Screwed up a secured card - where to next for a student?

[AnaMKMK]

Ladies & Gents:

You've all helped me out a great deal in the past with rebuilding my credit and I'm hoping more of your knowledge will solve my brothers case. He's a med student with essentially no bills besides his cell phone and car (cell phone in his name, car is in my other brothers, but he makes the payments on-time - I think mostly because he's afraid of messing up my other brothers credit, he's not so concerned with his). He literally lives from one student loan to another and towards the end of the school term is really hurting for money. Anyways his credit took a real dive - he just told me that he got a secured card through Citibank and screwed it up. It had a $500 cl and he took it to $700 after all the fees; just a few days ago he paid off the $200 and suffice it to say Citi would not offer him an unsecured card.

Where can he go? I'm thinking another secured card is the only option - he's asked me to just apply for it and use it like I would if its mine. As much as I lecture about spending the bare min on cc and paying them off, never carrying a big balance its hard as a student, so he's sticking to cash but needs his credit fixed by the time he graduates.

I already tried the pre-approval for CapOne and Orchard, CapOne was denied and Orchard only offered a secured card. His credit score was 590 when he was approved for the Citi Secured card and I imagine its plummeted since then.

I guess the first step is pulling his credit report, but how do you go about applying for credit cards to establish credit if you have no income? Besides that generated by student loans - what do you list under employer?

Thoughts....suggestions??

Thanks!

[Anonymous]

Honestly, to me this doesn't look so much like a credit problem than primarily an income problem. Is there any possibility that your brother could get a job and pay off that secured Citi card? As a side effect, that should cure his score immediately and improve his chance of getting another card immensely.

Message Edited by Ulan on 02-07-2009 01:26 PM

[AnaMKMK]

Working would be tough with his schedule and class load - i've tried pushing this many times. When he's on break he works for friends, but he just finished his BS in 3 yrs and started his DC program, which is 9-5 m-f, when the acupuncture training kicks in, his saturday and sunday will be in school as well.

He recently got his most recent student loan, so the balance left on the secured card was $200 which he's paid off.

If paying off that secured card helps his credit, maybe i just need to wait and see the results of that.

[AnaMKMK]

It is an income problem. He gets student loans to cover his expenses, but he needs good credit when he's done with the program. What do you put for income? employer?

Applying for student credit cards won't work, he's tried and been denied bc his credit is so bad to start.

[Anonymous]

I understand that a med student's schedule is harsh. But I guess I misunderstood this part:

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@AnaMKMK wrote:

He recently got his most recent student loan, so the balance left on the secured card was $200 which he's paid off.

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When I read your first post, I understood that he just paid off the $200 he charged more than his $500 secured amount and let the balance stay at $500, but this sounds much better. I guess he has still a chance with that secured card, as Citi didn't close it.

I guess your brother should be fine with a "wait and see" approach. Getting a store card at one of the easier stores where he actually shops might be the next step.

[AnaMKMK]

Honestly i don't know the details of the secured card. What i understood is this: when it was initially opened up, he took $500 and put it into a CD, this secured the card. He was supposed to then make payments on it just like a regular CC. The secured card was linked to the CD with a 1-yr life, on the pretense that his credit wouold improve and then be converted to an unsecured card, this wasn't the case. The 1-yr lapsed and Citi took the balance of the CD to pay the secured card, thats why he only had $200 left to pay. Citi told him to ask in approx 3 more months if he can have another secured card.

[oracles]

Hi Ana

First - He needs to pay down his cc bill. 

Currently he has 100% util. This is killing his score tremendously. Pay down the bill and he will experience a significant point increase. Util% is 35% of your fico score. Get it down to 1-5% util if possible.

Second - he needs to work on his credit report. Try to send goodwill letters and ask to please remove any baddies that are currently on his report. Give the explanation as to why these baddies occurred. This will hopefully work sending the first letter however continue to send more letters if not successful. It is sometimes about getting the right person to read the letter and being understandable. Explain his situation of being a student and how he now understands the importance of credit but unfortunately because of student loans and also his field of studies, he had a rough time. Make sure he sends the goodwill letters after he has paid down the bill.

Third - With these two items, his scores will increase and he will have an opportunity to receive a cc.

I unfortunately do not think he would get any card with the situation he is in currently, beside another secured card like B of A. This card will become unsecured in 9-12 months with good payment history.

Do these things and he will be on his way to a healthier score.

Hope this helps and keep us updated

[oracles]

I just read your recent post ana.

Since he no longer has this secured card, again I would pay off the remaining balance if any. I am still somewhat fuzzy on this.

It still shows an util% of over 100% due to having a balance and no limit. I would advise him to get another secured card with b of a. 

He needs to still send the goodwill letters and try to clean his report. As far as income and job. He can put a title he had while helping his friends and income can be how much he earned during that year. because it is a secured card, it may not matter that much.

Hope this helps