I spoke with a customer service rep at Citibank credit cards and they said they offer a secured credit card that requires a deposit. The deposit amount becomes your credit limit and the money is deposited into a CD for 18 months. After 18 months, you get your money back plus interest and they convert the account to a regular card. She is sending me an application in the mail -- that's the only way to get it, no available online -- but I was wondering if it's a smart move. They report to all 3 CRA's, and it's just like a regular card, so if I have lets say $1000 to put into savings or a CD anyway, should I just do it? I was denied a regular AAdvantage card already.
What are your current credit history and scores? Are you dealing with starting out with little credit, or trying to re-establish credit after paying off some accounts that resulted in negative items on your reports? I have found Citi to be one of the better CC companies to work with long term, both in terms of their handling of problem charges and merchant problems, requiring phone activation of BT or cash advance checks for security, dealing with occasional problems in billing including waiving late fees due to delays in statements, and providing competitive terms and limits if your history and scores justify it.
My Equifax FICO is 631 (it was 550 in May) and my Experian FICO is 612 (was also in the mid-500's this summer). I have gotten several collection/charge-off tradelines removed. I only have 1 30-day late on 2 different credit cards over the past year. I was recently approved for a Orchard Bank ($300), Capital One ($300), Bank of American partially secured ($500), Bloomingdale's ($200). I currently have one active, but disputed collection with Asset Acceptance which should be deleted within the next month. I am also an AU on my father's Amex Gold and Platinum, Chase Business and my wife's Citi AAdvantage, although the last 2 have not yet been reported. I also have a paid off, never late joint car loan, and a never late student loan with a $10k balance. I am excited about the Bank of America card, which after 6 months of on-time payments will turn into a regular card and hopefully credit limit increased. I am sick of the "embarrassing" cards that I don't even carry anymore and have $0 balance such as Credit One Bank/FNBM, First Premier and Rewards 660. I would really like the Citi card and don't mind putting the secured deposit into a CD which will earn interest anyway for 18 months. What else do you think I should aside from continuing to pay my bills on time and keep low balance? I figure my scores will continue to gradually go up and up!
You have a cluster of new accounts, with their associated inquiries, that probably push FICO down, but over the next year or two that effect should fade, and your average account age should increase substantially. In addition, the AU information should increase your account age when it reports. Just do what you are doing, and don't expect there to be any action that jacks it up a lot all at once. Don't just thrash at applying for accounts hoping they are approved, but racking up inquiries that defeat your goal. Choose your new accounts carefully based on who you want to build long term credit relationships with, and take advantage of only the best terms as they come your way. Your existing credit limits are at "starter" levels, but they will likely rise as your scores rise as long as the accounts are not just with lenders targetting you as only a sub-prime account. Keep your old embarrassing accounts for a little more until you have established the accounts you want, looking at your average account age, and debt to available credit limit to see when you no longer need them. You have already moved beyond the barrier of getting initial accounts, so you shouldn't have to pay in fees or excessive terms for what will come your way anyway if you just wait over the next year. Above all, of course, keep on top of all your accounts and make sure all payments are timely and your debt level is managable. Maybe this all sounds like some generic fortune cookie, but I think it accurately describes your current situation and best strategy.
I think that is a great way to go. I had that exact scenario with them when I was 19 and they were very good about credit increases and helping with any problems I had. I remember that card fondly. My credit got to be so good with that card that I had offers pouring in from everyone with decent lines....which led to my credit demise. Which in turn led me here and I repaired the damage. Older and wiser. Good credit is almost better the second time around because you will do anything to keep it if you messed it up before. I agree as usual with ontrack about how to grow your scores, it'll take time, but you are past the hard part.
