thus no diagnosis can be made...

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Good luck and wish you the best with the card.  When it comes time to apply for a car loan, make sure to visit the auto loan section.  There will be people there to give you sound advice.  I'm not sure about your ability to do this but you are going to need to get that income up before any chance of an auto loan approval without a cosigner.

[Callandra]

^Unless you're willing to just save up and buy the car in cash, you might have a hard time with the car loan (I agree with the above). I pay my car every month but my Dad is the co-signer due to my low income (and that was with the max down payment); my monthly payments are only $176 (well within a reasonable range for my pay) but Honda wanted my Dad to co-sign (thank goodness for a Dad with excellent credit and 6 figures income). 

You can go for secured cards; look at Bank of America's (it does graduate and others have found success getting the AF removed) or SDFCU (no HP, will not graduate but it's a good option). You could also try Cap1 Platinum if you have had some student loan history (why can't myFico find you? Have you tried pulling your free credit reports to see if the SLs reported? They should have). A store card is also an option (others will boo me out on this I'm sure) but if there's somewhere you shop at, it could be worth it (or even Wal-Mart's card for the free FICO). 

Good luck!

(And 250k miles on a 6 year old car?! That's a lot of driving!)

[Anonymous]

Well, my dad cosigning is an option... he makes six figures as well, but has what he estimates to be "awful" credit (messy, messy divorce and an evil mother, with a long history of defaulted student loans... and as you can tell by my usage of the word "estimated," he is even less aware of credit than I am.) So maybe it's not a good one. The money I have saved for a down payment should suffice for operable transportation if neccessary.

Regardless of what happens, I'm still interested in building credit. I should maybe attempt to communicate with my dad about this, since his 15 years of wage garnishments ends next month.

Oh, and I worded my car's age incorrectly. It's 6 years old to me. 15 years old to everyone else. xD

[Anonymous]

How much do you make? If you make $25,000 a year or so I don't see why you shouldn't be able to get a $1k unsecured card.

You can always use the "shopping cart trick" (google it). Great way to get cards without hard pulls for those building credit.

[Anonymous]

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@Anonymous wrote:

How much do you make? If you make $25,000 a year or so I don't see why you shouldn't be able to get a $1k unsecured card.

You can always use the "shopping cart trick" (google it). Great way to get cards without hard pulls for those building credit.

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Her income is in her first post and I highly recommend against her using the SCT.  All she will get is very low limits on cards that she might not even use.  She's far better to go the secured card route.

[Anonymous]

If you use a local credit union, rather than a bank, that can be a good option. 

Discover in particular is known for accepting applicants with a thin file. CapOne sometimes also accepts people with thin/no files, or counters with a secured card. You likely won't get much in the way of a credit limit (I'd guess at $500), but it is a start. 

I don't particularly like the SCT, as people use it get lots of $200 cards at stores that they never use.

[Jesse3581]

My advice might be a bit different.  It sounds like you are on the right path so far, but keep in mind it will take a few months to generate a credit score.  Even if you (hypothetically) generated a phenomenal score of 800, you may have difficulty getting a car loan until your file is "thicker".

My advice is to check the prequalification websites. Start with Chase, seeing as they sent you offers before. Get a card, use it well for 6 months. Seeing as you're already making student loan payments, it shouldn't take the full 6 months to generate a score. Capital One and Discover are also helpful credit card companies that are lienent with thin files. If you don't have any luck with them, you'll have to go for the secured card.

When you do generate a score, it should be good (assuming you have a clean credit report). Call Digital Federal Credit Union. Join them. If you qualify for their car loan, it'll be the lowest possible rate.

Just over a year ago, I couldn't generate a score. When I did, it was poor because of some old collections. Capital One gave me a card, 6 months later I had a score, took off the baddies. Just bought a car a few months ago thanks to DCU at a 1.49 rate. To put that in perspective, I bought a 12k car (put 2500 down) and took a loan for a little over 10k for 5 years. The payments are a very reasonable $180 a month.

As everyone is fond of saying around here, good credit is a marathon, not a sprint.  Aside from your dad cosigning a loan or some financial windfall, you won't be able to buy a car in the next few months.  But 6 months from now could be a completely different story.

Also, seeing as your car isn't doing so well, if you do have 1-2k saved up, don't be afraid to get another beater. Buy yourself some time to get the car you need, and you'll be able to trade it in or sell it on CL for maximum value.