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Seven years of credit history...but no real history. First card to get?

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Seven years of credit history...but no real history. First card to get?

First off, I know that this is going to kind of be a wall of text; I apologize for that in advance. I promise to try and organize it as well as I can so that it's as easy as possible to read.

 

I have a credit history file dating back seven years, but there is almost nothing in there. The full extent of my history is a grand total of two accounts:

 

1) I took out an auto loan for $9,685 in 2003 and paid off in 2008. I was late twice on my payments (April and March of 2005); both times I was less than 30 days late.

 

2) A department store card (GEMB JCPenney) that I opened in 2005. I used it once, paid it off in full before it was due, and never used it again. I never did cancel the account.

 

In the past year, I have accumulated between one and three inquiries , depending on which reporting agency you're asking (three on Equifax). One was for an apartment, one was an auto loan that I ended up not actually taking out (was able to purchase the vehicle without taking out a loan), and the most recent was CapitalOne (I applied for and was denied a No Hassle Cash Rewards Card).

 

I am trying to figure out the best "plan of attack" for building my credit history; my scores themselves are actually decent:

 

AnnualCreditReport.com Equifax Score (pre-CapitalOne inquiry): 691

 

FICO Scores (post-CapitalOne inquiry)

Equifax: 743

TransUnion: 748

 

CapitalOne quoted the following four reasons for denying me the No Hassle Cash Rewards Card:

 

1) Number of revolving accounts (Equifax)

2) Current account has not been used enough (Experian)

3) Credit limit(s) are too low (Equifax)

4) Balance on accounts (TransUnion)

 

After educating myself a little more, I understand why I wasn't approved for the CapitalOne No Hassle Cash Rewards card. My question is this: What is the best plan of attack for me to build a credit history while simultaneously setting me up to get the cards that will be best for me and that I will use?

 

Long Term Goals

I would like to eventually get a good cash back rewards card for everyday use, as well as another card with a very low APR for those rare purchases that I do not intend to pay off in full by the end of the month. My local credit union's Visa credit card fits that bill (7.75%), but they don't offer any other cards that I could get approved for with the intention of graduating to the better card later. For a cash back rewards card, something akin to the CapitalOne No Hassle Cash Rewards Card as I mentioned earlier, or the Pentagon Federal Credit Union Visa Platinum Cashback Rewards Card is what I have in mind. Supplementally, the Shell Drive for Five Card is on the table, since I spend a little under ten grand a year on gas, and buy Shell and BP fuels almost exclusively. I figure that this is a card that I might be able to get after building a little bit of solid history, but before I have done enough to be able to get approved for the more desirable cards I mentioned above.

 

Current Considerations

Obviously, I would like to apply for the best card that I can get approved for. If that has to be a secured card, so be it. If I have to go that route, I am considering the CapitalOne Secured MasterCard, since I am looking at a CapitalOne card as a contender for one of my long-term goal cards in the "rewards card" category. If it is feasible, I would like to be able to apply for and be approved for an unsecured card. I don't know if someone with my credit history (or lack thereof) would be approved for something like CapitalOne's Classic Platinum Card, but that would mean skipping the "secured card" step, which would be nice. The Capital One Cash Rewards for Newcomers Card caught my eye as well. I know that it's targeted at people new to the country, but considering my credit history, I have to wonder if it's possibly an option for me as well.

 

Please let me know if I'm pointed in the wrong direction at all, and any advice as to how to proceed and what you think of the options I've outlined would be most appreciated.


FICO Equifax: 743 (5/22/11)
FICO TransUnion: 748 (5/22/11)
CreditKarma TransUnion: 672 (5/22/11)
Credit Monitoring Service Guide | Frequently Requested Threads

Message 1 of 32
31 REPLIES 31
Frequent Contributor

Re: Seven years of credit history...but no real history. First card to get?

Capital One is a good card in my experience regardless of what you might read on this forum (you'll note that some like it and some hate it.)  And you may not need a secured card.  Your two payments of less than 30 days late should not even show up on your CR since they must be at least 30 days late to qualify.

Message 2 of 32
Senior Contributor

Re: Seven years of credit history...but no real history. First card to get?

 


@hsg10mm wrote:

First off, I know that this is going to kind of be a wall of text; I apologize for that in advance. I promise to try and organize it as well as I can so that it's as easy as possible to read.

 

I have a credit history file dating back seven years, but there is almost nothing in there. The full extent of my history is a grand total of two accounts:

 

1) I took out an auto loan for $9,685 in 2003 and paid off in 2008. I was late twice on my payments (April and March of 2005); both times I was less than 30 days late.

 

2) A department store card (GEMB JCPenney) that I opened in 2005. I used it once, paid it off in full before it was due, and never used it again. I never did cancel the account.

 

In the past year, I have accumulated between one and three inquiries , depending on which reporting agency you're asking (three on Equifax). One was for an apartment, one was an auto loan that I ended up not actually taking out (was able to purchase the vehicle without taking out a loan), and the most recent was CapitalOne (I applied for and was denied a No Hassle Cash Rewards Card).

 

I am trying to figure out the best "plan of attack" for building my credit history; my scores themselves are actually decent:

 

AnnualCreditReport.com Equifax Score (pre-CapitalOne inquiry): 691

 

FICO Scores (post-CapitalOne inquiry)

Equifax: 743

TransUnion: 748

 

CapitalOne quoted the following four reasons for denying me the No Hassle Cash Rewards Card:

 

1) Number of revolving accounts (Equifax)

2) Current account has not been used enough (Experian)

3) Credit limit(s) are too low (Equifax)

4) Balance on accounts (TransUnion)

 

After educating myself a little more, I understand why I wasn't approved for the CapitalOne No Hassle Cash Rewards card. My question is this: What is the best plan of attack for me to build a credit history while simultaneously setting me up to get the cards that will be best for me and that I will use?

 

Long Term Goals

I would like to eventually get a good cash back rewards card for everyday use, as well as another card with a very low APR for those rare purchases that I do not intend to pay off in full by the end of the month. My local credit union's Visa credit card fits that bill (7.75%), but they don't offer any other cards that I could get approved for with the intention of graduating to the better card later. For a cash back rewards card, something akin to the CapitalOne No Hassle Cash Rewards Card as I mentioned earlier, or the Pentagon Federal Credit Union Visa Platinum Cashback Rewards Card is what I have in mind. Supplementally, the Shell Drive for Five Card is on the table, since I spend a little under ten grand a year on gas, and buy Shell and BP fuels almost exclusively. I figure that this is a card that I might be able to get after building a little bit of solid history, but before I have done enough to be able to get approved for the more desirable cards I mentioned above.

 

Current Considerations

Obviously, I would like to apply for the best card that I can get approved for. If that has to be a secured card, so be it. If I have to go that route, I am considering the CapitalOne Secured MasterCard, since I am looking at a CapitalOne card as a contender for one of my long-term goal cards in the "rewards card" category. If it is feasible, I would like to be able to apply for and be approved for an unsecured card. I don't know if someone with my credit history (or lack thereof) would be approved for something like CapitalOne's Classic Platinum Card, but that would mean skipping the "secured card" step, which would be nice. The Capital One Cash Rewards for Newcomers Card caught my eye as well. I know that it's targeted at people new to the country, but considering my credit history, I have to wonder if it's possibly an option for me as well.

 

Please let me know if I'm pointed in the wrong direction at all, and any advice as to how to proceed and what you think of the options I've outlined would be most appreciated.


 

Even though your credit history is 7 years old, you have what they call a think thin file.  It will be very difficult to get approved for a prime card unless you find a lenient lender.

 

I'd start with a credit union and maybe a secured credit card from a prime lender such as BoA or Citibank. 

IAALBNYL
Message 3 of 32
Moderator Emeritus

Re: Seven years of credit history...but no real history. First card to get?

I'm going to speculate that a "think file" must be a cross between a thin file and a thick file.

My guess - O6 was stating that he believes you have a thin file.  Smiley Wink

 

If you posted about this, I missed it--While you consider your long term objectives, have you considered keeping that JCPenney account happy?  Use it every few months for socks so it doesn't close.  It's good to keep around, but you risk losing it if you don't use it.  IMO, I would make keeping them open a priority - they're valuable to you.

 

And you'll get some good responses about cards to get the an EQ 743 or a TU 748 even with little history.  If you like CU's, check out a local CU, or any of the others 'round here - there are some favs you'll see as you read the posts.  (I like Alliant CU and I think maybe they'd like you).  I'm not experienced with starting out with little history, so I'll leave you to our forum experts.......

 

 

 

Just puttin' syrup on something, don't make it pancakes.
Message 4 of 32
Member

Re: Seven years of credit history...but no real history. First card to get?

O6:

Okay, so I should probably not try for the CapitalOne Classic Platinum Card, then. What about the Capital One Cash Rewards for Newcomers Card the I mentioned? I have not found anything one way or the other to indicate whether or not it would be a good idea for someone with a thin file to apply for.

 

When you say to start with a credit union, do you mean to apply for a secured card with a credit union? I am a member of three banks, two of which are credit unions, and neither has a secured card. One has a points-based rewards card (I have been with this credit union since I was learning to walk, I think, and I'm 27 now). The other credit union has a non-rewards card with a very good interest rate (7.75%). I have been with that credit union for 15 years, I believe. I don't feel confident that I could get approved for either of those cards based on my thin credit file; let me know if that is an incorrect assumption.

 

 

beamMEup:

What you suggest about the JCPenney account actually did cross my mind after I made my original post. I'm not really sure how to go about it, but if I did start putting purchases on it every month, I assume that I could increase my credit limit with them, which would help my credit score/file on top of the simple fact of not losing my oldest/only revolving account. What steps would I need to take to increase my credit limit with them?

 

As to other credit unions, I will check out Alliant, and maybe they will like me, as you say. Smiley Happy


FICO Equifax: 743 (5/22/11)
FICO TransUnion: 748 (5/22/11)
CreditKarma TransUnion: 672 (5/22/11)
Credit Monitoring Service Guide | Frequently Requested Threads

Message 5 of 32
Senior Contributor

Re: Seven years of credit history...but no real history. First card to get?

I think the Capital One Secured Card is a very good idea.    I suggest building up the deposit over the next 6 months as funds are available.   When you have 6 months history and a nice CL reporting, it is time to apply for the cards you want.

 

CU also good choice. 

Message 6 of 32
Member

Re: Seven years of credit history...but no real history. First card to get?

 


@hsg10mm wrote:

O6:

Okay, so I should probably not try for the CapitalOne Classic Platinum Card, then. What about the Capital One Cash Rewards for Newcomers Card the I mentioned? I have not found anything one way or the other to indicate whether or not it would be a good idea for someone with a thin file to apply for.

 

When you say to start with a credit union, do you mean to apply for a secured card with a credit union? I am a member of three banks, two of which are credit unions, and neither has a secured card. One has a points-based rewards card (I have been with this credit union since I was learning to walk, I think, and I'm 27 now). The other credit union has a non-rewards card with a very good interest rate (7.75%). I have been with that credit union for 15 years, I believe. I don't feel confident that I could get approved for either of those cards based on my thin credit file; let me know if that is an incorrect assumption.

 

 

beamMEup:

What you suggest about the JCPenney account actually did cross my mind after I made my original post. I'm not really sure how to go about it, but if I did start putting purchases on it every month, I assume that I could increase my credit limit with them, which would help my credit score/file on top of the simple fact of not losing my oldest/only revolving account. What steps would I need to take to increase my credit limit with them?

 

As to other credit unions, I will check out Alliant, and maybe they will like me, as you say. Smiley Happy


I actually applied and was approved for the new comers card from Cap One, when I only had a secured card for like a month, and was added as an AU on a good standing account. They gave me a 1000CL, and I'm in the credit steps program (should be getting a 500 CLI soon). Just FYI, the newcomer's card gives the 2% cashback only on hotels and travel expenses (airfare, trainfare, rental cars) so it's not as good in day to day spending as the regular no hassle cashback.

 

I don't know tbh if it's easier to get, but I got it no problem with a file just as thin, or even thinner than yours. As always with Cap One, they'll pull all three bureaus.

 

Hope this helps.

Message 7 of 32
Moderator Emeritus

Re: Seven years of credit history...but no real history. First card to get?


@hsg10mm wrote:

 

beamMEup:

What you suggest about the JCPenney account actually did cross my mind after I made my original post. I'm not really sure how to go about it, but if I did start putting purchases on it every month, I assume that I could increase my credit limit with them, which would help my credit score/file on top of the simple fact of not losing my oldest/only revolving account. What steps would I need to take to increase my credit limit with them?

 

As to other credit unions, I will check out Alliant, and maybe they will like me, as you say. Smiley Happy


JCPenney is GEMB, and they historically offer CLI's after every fourth statement cuts.  Maybe buy a little somthin-somthin you'd need anyway and see if the account is still even considered open.  JCPenney has reported old accounts open on CR's for both DH and I long after they have actually considered the account closed, so this way you'll know it's really open.

If they are open, they may have decreased your CL, don't be alarmed.  Just start workin' it.  You don't need to put much on it (a few dollars'll do) and you can PIF.  After the fourth statement, ask for a CLI.  JCPenney does nice CLI's for quite a few folks - hopefully they'll help you in your building process.

 

On the other hand, if it's closed they may ask you if you'd like to open a new account.  That's your call.  Lots of folks like JCPenneys - but you'll still want a good general purpose bank or CU card for lots of reasons - including FICO scoring.

 

I'd also recommend going into your two CU's with a copy of the credit reports you pulled here and ask them to sit down and talk to you about opening an account.  They'll still have to do a hard pull, but they may be able to give you some good insight after seeing the reports you pulled.

 

Best wishes!

Just puttin' syrup on something, don't make it pancakes.
Message 8 of 32
Senior Contributor

Re: Seven years of credit history...but no real history. First card to get?


@beamMEup wrote:

I'm going to speculate that a "think file" must be a cross between a thin file and a thick file.

My guess - O6 was stating that he believes you have a thin file.  Smiley Wink

 

 ...

 


 

Or maybe a cross between a thin file and a stink file?  Smiley Happy

 

As usual, beamMEup, your guess was right.  I meant to type thin file.

IAALBNYL
Message 9 of 32
Senior Contributor

Re: Seven years of credit history...but no real history. First card to get?


@hsg10mm wrote:

O6:

Okay, so I should probably not try for the CapitalOne Classic Platinum Card, then. What about the Capital One Cash Rewards for Newcomers Card the I mentioned? I have not found anything one way or the other to indicate whether or not it would be a good idea for someone with a thin file to apply for.

 

When you say to start with a credit union, do you mean to apply for a secured card with a credit union? I am a member of three banks, two of which are credit unions, and neither has a secured card. One has a points-based rewards card (I have been with this credit union since I was learning to walk, I think, and I'm 27 now). The other credit union has a non-rewards card with a very good interest rate (7.75%). I have been with that credit union for 15 years, I believe. I don't feel confident that I could get approved for either of those cards based on my thin credit file; let me know if that is an incorrect assumption.

 

 

beamMEup:

What you suggest about the JCPenney account actually did cross my mind after I made my original post. I'm not really sure how to go about it, but if I did start putting purchases on it every month, I assume that I could increase my credit limit with them, which would help my credit score/file on top of the simple fact of not losing my oldest/only revolving account. What steps would I need to take to increase my credit limit with them?

 

As to other credit unions, I will check out Alliant, and maybe they will like me, as you say. Smiley Happy


 

I'm afraid I know little about CrapOne's card products so I can't comment about which might be best for you. 

 

I know that with a "thin" file some lenders don't like to take a chance.  They believe that a department store card and an auto loan, even though showing 7 years of history, might not be enough to indicate whether one can handle a major credit card.

 

I would go with a good credit union (maybe like Alliant) and apply for an unsecured card.  They might be more willing to approve, if not initially, after you recon their initial decision.

 

I think other banks like Bank of America or Citibank for unsecured cards might be more difficult, but YMMV.  Even if they initially decline, you can try a recon.  Still, you don't want to be applying for too many cards because those inquiries will also kill your chances of getting approved.  Best to use your inquiries wisely.

 

A good option would be to get a secured card from, say, BoA or Citibank and then you can be pretty sure that after a year or so it will unsecure. 

 

My strategy might be something like this:

 

Try for an unsecured card from one of your credit unions.  When you get approved for one, stop applying for unsecured credit.

 

Then get a secured card from BoA and also Citibank.  Then stop applying, period. 

 

After a year and a half you have three great unsecured cards (because Citibank and BoA will unsecure) that will grow with you while having only very, very old inquiries still showing on your credit report. 

 

 

 

 

IAALBNYL
Message 10 of 32
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