Advice for obtaining first credit card and good credit as fast as possible?

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pbc561
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Advice for obtaining first credit card and good credit as fast as possible?

Post by pbc561 »

Hi All, I need some advice on the best way for me to get my first credit card and build credit as fast as possible (with the mere goal of building credit to get a good rewards card).

My past credit card applications (years ago) have been rejected at Wells Fargo and Walmart, so I've been told a secured card is the best way to. Any specific recommendations such as which institution (bank or credit union), which type of secured card (e.g. limit size or specific name of card), or any other advice for me to get good credit as fast as possible?

And once I do get this secured card or whatever, is there a certain amount of spending to build credit faster? Thanks!
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prudent
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by prudent »

I would start by getting your free copies of all three credit reports at annualcreditreport.com and check for any inaccurate information. You mention it was years ago since you last applied for credit - you want to figure out why you got denied. Lack of credit history is a lot different from having tons of derogatory info on your report.

If your reports have no negative information AND they are accurate, try applying for a regular (not secured) credit card where you bank currently assuming you have not had any issues with them (like bounced checks). You might be pleasantly surprised at the result.

If there are other issues, ask at creditboards.com credit forum and see what those people have to say. A lot of folks there with knowledge about secured cards. Ideally you want one that can convert to a regular credit card after some period of time.
betterfinances
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by betterfinances »

I applied for student cards when I was a college student and easily got 2 or 3 credit cards. That was a while ago, I don't know how hard they are to get today. I'm assuming you're a student?

If not, I'd apply for a card where you bank.

And yes, pulling your credit report is a good idea. I don't know why they'd deny you unless you are behind on bills and it shows on your credit report.
qui
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by qui »

I was in a similar situation. Here's what I did:

I went to Capital One and got a secured credit card with something like a $300 limit.
Use the card, but don't use a lot of the limit. Aim for like 10-30% of the total limit, so in my case aim for $30-90. (This is to keep the credit utilization low. High credit utilization is seen as a bad sign usually.)
Pay it off, in full, every month.
After six months, put in an application for an unsecured cash rewards card.
Repeat with low utilization. They will periodically bump up your limit.
Topic Author
pbc561
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by pbc561 »

qui wrote:I was in a similar situation. Here's what I did:

I went to Capital One and got a secured credit card with something like a $300 limit.
Use the card, but don't use a lot of the limit. Aim for like 10-30% of the total limit, so in my case aim for $30-90. (This is to keep the credit utilization low. High credit utilization is seen as a bad sign usually.)
Pay it off, in full, every month.
After six months, put in an application for an unsecured cash rewards card.
Repeat with low utilization. They will periodically bump up your limit.
Great info. So you think after 6 months I can try to apply for something like the Citi Double Cash? And at what point could I stop using the secured card and close it, would you say?
123
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by 123 »

Here's how our college student son get credit without a problem or issue.

He opened student savings and checking accounts at a nearby Bank of America. They were opened with deposits of about $2,000 each. He just used the debit card to pay routine expenses, cell phone and books at school. We periodically recharged the accounts so the balances stayed around $2000. After a year he applied for a Bank of America VISA card. It was approved with a credit limit of $700 initially. He then used the credit card to pay the cell phone bill, Netflix, and for books at school. Each time he received a monthly statement on the credit card it was immediately paid in full. Most months he used less then $150 of his $700 credit limit. After he had the VISA card a year his credit limit was raised to $1,200.

It's really a simple process. You establish a banking relationship and use your accounts wisely, no overdrafts. About a year later you apply for a credit card and use it wisely as well, paying the billed amount promptly. Having bank accounts with balances helps the bank to understand that you really don't "need" credit. People that really "need" credit are the last ones the banks want to give it to because their ability to repay debt may be questionable.
The closest helping hand is at the end of your own arm.
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pbc561
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by pbc561 »

123 wrote:Here's how our college student son get credit without a problem or issue.

He opened student savings and checking accounts at a nearby Bank of America. They were opened with deposits of about $2,000 each. He just used the debit card to pay routine expenses, cell phone and books at school. We periodically recharged the accounts so the balances stayed around $2000. After a year he applied for a Bank of America VISA card. It was approved with a credit limit of $700 initially. He then used the credit card to pay the cell phone bill, Netflix, and for books at school. Each time he received a monthly statement on the credit card it was immediately paid in full. Most months he used less then $150 of his $700 credit limit. After he had the VISA card a year his credit limit was raised to $1,200.

It's really a simple process. You establish a banking relationship and use your accounts wisely, no overdrafts. About a year later you apply for a credit card and use it wisely as well, paying the billed amount promptly. Having bank accounts with balances helps the bank to understand that you really don't "need" credit. People that really "need" credit are the last ones the banks want to give it to because their ability to repay debt may be questionable.
Great advice. I have that banking relationship as you mentioned, so I'll see if my banking rep still thinks I have a chance. Do you think I should hold off on pulling my credit report for this, as the first response in this thread recommended?
cheapedy
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by cheapedy »

I applied for my first card in my late 20's. It was a Cap one with a $300 limit, 29 percent APR, and $30 annual fee. Made small purchases and paid them off. Nine months later I applied for a B of A card and was approved for $2,000. Four years later my credit score grew to 760 range and has not dropped.
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N1CKV
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by N1CKV »

OP:
You are ignoring the best advice given, which was the first response from Prudent. If there is something negative on your credit report you might not be able to do any of what people are suggesting. It's also a completely free process vs. wasting time and savings dealing with a secured if you don't have to.
qui
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by qui »

pbc561 wrote:Great info. So you think after 6 months I can try to apply for something like the Citi Double Cash? And at what point could I stop using the secured card and close it, would you say?
The generally accepted belief is that everything in the credit score world happens in six month increments. At least that's what everyone has always told me. I was personally approved after six months, and you likely will be too. If you're not, then just wait for another few months and try again.

I still have mine open, and it's been about 4 years now. Really the only reason to close it is because there's a fee associated with it. Otherwise I wouldn't recommend closing it at all. I'd probably try to get at least 2 additional cards before I closed it, so maybe about 18-24 months. Once you close it though, expect a hit to your credit report about 7 years later when it falls off as a closed account.

Speaking of credit reports, have you pulled yours yet?
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quantAndHold
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by quantAndHold »

I'll repeat this good advice.

Start by going to annualcreditreport.com. You can get copies of your credit report for free once per year. Get your credit report from the three agencies (skip all the offers for credit monitoring and scores and such). Pulling reports through annualcreditreport.com doesn't count against your credit score. Make sure the reports are accurate and that there's no negative information.

If there's inaccurate or negative information, it's a different discussion than if you're trying to build credit for the first time.
BarbK
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by BarbK »

My daughter got her own card free Capital One card when she was a sophomore in college. The credit limit was $500 and then raised to $750. She was diligent about paying the balance off within the month so she wouldn't go over the limit. She said her CL is $3500 now.
Topic Author
pbc561
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by pbc561 »

A lot of great suggestions. Another one I thought of before I proceed: would my wife getting a card where I can be an authorized user (that gets reported to all 3 beaurus) be another efficient way to get my own card in the future or not as efficient as doing the secured card?
JPD
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by JPD »

My wife was in that situation a couple years ago. She applied for a store credit card, but was turned down since she didn't have any credit history. She applied for basic (not secured) Discover and Capital One cards and was approved. She used whatever offers had come in the mail in her name recently. If you're getting those in the mailbox, I would assume there's a good chance they'd approve an application from one. There's usually an online code you can enter in their website when you apply. I think both cards started out with a $250-300 credit limit, but they started increasing it fairly quickly.

Try to get one that includes free credit scores like the Discover It. Then you'll know what your progress is.

I'll echo the checking your credit report comments. It's boring, but worth the effort.

Also, just be patient. The rewards from even a really a good card don't amount to anything life-changing anyway. There's really no rush. Be smart with your new credit card and you'll be there before you know it.
mhalley
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Re: Advice for obtaining first credit card and good credit as fast as possible?

Post by mhalley »

Check around your local credit unions to see if they have a getting started program. Sometimes called fresh start, or other names. Excerpt from Clark Howard article:
"My preferred way for you to get credit is more of a fast track: Join a credit union that has a "fresh start" program and apply for their credit card. The fresh start program is an informal name for any of a number of initiatives at credit unions that are geared toward people who have never had credit before.

Like with a secured card, the fresh start program will have you put money on deposit with the credit union. Then the credit union will write you a small loan or issue you a Visa or MasterCard with a small limit against the money you put in savings. But unlike a secured card, the credit card from a fresh start program reports as regular credit from day one. And that's why it's better.

By the way, you can locate a credit union near you by visiting FindaCreditUnion.org and using their search tool."

Here's the find cu link http://www.asmarterchoice.org/find-a-credit-union

Oh, and here are his things to look for in a secured card

A reasonable annual fee of no more than $60
No application fee
After 12-18 months of paying on time, be sure the issuer will upgrade you to a traditional credit card
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