It can hurt your credit score to apply for credit too often in a given period of time, so the OP is probably doing well in being selective (and asking for advice on the best places to try) rather than applying everywhere possible.
This is absolutely not true at all. If the banks earn a cent off of you, you are not using credit cards correctly (if anything eventually you should be making money off the banks via rewards cards). While some activity on your card is beneficial, there is no positive to carrying a balance and your card absolutely should be paid off every month. In fact, your credit card could just sit there unused and it will still build up your credit score/report (just don’t let it sit unused more then 4 or 5 months in a row or it might be canceled by your bank).
Unfortunately you chose a tough time to go for your first card. Banks are being a lot more picky on who they give credit too. As far as good first cards I will echo what other have said that store credit cards are good or you could go the secured credit card route. A secured card acts just like a unsecured card, and looks the same on your credit report, it is just backed by an initial deposit you make which as long as you pay your bill you will get back. Often local credit unions/banks will have very low/no fee secured cards, so that is a good place to start.
I was in a very similar place a few years ago, and used the secured card route.
I came out of university without a credit card where somehow everyone else I knew seemed to have them thrown at them by the banks. I figured they where just trouble anyways so didn’t put much to it at the time. When I got to my late thirties I began to get tired of the hassles of renting cars or anything, travelling, and booking hotels without one. I was just getting started in a new career, had nothing to speak of for assets, and had lived a life of maximum recreation and minimized income.
I got a secured visa of five hundred dollars from my bank after meeting with a rep and going over my predicament. I followed their instructions; buying fuel, groceries and fixed monthly expenses and paying the card off monthly or before I reached 75% of its limit. I do not remember exactly but I think it wasn’t even six months before they upped my limit to 1000 and refunded my secured deposit. Soon after they activated a 10000 line of credit and I was on my way.
Get it, use it, pay it off and don’t exceed 75% of the limit. If you end up carrying a balance dont sweat it, but make a plan to get it paid down.
The OP doesn’t really have a credit score to hurt, remember? And the very small hit your score gets from excess “inquiries” goes away quite quickly.
Op, have you ordered your free credit reports, and checked them?
Apply at about ten different places within a short time. As stated, you don’t have the history to get dinged yet for too many applications.
Like dating, it’s a numbers game.
I’m in the same situation at age 34. I went to the credit union with $1700 and told them my intentions and I’m on my way. one woman at the bank was astonished that I had made it this far in life without credit. I told her I pay cash and drive cheap cars that I maintain myself and simply did not buy things I cannot afford and was a bit surprised that this made things difficult for me. Oh well…
Depending on what state you live in National City now PNC has a secured card with low fees. Crown Jewelers offers their own credit everyone is approved and they give you a limit of 2500 that reports to the credit reporting bureaus.
www.creditboards.com is a great place to learn about establishing and rebuilding your credit
Hell no. My biggest purchase while under the US credit system was $5 under the limit of the card I had; I paid it in full before being in the house - and not only did the bank “spontaneously” multiply my limit x3, but I started getting offers (including from reputable sources) like nobody’s business.
I’m a 31 year old in the same situation as the OP. I’m starting to look at buying a house, but have no credit. There seems to be a big RTO movement in the housing industry in my neck of the woods (Seattle) that I’m checking in to. Doesn’t seem to be too unreasonable for the most part.
Sorry to upset your opinion, but the exact opposite is true. Banks don’t make money off of credit cards that aren’t used, and if they aren’t earning money off you, you are a bad customer in their eyes. Also, the length of time you’ve had credit is only one factor in your FICO score, and not the most significant one at that-- just letting your card sit there unused will not improve your credit dramatically, and will almost certainly lead it to being canceled in this tight credit environment.
And making big payments on cards is bad.
Here’s another good (bad) piece on why “good” users of credit are actually undesirable to banks.
FYI, this is becoming a political issue now.
Unfortunately, the proposed “reforms” to the credit card business are likely to make it even harder to get credit in the future.
To answer the OP’s question-- just get a card(s). Secured, unsecured, retail card, credit union card, anywhere you can get it. And then use the cards, but don’t focus so much on zero balance each month-- focus on manageable balance each month.
At the end of the day, keeping a $100 balance on your card isn’t going to kill you in interest rates-- it’s not $10,000, which everyone can (and should) agree is irresponsible.
It is true that a $100 balance isn;t so bad. But many dudes can’t control it. And, yes, some CC companies are not happy with you if you do certain things- buit that doesn’t matter, it only matters if it effects your FICO score. And payting it all off every month is just fine for your FICO score. Even having a back-up CC, one which you don;t use at all- doesn;t hurt your FICO score.
Don’t confuse what the banks want with what makes you a good credit risk.
I’m 26 and currently working through the same issue. I got a secured card from BofA ($29 fee, plus the $300 security deposit) and a Zales store card. I’ll probably get a Target card too.
About 10 years ago, when I was 54 years old, I moved to the US, and had no credit history. So a couple of times, when buying something in a store and offered a discount if I used the store card, I applied on the spot for the card, and got knocked back because I had no credit history. (What a pain – I would then have had black marks on my credit history for being rejected – they should have given me the frigging discount for applying!)
So I started getting a history by opening a credit union account, into which my salary was paid, and attached to which was a Visa debit card.
A few months later, my wife and I wanted to buy a house with about 30% down payment, and because of my short credit history it was hard to get finance. However, we used a buyer’s agent in the process of buying the house, and he was able to shop around and find a company that would lend on such good security.
(And now I get credit card offers, and offers to borrow money on the security of my house, every day in the mail. The old saying is true, that those who don’t need to borrow money are those who will find it easiest to do so, even in a credit crisis.)
I had to go through this when I move to the states. I had to grit my teeth and get a secured credit card. They are a rip off of the highest order, and clearly a way the finance industry takes advantage of the poorest section of society, basically they take your money (you need a few hundred bucks to “secure” the card) then card you their usual usurious interest rate to give you back YOUR OWN MONEY! And then to add insult to injury they even charge you to close down the card and give you your own money back.
However they do work (five years later I have a very good credit score).
1.) I second-third-fourth-whatever the secured credit card suggestion.
2.) Being denied credit… dings your credit. So don’t go crazy about applying a bunch of different places.
3.) Having more credit available than you’re using… hurts your credit. So **do not **get a card and not use it. They don’t just want to know that you can get it, they want to know that you’ll use it responsibly once you do use it.
4.) Having lots of available credit… can also hurt your credit, especially with regard to how it compares as a percentage of your income. They don’t like it if there’s the potential for you to go on a crazy spree at any moment and take on more debt than you could easily get out of. (This also ties back into #3.)
In summary: it’s a stupid system with a lot of counterintuitive things going on.
Fair point, but it’s a bit of a “chicken and the egg” deal-- the way to get good credit is to deal with the banks as a good customer, in the way they define “good.”
Do I think it’s stupid? Sure. I’ve never been late on a payment in my life, never gone over a limit, usually paid off my CC monthly, and made good use of other credit (student loans, car payments, my home mortgage). My FICO score as a result is very good, but by the standards banks are increasingly using, I’m a bad customer for not carrying a higher debt load than I do.
It’s frustrating, it’s unfair, but in the end, it’s hard to argue with-- banks are businesses, businesses exist to make money, the only way they can provide services *at all *to you is if they make money on them.
I’m afraid the government’s interference here is going to muck up the situation even more, as it will continue to introduce even more moral hazard into personal financial incentives. That worked out so great for the mortgage industry, I’m sure we’ll all love it even more once it’s applied to Visa! / sarc
Store cards are usually the easiest to get with no credit and without paying a lot of fees. (Secured cards are a second option but typically have fees).
For example, try applying for a Target guest card – not the Visa card, but the actual Target card. They approved me for $200 years ago when I had little credit history, and what I had was bad. I used the card each month, paid it off in full, and they kept giving me increases until finally inviting me to apply for a Target Visa. I did so and it’s my most longstanding credit card.
You want to find a store card that isn’t Visa/Mastercard branded – those can be used anywhere and thus tend to be more stringent. Be prepared for a very low limit, but it can help you establish good credit.
If you can’t even get any store cards, paying a fee for a secured credit card is a good place to go. Orchard Bank is probably one of the better ones. Be sure to make sure you understand all of the fees. The bad thing is that part of your credit score is the oldest open account, so having to cancel one of these does ding you a bit, so keep focus on getting a card with no fees soon.
No, it is the way Fair-Issac defines “good”- they do the FICO scores. Yes, FICO is a rating of how good of a credit risk you are, and certainly banks do want customers to pay their bills, so it is part of being a good customer.
But although the banks would be very happy if you carried a large balance AND made your payments all on time, the first will not increase your FICO score, but the second will. In fct, carrying a large balance may reduce your FICO score.
Of course, if you make your bank happy, they may give you a higher limit.
“Insufficient credit history” =/= no credit score to hurt. If the OP has utilities in their name, car insurance, etc., then they most likely have a credit score, albeit a low one.
Didn’t know the hit from inquiries goes away quickly; I do know I got dinged when changing car insurance companies a year ago for having applied for (and getting) financing for a laptop about a month prior.