Student - no credit history and a unique problem

Discussion in 'Credit Talk' started by rohandhruv, Jan 8, 2011.

  1. rohandhruv

    rohandhruv Member

    Hi everyone,

    I am a student who came to USA around 4 months back (non-citizen, F1 visa). I got my SSN at the same time, and I have absolutely no credit history.

    I made a huge mistake of applying for many credit cards -- I applied (and was obviously rejected) for a total of 5 or 6 offers (HSBC, Amex, GAP, BofA). I know this was a foolish mistake, but I did not know this concept of credit history and credit reporting (we don't have it in India). I have a checking and savings account with HSBC, and utility bill is in my name, which I always pay on time.

    Now, because of so many rejections, I am quite sure I won't be getting a credit card any time soon. Quite frankly, I don't really require credit -- I am just looking to build my history, and get a good score. However, I am in a proverbial Catch-22 situation here.

    I am wary of secured credit cards because of their high fees (esp. the annual fee), and I might be rejected even for that. I would prefer another option, but as a last resort, I could try secured credit card. BofA told me they might issue a student card if I had a cosignor - but since I have no relatives here, this will also be a problem.

    TL;DR: I have no credit history, with ~6 rejected cc offers. How should I proceed, preferably avoiding secured credit cards?

    This is my first post here. I have read most of the guides here, but I still want to request some guidance on this issue. Thanks :)
  2. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    Since you bank with HSBC, have you talked with them about an offer you might be pre-approved for through HSBC? Also, have you applied for any student credit cards yet?

    You may want to wait 3 months or so before applying again since you've had your credit pulled so many times recently. I wouldn't go the secured card route either unless you're trying to repair damaged credit. You should be able to get approved for some kind of student credit card- you just need to find the right one.
  3. rohandhruv

    rohandhruv Member

    Thanks, Joshua :)

    Many people suggested that I start out with a secured credit card to build a history, hence I even considered it.. it's definitely not a preferred option for me.

    The bofa credit card I applied for was a student visa card. I was rejected for it, and when I talked to them, the reason they cited was that I have no history at all. They said they might consider me if I had a co-signer. And I don't think I can apply for others at this time, because like you said - there have been too many rejected offers.

    Do banks generally pre-approve their customers? Unfortunately, HSBC doesn't offer specific student cards, and they haven't really intimated me about any pre-approval. Is it ok to just ask them? Whenever I talk to them about a credit card, they just offer to start a new application, which I fear might again be rejected. Do I specifically ask them if I have been pre-approved?
  4. lawss

    lawss Member

    One route you might go for a cheaper interest rate is like you stated a bank loan .I did this in 2004 but I was fortunate enough to have a co signer . I borrowed $3007.00 and my interest rate was 11% typical of even todays rates .

    If I were you I would try this route for 1,000 and if you do not have a co signer
    put 1,000 in a secured cd . Ally is giving 1.29% compounded daily .LOL this sounds big but is only $12.90 over 1 year . So I would deposit 1,000 on a secured cd for 1 yr ,ask for a $800 loan for 1 yr which may be 6-8%. Let the bank spokesperson know your intention for the loan .

    I my self had good credit in 2004 from signed loan . I also got 5 credit cards between 2004 and 2005 . I was young and never learned the value of having good credit in school . I never paid one dime on any BUT I paid every month religiously on the loan until it was paid off , as It was cosigned by my uncle and I did not want to risk his credit rating .Anyway Now Luckily my oldest good credit was 2004. Those cards will ALL be off report in 2012 .(Providing the MYANS were not correct in the world ending ).

    I have Since went to three banks and secured 1,000 loans for 1 yr by getting
    $1500 Secured Cd's and borrowing against them . So by the time 2012 rolls around I will have 4 positives with oldest line of credit 7 years ago AND No negatives !!! This Should Put me back in the CREDIT game .

    I see it here all the time and feel I need to reiterate the obvious ......
    Make sure you stick to the plan make your payments before or on time .
    You are blessed with still being a youth and can have great credit in no time .
    Watch out for this for as the higher your score goes the more offers you will receive !!! Good luck and hope this method works ....

    Lawss ,...
  5. rohandhruv

    rohandhruv Member

    Thanks lawss.. Your solution looks good, but is quite complicated.. Also I am not sure how the laws work for non-citizens and loans. I think the better option would be to wait and get a "normal" (unsecured) credit card.. but that's looking rather difficult right now :-/

    The only solution I can see is to either get a cosigner, or wait for HSBC to pre-approve me (assuming they even have such a system). Any other suggestions/ideas?
  6. lawss

    lawss Member

    Not really difficult but try this .... You may be a non Us citizen but if you have your Visa and Social security card and a photo id it should not be a problem .

    OK Save $500-$1000 and then visit various banks with your credit report in hand asking them whether they do secure passbook loans based on your savings. Once they agree, ask the loan officer if there is a prepayment penalty, what the interest rate is, and what credit bureaus they report to.

    If you like the terms Apply for a 12-month passbook loan using your funds you will be depositing.
  7. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    Have you tried visiting a few local banks around your school to see what type of student checking accounts they offer along with debit and credit cards? I'd be surprised if you didn't find one that was willing to offer you a credit card with a low limit after you opened a new checking account and deposited some of your cash from HSBC. That may be all you need to get started, despite the lack of credit history.

    If you have a close relative or friend that would be willing to add you as an Authorized User on one of their oldest credit cards in good standing, that's another way to actually get some good history on your credit reports. Parent's have been doing this for their children for years, and it still works with the new scoring models as well.
  8. rohandhruv

    rohandhruv Member

    I don't think any banks have special offer for students where they would offer a credit card. Most banks are willing to only offer debit cards for free. I will try asking HSBC for a pre-approved card, but I am quite sure it'll be in vain.

    I have no relative who could act as a co-signer, or add me as an authorised user for his own card.

    A surprising update: Today, I received a "pre-screened" offer from Capital One in the mail. They most likely got my address from some credit reporting agency, and it definitely doesn't say "pre-approved". They have also mentioned that they will run a credit check and give me a decision within 60 seconds. I read some reviews of Capital One, and I am tempted to think that the offer and the mailer are both crap - but any views/suggestions?
  9. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    When you receive a pre-screened offer, it basically means the bank has done some homework and think you're an ideal customer. They may have looked at your age, credit score, borrowing history, etc., and feel that the specific card offer is tailored for you. But, you're right, it's not a guarantee you'll get approved at all.

    What credit card is Cap One offering you? By the way, have you ever pulled your FICO score? Do you have one?

    And as far as local banks go, I still find it hard to believe there isn't a CU or something close by your school that works with a lot of students. What city do you live in?
  10. rohandhruv

    rohandhruv Member

    Well, it looks a bit shady because I received it only a few days after I "opted-in" for prescreened offers. Also, I've been reading a lot of negative reviews of Cap One - one person having a dispute of as much as $10k with them right on this forum. The card they are offering is a Platinum MasterCard, with no annual fee. The offer expires on 01 Feb.

    I've not pulled my FICO score, but I am quite sure I won't have one, because creditkarma said "I have a thin file".

    My university (Rensselaer Polytechnic Institute) works with HSBC, in that HSBC offers a no maintenance fee checking account. And everyone uses HSBC since they have a branch right in our university campus. The only other bank which is somewhat close is BofA, and they don't have any special offers for students. I'm in Troy, NY.
  11. JMason

    JMason Well-Known Member

    HSBC/Orchard Bank has a secured card that is specifically for people who have either negative debt or no scores at all for whatever reason. I know this works because a lot of my clients have been successful at increasing their scores, establishing scores and it only takes 6 months to do so. This card reports to all 3 credit bureaus, no annual fee for the 1st year, no monthly fee ever, and the interest rate is 7.9%, which isn't bad for someone that doesn't have a credit history. Go to their website and look for the 7.9% secured card. All you have to do when your receive the card is keep the balance at 30% of the limit, which will be $200, and pay it on time for 6 months. Folks have gone from having no credit to having scores in the 600's or more. Try it.
  12. rohandhruv

    rohandhruv Member

    Thanks, JMason. However, the problem with Orchard/HSBC is that they charge an annual fee for all cards - even the unsecured ones. If I do go for an Orchard secured card, can I cancel it before the year is up, and save on the annual fee?

    I asked a friend who was in a similar position like me, and he told that it took him about 1 year to start receiving prescreened offers. Is this the usual time? I am in no real hurry for a credit limit (I don't plan to hold a balance anyway), my only interest in having a card are the rewards/cashback offered. However, to that end, I think no student cards, except Citi, offer rewards. The rewards offered by Citi are pretty awesome (e.g. compared to BofA), but I'm pretty sure I'll be rejected there too, because of no credit history. I was also particularly interested in AmEx Blue Cash, but after being rejected twice, I really don't think I hold a chance there in the near future.

    Is it true that I should wait for a year before expecting any good credit card offers? Is that also probably the best way for me to proceed now?
  13. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    I'm pretty sure Orchard Bank currently offers one secured card that waives the annual fee for the first year. This may be the best route to take if you simply can't find any other offers you would qualify for.

    Just use the card sparingly for 6-12 months until you establish some positive payment history, and then upgrade to a better rewards card. You can compare and contrast all the HSBC offers right here on Creditnet in our Orchard Bank credit card section.
  14. rohandhruv

    rohandhruv Member

    I was wondering -- if I anyway have to go for a secure card, why not try for my own HSBC card once again after a few months? Or even a Citi student card which offers the best rewards? I guess 2-3 more rejected offers wouldn't make a difference to a secured card.

    If after 2-3 months I am still rejected for both HSBC and Citi, I will probably find a guarantor and get a BofA card, or get a secured card.

    (sorry for being repetitive, but I'm really new to this) Does this strategy sound ok, or should I directly go for a secured card now, instead of messing up my report with possibly more rejected offers?
  15. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    Trying to get approved for a few more student credit cards isn't really going to mess up your credit reports. You'll have a few more hard inquiries, but the denials themselves don't directly hurt your credit scores. I would still wait awhile before applying again, since you have had a bunch of recent hard pulls.
  16. rohandhruv

    rohandhruv Member

    Thank you - that sounds great. I'll wait around 3 months, and then try to get a card at Citi or HSBC. If I'm again denied for both of them, I'll go ahead and get a secured card.

    One final question -- how does the Capital One offer sound? Is it worth looking into? Has anyone had positive experiences with them at all, or is it as bad as the reviews say?
  17. JoshuaHeckathorn

    JoshuaHeckathorn Administrator

    I've had a Capital One credit card for about 10 years and have never had a problem. I use mine mostly when traveling overseas, since Cap One doesn't charge any foreign transaction fees on any of their cards.
  18. rohandhruv

    rohandhruv Member

    Ok, thanks! I guess I'll prefer Cap One to an unsecured card, because they are offering a prescreened no-annual fee card. I'll have to read the fine print properly, though.
  19. Karma

    Karma Member

    I have 2 cap one cards and love them, give it a try.
  20. rohandhruv

    rohandhruv Member

    Thanks for the input -- I'll give it a shot!

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