Student with no credit

Discussion in 'Credit Talk' started by faddat, Aug 5, 2003.

  1. faddat

    faddat New Member

    I'm a 19-year old student with one (CapitalOne - $800 limit, $300 original limit) credit card and no other credit history. I was recently denied a second increase on the limit on that card, and have requested my credit history from equifax (for free, they were who CapitalOne used).

    As far as I know, I have no "bad things" in my credit history, except for applications for credit (EX: Discover Card). Does anyone know how I can get more credit? I will be traveling abroad shortly and could use more credit quickly, mostly out of fear of emergencies.

    Would trying one of the "subpar" cards on the "credit cards" section of this page be a good idea? Should I try to take something more up with CapitalOne?

    Credit I've been denied:
    -Discover Card (repeatedly)
    -Credit Limit Increase on my CapitalOne Visa
    -Account Protection on my Citibank checking account

    Now, here's the thing that I really don't get:

    I <B>Always</B> pay my bill on time, and I have never been late with a payment. I don't understand why I have been repeatedly denied credit.

    Does anyone have any clue what's going on? Is one of the "subpar" cards a good idea?

  2. lakpr

    lakpr Well-Known Member

    The reason could be your FICO score. FICO rewards long credit history, and in your case, with only a few months of history, you might be scoring below 620. And you also say you repeatedly applied for Discover ... each inquiry hurts you, and your repeated applications for credit only hurt your score more. Also, due to the way FICO algorithm works, a hard inquiry hurts more on a short-history report (approx 7 point hit) than a long-history report (3-4 point hit). Short history => anything less than 2 years

    You are facing a chicken and egg problem; the best way to start a credit history is to try secured cards, and preferably that don't pull your reports to give you a secured card. Can you join a credit union? Unlike banks, they usually do not insist on pulling your report to lend your own money to you. Get a secured visa from a CU, and do not apply for any other credit for at least 6 months. Also, ask your parents if they are willing to make you an Authorized User on one of their oldest tradelines, but one that has perfect or near-perfect history. Even then, it takes at least 2 billing cycles before all 3 bureaus report it on your CR.

    Sorry, building good history is a time consuming process; no help here for you to get a good credit limit card before you go abroad.

    Best of luck
  3. faddat

    faddat New Member

    Thank you! Would making me be an authorized trader be just getting a card with my name/signature on it? I think my parents would definately go for that, especially if it would help my credit (which has caused problems, as I'm sure you can believe). I shouldn't have any inquiries for the 9 months in Rome, so that should also help my credit out.

    Again, thank you.
  4. lakpr

    lakpr Well-Known Member

    Re: Re: Student with no credit

    Yes; your parents should call their credit card issuer, and ask them to issue an additional card in your name. Due to security reasons, the card will be sent only to the primary card holder's address (your parents' address) ... you must pick it up from them. If it's a VISA or MASTERCARD, you may take it to Rome with you and use it there, that way you can get a bit of credit history while you are still there. Just make sure you pay it off regularly; try to enroll in your bank's BillPay, so that you can pay off your balance regularly using US funds.

    Keep in mind -- this is extremely important -- if you agree to be responsible for your charges on this card with your parents, and you miss even a single payment on time -- IT DINGS YOUR PARENTS' CREDIT REPORT ALSO! Just keep it in mind always, and try not to abuse their trust (sorry to be lecturing; I got hurt that way to the tune of $7500 :( )

    You are most welcome! Best of luck.
  5. faddat

    faddat New Member

    Re: Re: Student with no credit

    So, is it possible to have, I guess the best way of saying it is "an account within an account" or would it be that all of the payments (mine and my parents) went toward all of the purchases (mine and my parents)?
  6. lakpr

    lakpr Well-Known Member

    Re: Re: Re: Student with no credit

    No, it is not usually possible to have an "account within an account". All payments (regardless of who made them) go towards all charges (regardless of who made them). How to apply payments received, and towards which balances, is the prerogative of the credit card issuer; you cannot influence that.

    What I had in mind when I responded above, is a scenario where your parents make you an authorized user on one of their oldest tradelines, but one that is seldom used. Once they would make you an AU, you get the card; you verbally agree with your parents to be responsible for all the charges as well as all the payments on the card. This is a scenario that's very dangerous; if your parents trusted you to make all payments, and you missed even one payment by a single day, both your report as well as your parents' reports get dinged. I was just cautioning you against that.

    [ I gave an additional card to my cousin, who used it to pay tuition for $7500, but did not keep up with payments. After 1 30-day late appeared on my CR, I paid off the balance out of my own funds, and canceled the card. Needless to say, I never trusted him again with any amount of money ]

    There can be another way to play this Authorized User game. You do get added as an authorized user on your parents' card, but don't actually have possession of the card (say, the card gets shredded immediately after it arrives at your parents' home). Thus, YOU cannot make any charges on the account. But your parents' normal usage on the card gets reported, both on your parent's CR and your CR. If you want to go this route, you must be an AU on one of their high-usage cards.

    Bottom line, the card on which you are the AU need to show regular usage, as well as timely payments, for your CR to show score improvement.

    Best of luck
  7. ero2

    ero2 Well-Known Member

    Re: Re: Student with no credit

    I was in the same boat as you and same first card!!!!!!!!!I now have several prime cards 2 years later! Here is what I did, applied for citibank dividend platinum for students and also amex blue for students. I got approved for both even though my crap one card only had a CL of 800$. I got 3,000 for citibank and 2,000 for amex. Oh, by the way don't bother applying for regular cards right now, your account history is too short and if your a student like me you don't have the 20,000-25,000 minimum income they won't approve you. Getting your foot in the door with amex is really good because 9 months after I got my student blue I found out that once you have an amex the minimum income requirement is waived so I got approved for blue 9 mths later and the once I got that I got a chase platinum, MBNA platinum, and also an amex preferred rewards gold card. So this is probably a good way to go about it, then do what I did, throw that 800$ limit 19.80% card in the sockdrawer:)
  8. ero2

    ero2 Well-Known Member

    Re: Re: Student with no credit

    oh also being an AU on my parents discover with a perfect payment history of 16 yrs and a 12,000 limit helped a lot I am sure!

  9. faddat

    faddat New Member

    Re: Re: Student with no credit

    It's great to know that this has worked for someone else! Thank you!
  10. delgato

    delgato Well-Known Member

    Re: Re: Student with no credit

    MBNA has cards for students with pretty generous limits. They also have deals with schools to promote their card. Chances are MBNA has a card for your school.
  11. klingsor

    klingsor Well-Known Member

    there are a few more solutions:

    - apply for student cards. They usually understand that your income is low.

    - lie about your income. If you have an ethical problem with this (or you are afraid that there may be consequences) then don't do it -- but it is an option.

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