I’d like to get a credit card, and need some assistance. I’ve messed up a bit in my credit history, and have recently got declined for the card I wanted (admittedly I was aiming a bit high on the credit scale), but I don’t want to have lots and lots of requests for my credit report showing up, so I’d like some advice.
I screwed up a year ago and thought I had paid off a credit card, but it wasn’t paid. Because I was living in the same household with some other people, they were stacking my mail off someplace for several months (!) without telling me that these statements were coming in (I worked nights at a highly stressful job at the time, and had other things on my mind). Long story short, the debts and fees have all been paid off quite some time ago (right when I found out about it), but I know it’s a gash on the report and it’s not something I can dispute over.
On the bright side, I did get a car loan with no problems and have paid it on time every month since last July (just a few months after this happened) so I know I must have some good credit, too.
Does someone have advice as to what I can expect in credit card terms? Do I have to pay to get a secured card? Is it worth $50 or so in annual fees to get one of these prepaid cards, or is there someplace I could get a better deal?
I’m not looking for a high credit limit, just some more credit experience to try to make up for this. I’m looking for an apartment and am terrified this will keep me from getting one, and besides which it would be nice to have a credit card for emergencies.
Prepaid cards won’t help your credit. You said you got a car loan with no problem, which is usually ten times harder than getting a credit card. Keep paying that off, and that will do more to affect your credit than any measly credit card will. Also, do you have a full time permanent status job? Usually you need that to get a credit card approval. Also, borrowing money for education and paying it off on time helps.
I’m just speaking from personal experience. I went from being a creditless college grad to being swamped by solicitations from the credit card companies (and increases in credit lines!) in less than a month, just because I got a job, borrowed money for a car (big down payments help), and am paying off student loans.
I did some research on prepaid cards for my sister a couple of months ago.
The best deal out there is the PayPal prepaid MasterCard. It’s completely free, but you have to have been a Paypal member for at least two months to get one.
There might be some confusion here between secured and prepaid cards. A secured card will help your credit rating and you shouldn’t expect to pay an annual fee. It’s not “prepaid” because you aren’t really spending the money you put down; that money is just to cover your balance in case you can’t pay.
Mr2001, Thanks for the vocab lesson. I had foolishly assumed secured and prepaid were simply different marketing terms for the same thing.
In case anyone is wondering, if there is an error on your credit report, it can take as much as two years and a couple of hundred dollars in notary and registered mail fees to get it fixed. Not that I’ve had a bad experience or anything.
If you’re curious about your current credit status, fluiddruid, your recent rejection entitles you to a free copy of your credit report from whichever credit bureau was used in the decision to turn you down. Your rejection letter should have details about how to obtain the free report.
Get a secured credit card. Say you deposit $200, your credit line is good for $240. You establish credit this way as they report to the credit bureaus monthly. I have mine through Sterling Bank and Trust (search Google). Took about a week to get the card, and I have had it for a year and a half. It’s my bankruptcy that is still a big sore on my credit history.
When you were declined the credit cards in the past, what were the specific reasons you were given?
Every declination of credit must be substantiated with the reason.
Sort of removes the mystery a bit.
Car loans: These go to anyone, almost regardless of credit if they can substantiate your income, residence, a different down payment, security deposit on lease, bank fees, document fees and of course the biggie, the interest rates.
Yes, there are people who, because of their credit, are paying 18% on a car loan. With good credit/low risk, they might have been paying 8%.
Credit cards are generally harder to get than car loans.
The credit heirarchy (from somebody who’s worked his way up from the bottom over the last few years). All of this assumes good salary.
Car loan. They know you need a car. They know this is a higher priority pay-off for most people, because they can take the car away from you, and you don’t want them to do that. They’ll charge you higher interest, but you’ll have a car.
Secured credit card. usually you put in something like $200, and your limit will be anywhere from $200-$400. If your credit is this bad, then you usually have other debts that you should be spending that $200 on, and paying off the other debts would help your credit rating more than having a new credit card. But it’s better than nothing.
High annual fee/interest rate card. Normal credit card, but with a $50 or so annual fee, a low limit, and a high interest rates. If you keep your nose clean with one of these for a year or two, you can start getting offers for better cards. Once you do, dump this one.
Store cards. Again, with a lower limit than if your credit was better. Stores that offer incentives for buying things with their store card (like Best Buy, “no interest for a year” type stuff) may be pickier than other stores.
Regular credit cards. No annual fee, lower interest rates, etc.
Get a copy of your credit report, and find out what your score is. Somebody on the board more familiar with the credit instituations than I can probably tell you what sort of credit you can get with your score.
If you were turned down for a regular credit card, my next step would be to apply for a high annual fee card. Use it, but pay it off.
Well, I don’t have any outstanding debts, and I did actually get a Target card with no trouble. Damn my luck, I should have asked for the one with the Visa.
Thanks very much for the advice, all. I’ll start looking again.