Need advice on a short-/mid-term CC app strategy…

[mikka1]

Hi everyone,

I am a newbie here and, saying frankly, I wish I found this board much earlier – most likely it would have helped me to avoid some of the mistakes I seemed to make in my CC apps. So here is my story :-)

Just a couple of words about myself – I moved to the US from another country less than a year ago, so I faced all the ‘fun’ of establishing a new credit history from scratch :-) By that time I only had a couple of checking accounts that I opened 3-4 years ago when I was here as an summer exchange student, but no credit here.

For some time I was mostly using my foreign CCs (I still do, as I have a small source of income abroad, so it’s pretty easy for me to repay my CC debts there), but in July I decided to give it a try and apply for some CCs here. Based on what I knew that time (unfortunately, without this community board), the easiest cards to go seemed to be store charge cards, so I started with Target card (as it appeared to be the most ‘rewarding’, giving 5% discount for all). Decline (not a surprise, probably). Then I decided to try Amazon Store card as I had a pretty long history of relationship with Amazon even from my exchange student times, but… Decline again.

At that point of time I started to seriously think about secured cards, but decided to give a try for the last time to the unsecured one choosing Cap1 Cash rewards for newcomers, and it was a first success with an instant approval of $500 CL! I don’t know what helped in my particular case, but probably my checking account with Cap1 with an average balance of $1k-$2k played some role here.

A couple of months later I decided to try another bank I had a relationship with – BoA – applying for their cash rewards card (and I liked their offer to get $100 back after $500 purchases). I was not approved instantly, but after a couple of weeks I saw a new record in my Online banking and got a card in my mail. $500 CL again.

At this point I made a largest mistake so far :-) – I wrongfully assumed that after getting 2 CCs I can apply for whatever I want :-) (Yes, I wish I saw this board at that time…). So looking at what I really needed and as long as I travel between US and Europe extensively, I applied almost at the same time for Expedia Citibank card, Amex Delta Gold and a bit later for Apple Barclays.

Decline. Decline. Decline :-)

After this I made a pause for around a month or so and clearly realized, that I should focus my attention on some ‘lower level’ store cards, not trying to jump too high. One day during the shopping with my wife I decided to apply for JCPenney store card and was instantly approved for $500 CL. Next day in was GAP with $300 CL and a couple of days later - Amazon Store Card again with $300 CL (which is perfectly fine as it sets a certain cap to what we can spend in these stores at once :-) ).

I also tried Target again and some time later got a letter saying that ‘based on the information from consumer reporting agency Target Bank can not verify my identity, so please send us a copy of your DL, current utility bill and SSN’. I sent all what they’ve asked for and a couple of weeks later got their CC with $700 CL (my largest CL so far). I also applied for Childrens Place card (not knowing that it's backed by Citi) and heard nothing from them at all so far...

So, now with 6 cards (2 CCs and 4 store cards) and a cumulative CL of $2800 I think I should stop apping for some time. The only card I really want now is a Walmart card, mostly because of free TU score they provide every month. I think I will try to apple in store in January or February. My only concern is that it is also backed by GE bank, and I already have 3 cards from them...

But other than that my biggest problem is a CL size on a single card. Funny thing is that I can’t even use any of these cards to by an air ticket to Europe (as price for RT ticket is usually higher than $500 with very rare exceptions forLondon), so I have to use my foreign cards (luckily, my CLs on foreign cards are in $5k+ on most of them). Same for renting a car in Europe as most of european rental companies authorize at least EUR 350 for any rental (which can be almost $500 depending on the FX rate). So what I’m thinking of now is how to grow up to the decent CLs on my US cards over time.

It seems that my Cap1 card will probably stay forever at <$1k CL (I’ve read someone’s recent thread here about $7500 CLI on $500 card, that’s amazing, but probably unlikely :-) ). Amex seem to be out of my league here right now (which I’m perfectly fine with, I have a corporate one, but can’t use it for personal expenses), same for Citi, regardless of the fact I have a checking account with them for 3-4 years now.

So, for now I have around 10 inqs for the last 6 months in my history and 6 cards (I don’t know if Target reports anywhere, I haven’t seen it on my EX and TU reports, but I have not seen my EQ yet). I try not to exceed 40-50% util on any of these cards, but due to the very low CLs it’s pretty hard. Any advice from experts on how can I grow to higher CLs, except for waiting and ‘gardening’? (Yes, I know there are no magic recipes, but maybe I overlook something :-) )

What are the cards that might be useful as a ‘beginner’ cards and tend to grant decent CLs?

Thanks a lot in advance, your advice is highly appreciated!

[Anonymous]

I was in the same boat as you, I'm maybe 6-9 months ahead of you in trying to establish my credit in the US. There really is no quick fix to the problem. Nobody is going to want to extend a lot of credit to you until you have a lengthy relationship with the creditor (so they'll give you a decent CLI) or you have a long credit history.

At this point, I'd say the only 'quick' way of getting a higher credit limit card is to open a secured card. It's not fun to have to lock up a bunch of your money that way, but it's really the only simple choice. Even credit unions are going to be wary if you don't have a longer pre-existing relationship with them and you have short credit history. Prime lenders that might extend you a better credit line aren't going to want to touch you until they see 12-24 months of good history. Even at 12 months, you're still considered extremely new to credit so you'll probably get lower limits at that point.

Until I have longer credit history, I've resigned myself to having to pay off my card(s) multiple times a month. Of course, since you can't just buy half a plane ticket at a time, it does cause a problem. If I had to suddenly pay for something expensive, I'd have to use a debit card, and I really hate the thought of that.

[Anonymous]

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@mikka1 wrote:

Hi everyone,

I am a newbie here and, saying frankly, I wish I found this board much earlier – most likely it would have helped me to avoid some of the mistakes I seemed to make in my CC apps. So here is my story :-)

Just a couple of words about myself – I moved to the US from another country less than a year ago, so I faced all the ‘fun’ of establishing a new credit history from scratch :-) By that time I only had a couple of checking accounts that I opened 3-4 years ago when I was here as an summer exchange student, but no credit here.

For some time I was mostly using my foreign CCs (I still do, as I have a small source of income abroad, so it’s pretty easy for me to repay my CC debts there), but in July I decided to give it a try and apply for some CCs here. Based on what I knew that time (unfortunately, without this community board), the easiest cards to go seemed to be store charge cards, so I started with Target card (as it appeared to be the most ‘rewarding’, giving 5% discount for all). Decline (not a surprise, probably). Then I decided to try Amazon Store card as I had a pretty long history of relationship with Amazon even from my exchange student times, but… Decline again.

At that point of time I started to seriously think about secured cards, but decided to give a try for the last time to the unsecured one choosing Cap1 Cash rewards for newcomers, and it was a first success with an instant approval of $500 CL! I don’t know what helped in my particular case, but probably my checking account with Cap1 with an average balance of $1k-$2k played some role here.

A couple of months later I decided to try another bank I had a relationship with – BoA – applying for their cash rewards card (and I liked their offer to get $100 back after $500 purchases). I was not approved instantly, but after a couple of weeks I saw a new record in my Online banking and got a card in my mail. $500 CL again.

At this point I made a largest mistake so far :-) – I wrongfully assumed that after getting 2 CCs I can apply for whatever I want :-) (Yes, I wish I saw this board at that time…). So looking at what I really needed and as long as I travel between US and Europe extensively, I applied almost at the same time for Expedia Citibank card, Amex Delta Gold and a bit later for Apple Barclays.

Decline. Decline. Decline :-)

After this I made a pause for around a month or so and clearly realized, that I should focus my attention on some ‘lower level’ store cards, not trying to jump too high. One day during the shopping with my wife I decided to apply for JCPenney store card and was instantly approved for $500 CL. Next day in was GAP with $300 CL and a couple of days later - Amazon Store Card again with $300 CL (which is perfectly fine as it sets a certain cap to what we can spend in these stores at once :-) ).

I also tried Target again and some time later got a letter saying that ‘based on the information from consumer reporting agency Target Bank can not verify my identity, so please send us a copy of your DL, current utility bill and SSN’. I sent all what they’ve asked for and a couple of weeks later got their CC with $700 CL (my largest CL so far). I also applied for Childrens Place card (not knowing that it's backed by Citi) and heard nothing from them at all so far...

So, now with 6 cards (2 CCs and 4 store cards) and a cumulative CL of $2800 I think I should stop apping for some time. The only card I really want now is a Walmart card, mostly because of free TU score they provide every month. I think I will try to apple in store in January or February. My only concern is that it is also backed by GE bank, and I already have 3 cards from them...

But other than that my biggest problem is a CL size on a single card. Funny thing is that I can’t even use any of these cards to by an air ticket to Europe (as price for RT ticket is usually higher than $500 with very rare exceptions forLondon), so I have to use my foreign cards (luckily, my CLs on foreign cards are in $5k+ on most of them). Same for renting a car in Europe as most of european rental companies authorize at least EUR 350 for any rental (which can be almost $500 depending on the FX rate). So what I’m thinking of now is how to grow up to the decent CLs on my US cards over time.

It seems that my Cap1 card will probably stay forever at <$1k CL (I’ve read someone’s recent thread here about $7500 CLI on $500 card, that’s amazing, but probably unlikely :-) ). Amex seem to be out of my league here right now (which I’m perfectly fine with, I have a corporate one, but can’t use it for personal expenses), same for Citi, regardless of the fact I have a checking account with them for 3-4 years now.

So, for now I have around 10 inqs for the last 6 months in my history and 6 cards (I don’t know if Target reports anywhere, I haven’t seen it on my EX and TU reports, but I have not seen my EQ yet). I try not to exceed 40-50% util on any of these cards, but due to the very low CLs it’s pretty hard. Any advice from experts on how can I grow to higher CLs, except for waiting and ‘gardening’? (Yes, I know there are no magic recipes, but maybe I overlook something :-) )

What are the cards that might be useful as a ‘beginner’ cards and tend to grant decent CLs?

Thanks a lot in advance, your advice is highly appreciated!

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First off, Welcome to the Forums

I'm no expert by any means, but to answer your bolded question in my opinion.

And I also want to start by saying STOP apping, you are hurting yourself more than helping.

To start, Cap1 will probably stay at 500CL forever (unless you're in the Credit Steps Program) then it will go to 750 by your 7th statement. (and most likely never grow)

I would use BoA heavily, make multiple payments per month if needed, Out of the two CC's you have I believe you have the best chance with BoA for a CLI, BUT, it's going to take time (6 months probably) then you could ask for CLI.

GEBM is a bit different, you can go online in your accounts, and request a CLI every 4th statement (you may or may not get one)

I'd use the Cap1 card, but, in my (very biased) opinion, I'd show BoA more business.

TIP: When asking for CLI's always have your util low and not spread across all your cards, try to have as few cards as possible with balances.(This normaly improves ones chance to get a CLI)

But it's my opinion you are kinda stuck with what you have for now, because of sooooo many inq's and new TL's, and such short credit history, you are going to have to garden for at the very least 6 months.After 6 months I'd pull my TU and EQ reports from here and see if you're in a position to further app.

If you have to have another CC, you can app for an Orchard Card, but you will get a 300CL, 79+ AF and who knows what other charges (needless to say, you should stay away from this)

I enjoyed reading your post, and I Wish you all the Best.

BTW, Are you able to pull your EQ and TU FICO reports here at myFico? I would reccomend getting them so you can get an idea of where you are (FICO) scorewise.

You can purchase your EQ and TU Reports and Scores Here.

Or you can try the Free 10 Day Score Watch Trial@ at least you could see your EQ score and report, but be sure to read that you have to cancel on or before the 10th day or you will be obligated to a 3 month subscription @Anonymous.95 a month, I have SW and love it.

Unfortunatly, you can not purchase your true EX FICO anywhere, but you can get all three reports free once a year at annualcreditreport.com you will not get your scores, but you will get your FULL reports.

Best of Luck to you.

[mikka1]

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@Anonymous wrote:

(...)

At this point, I'd say the only 'quick' way of getting a higher credit limit card is to open a secured card. It's not fun to have to lock up a bunch of your money that way, but it's really the only simple choice. Even credit unions are going to be wary if you don't have a longer pre-existing relationship with them and you have short credit history. Prime lenders that might extend you a better credit line aren't going to want to touch you until they see 12-24 months of good history. Even at 12 months, you're still considered extremely new to credit so you'll probably get lower limits at that point.
(...)

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AndyK, thank you very much for your input, especially given the fact that you've already walked the similar path :-)

I thought about getting a secured CC, but was just trying to analyze its pro’s and con’s.
(+) I will get a US-issued CC with any (reasonable) limit I want (or, in other words, any limit I can lock up in security deposit for an extended period of time)
(-) I will lock up some funds at least for a year or so
(-) I will most likely have to pay an AF (maybe, except for Wells Fargo secured CC with 1st year AF waived, but I’m not sure it is exactly as I described)
(-) I will most likely have no rewards at all on this card.

Bottom line is basically the following: as I still have foreign CCs with high limits, no or very low AF, no (or pretty low) FTF, so I can use them for large one-off purchases, like air tickets, will locking up, let’s say $2500 in a deposit, paying ~$40 AF and having no rewards on this card be justified by just having one more CC on my report with a pretty high limit? Yes, indeed it will significantly lower my util, but is that it? Will it impact my ability to app for a new decent card in, let’s say, 6-12 months compared to the scenario when I just stick with what I have right now – that’s the main question…

[mikka1]

Mustanglvr2006, thanks for your reply! This community is great with lots of useful information, so I’m glad that I found it :-)

I absolutely agree, as I mentioned before I see no sense in applying for anything else in the next 6 months or so, except for, maybe, Walmart card (mostly for TU score). I might be wrong, but I don’t really expect GEMB to decline me now if I apply – they’ll just give me another ‘toy’ card with $200-$300 CL :-) (which is more or less fine for this specific purpose).

I am in Cap1 Credit steps, so I suppose my CL should reach $750 in a couple of months. I also try to use BoA much more, using Cap1 mostly for small travel related (car rentals etc) expenses, as is seems that they give back 3% of them (I might be wrong, haven’t checked this thoroughly).
I will also probably try CLI on one (or several) of my GEMB cards, but, for example, frankly speaking, $500 is right what I can let myself (and my wife :-) ) to spend in JCPenney at once, so I don’t see much practical sense in GEMB CLIs, except for making total limit higher and thus lower util.

Can you please explain a bit of what you mean by TIP: When asking for CLI's always have your util low and not spread across all your cards, try to have as few cards as possible with balances.(This normaly improves ones chance to get a CLI).
If I understand it right, having, let’s say, $150 average balance on my BoA card with no balance on other cards will eventually increase my chances to get BoA CLI compared to having $150 average balance on BoA and, let’s say, $200 average balance on Cap1 or other card? I’m not trying doubt it, but it seems a little bit counterintuitive for me, at least based on my experience with banks in Russia (but again, they might be using completely different scoring and behavioral models). In simple terms, if I was a banker and had a client who has only 1 credit card from me, I would have probably be more willing to make a CLI if the client was constantly close to the limit in his spendings, than to the one, who does not use even a half of what he’s offered now. This might not be true for limits that are already high, but I once had a huge CLI on one of my Russian cards only after I was using it for more than 90% 3-4 months in a row. I’m not trying to say that it should work exactly the same here, but that’s just what I experienced some time ago with one of the Russian banks (but maybe my util was not taken into account at all and it was just an annual/biannual review of account, so I would have got CLI regardless of my usage, who knows :-) )

I will definitely try to purchase my scores at some point of time, but as long as I know, they can’t be calculated at all (or at least with confidence) if the history length is less than 6 months. Mine started in August, so seems I have to wait at least 2-3 more months to try to buy any scores.

Will try to keep everyone posted on my progress. Meanwhile I have a pretty strange question probably – I read a lot about recon letters to the banks after decline here. I have no idea if this makes sense at all or not (probably nobody knows :-) ), but in your view, does it make sense to write to Citi providing them with a couple of my CC statements (or even a credit reference letter) from their Russian subsidiary (in English, of course)? They might not believe me, but maybe they would believe their colleagues working for Citigroup in Russia, as I have a pretty long history there (I think, 4 or 5 years) and relatively high limit (cumulative on 2 cards of around $10k or so…). Crazy idea, isn’t it? I know Amex had something like this before (Intl Transfer Desk), but it was mostly about backdating the account, so not sure if it can work with Citi even in theory…

Many thanks for your answers!

[mtrsprt]

You have a BETTER chance of getting credit line increases if you USE the card to more than 50% of its limit, AND carry a 35%+ balance monthly, as long as your history of payments are on time.

I have seen too many people here complain about no CL increases to so called "credit rebuilding" type cards.  80% of those people, also pay all balances in full each month, or keep less than 10% balances on them.  

CCC's make almost ZERO money on you (except those with annual fees etc), unless you CARRY a balance that they can make money off your interest. Why would they want to increase a limit if you dont need it, or show that you are using the card to its full potential??

So asking for CL increases on cards you barely use, or pay in full each month, is like try to catch a trophy world record fish while fishing, even though you have never been fishing before.......

I have had my Capital One card for 7 months now.  It started @ 300.00 CL, and it's already up to $1000.00

My dear friend, has one of the same cards.  She has had it for 4 years, and only uses it for gas.  It's never had over a 100.00 balance, and it's always paid if full each month.  It has not seen a CL increase after 4.5 years.  It's still @ 300 CL.

If you want CL increases, USE the card, and don't be afraid to CARRY a balance over a few months here and there.  So your utilization might go up and down a little, and your FICO score maybe change a few points.  BFD........  You will see MANY more automatic increases....   

For those that use the "sock drawer" term.  You are the ones who expect more from your cards, and wonder why they don't go anywhere..........

[mikka1]

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@mtrsprt wrote:

(...) 

CCC's make almost ZERO money on you (except those with annual fees etc), unless you CARRY a balance that they can make money off your interest. Why would they want to increase a limit if you dont need it, or show that you are using the card to its full potential??

So asking for CL increases on cards you barely use, or pay in full each month, is like try to catch a trophy world record fish while fishing, even though you have never been fishing before.......

(...)

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mtrsprt, well, I, as many other card users all over the world, stick to what is usually called 'gracer behaviour' in Europe - I always try to pay my balance in full every month, unless I have a very huge CC debt I'd better 'roll' over some period of time. Again, I might be wrong in my judgment, but I don't see real sense in carrying a balance (especially very small) just to 'make good' for a bank - maybe I'd just better bring $20 note and leave it on a table in this bank's branch? :-) (Just joking, of course).

I can also disagree with your statement that banks don't earn anything on me - this might be true only if rewards are too generous and they are much higher than interchange fees that banks get for a specific transaction (as long as I know, average interchange fee in the US is around 1,8%). I can also point out that there are also lots of "0% APR" offers for quite an extended period of time, which are, following your logic, completely loss making for those banks. I agree that banks of course earn more if I carry a balance, but there's no real sense to carry $100 (it reminded me of one Russian bank that gave me a $400 CC and was trying to push me a 'credit protection' insurance against uneployment for almost $50 a year, which in my view does not have a real sense :-) )...

But nevertheless, point taken and much appreciated :-) If that's the rule of the game and banks prefer to see me carrying $100 balance from month to month paying a couple of bucks in interest - I don't mind, but I just don't see the sense of doing so personally :-)

[mtrsprt]

The reply wasn't directed towards you, but just some basic info in general.

When someone recommended to you, that asking for a CL increase while having nothing on your cards, would be the better choice, I tend to disagree.  That's all.

[SevenNEW]

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@mikka1 wrote:

mtrsprt, well, I, as many other card users all over the world, stick to what is usually called 'gracer behaviour' in Europe - I always try to pay my balance in full every month, unless I have a very huge CC debt I'd better 'roll' over some period of time. Again, I might be wrong in my judgment, but I don't see real sense in carrying a balance (especially very small) just to 'make good' for a bank - maybe I'd just better bring $20 note and leave it on a table in this bank's branch? :-) (Just joking, of course).

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Hi mikka, welcome to the forum. Actually, virtually everyone who is in the position to do so in this forum pays in full every month. I am a bit baffled by mtrsprt's post, as this seems one of the myths that are more commonly busted in this forum. Keep paying in full, most definitely.

I am also an immigrant and have started working on my credit in 2008. Made several mistakes, but am now in a very good position -- home mortgage, prime cards, CL in the five digits, etc.

The best advice anyone can give you is to garden until the end of the year. Your best friend at this point is your average age of accounts, and it needs to be over one year if you really want to get serious CCs and -- down the line -- a home mortgage. As a foreigner you need to become an extremist gardener, and only apply for cards you really mean to use for years and years. As of now, you already have enough credit lines to get you anywhere. (I reached 740 with two Cap 1 cards, and was approved for my home mortgage with that. I was very proudly inq-free, and that helped.)

Even with little credit you can put quite a bit of money through a CC -- just pay twice a month or more if needed. This is the first year in which I can buy flight tickets for my family using a credit card. When I needed to do it before, I called my Credit Union and asked them to raise my Debit Card limit to $ 5,000 for one day, explaining that I needed to buy airline tickets. They checked the balance and always obliged without problems.

Mustang made a very good point about utilization. It's not a great priority for you right now, since you have no credit reports yet, but we all find that the best way to maximize our credit score is to pay the full balance of every card two-three days before the statement is generated so that it will report 0 util to the CRAs. On only one card we pay the balance almost completely, so that it will report 1-9% of the CL. It's a grand gesture to show that we don't need their money but we still use their cards, and it works very well, scorewise.

I will keep an eye on this thread -- feel free to ask for more clarifications as needed, or to PM me.

ED: forgot words here and there -- it's getting late.

[SevenNEW]

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@mtrsprt wrote:

The reply wasn't directed towards you, but just some basic info in general.

When someone recommended to you, that asking for a CL increase while having nothing on your cards, would be the better choice, I tend to disagree.  That's all.

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This is a very good point, mtrsprt -- heavy use of cards always moves CCCs.

I am just not convinced that carrying a balance is necessary. It seems most of our forum gurus never needed to.