applying for first credit card

[Parasitic]

I just got the Citibank's Driver's Edge card. It's got decent reward programs but its a little complicated. I'll probably keep it for a bit and cancel it afterwards.
The Dividend Platinum card is better and easier to use.

 

[kranky]

Originally posted by: Special K

Originally posted by: dullard
Whatever you do, don't listen to Xavier434!

His words are about as close to being 100% incorrect as possible.

1) Yes, you can get 0% interest CC loans but it does cost you. (A) Your credit score plunges meaning car loans, mortgages, insurance, etc goes way higher. You WILL lose hundreds of dollars a year and never even know it. All to save a few bucks here and there. (B) If you do goof somewhere in the scheme, you are in a world of pain. (C) Many cards charge 3% to transfer OUT of them. He forgot to mention that. (D) The days of easy money (0% cards) are limited. It hasn't happened yet, but it will happen soon that these offers will dry up. What do you do when you have thousands of dollars on a CC and you can't get any more 0% cards and the whole scheme crashes down on you?

2) Cancelling a card yourself can harm your credit score. (A) It may shorten the history of on-time payments in your credit score. (B) It may reduce your credit limit, thereby making your % used credit higher which harms your credit score.

3) Having available credit is crucial. If your CC debt to CC limit exceeds 25%, your credit score plunges. If you don't have enough available credit, or if you have too much debt, then your credit score will suffer. His plan includes both little available credit and high debt. His 33% calculation is so completely backasswards. Note: I'm talking about credit score only. Lenders use other criteria other than just credit score. Yes, some lenders can be scared away by available credit in some situations. But that is a pretty rare occurance.

4) He is only 26. He hasn't lived through times when the 0% credit isn't available yet. He is in for a rude awakening when it does happen.

Yes, you can use 0% loans to your advantage with minimal harm. But take his advice too far and you are setting yourself up for the biggest disaster in your life. How far is too far? How much do you want to gamble?

For point 3, isn't it actually your debt-to-income ratio that affects your FICO score? And in that case, don't all loans apply, not just credit cards?

Debt-to-income ratio is not a factor in credit scoring.

 

[Special K]

Meh, well I applied for the Chase Freedom World card. Hopefully I'll be accepted. I guess I should have been doing this a long time ago.

 

[RossMAN]

Originally posted by: Special K
Meh, well I applied for the Chase Freedom World card. Hopefully I'll be accepted. I guess I should have been doing this a long time ago.

Nice choice and congrats

Please keep us informed, hopefully your application will be approved.

 

[Special K]

Argh, two weeks later and they still haven't made a decision. Their automated response is "you will receive a response in writing no more than 30 days from the date of application", but I guess I thought these decisions were almost instantaneous. Last year I was immediately rejected for a Dell DPA card when I tried to apply.

 

[DT4K]

Originally posted by: Xavier434
There are ways to work with this system. I already mentioned how canceling the card hurts but not much and the positive results outweigh it anyways. In regards to available credit, I keep one card that I never cancel which currently has a $10,000 limit and 0 balance on it. I also call annually to apply for my interest rate to be reduced on this card.

Again, you are incorrect. When you don't know what you are talking about, it's best to keep your mouth closed (or fingers off the keyboard in this case).
Since there are NO positive effects from cancelling a card, they couldn't possibly outweigh the negative effects.
Yes, cancelling a card will hurt your credit score. How much it hurts your score depends on how old the account is, how many other accounts you have and how old they are. If you have a lot of established accounts with a long history, then closing one young account will have a minimal effect on your credit score. But following Xavier's suggestion of opening a new account each year and closing the previous one each year is very bad for your score. You are far better off leaving those accounts open so they will continue to age, thus increasing the length of your credit history, the average age of your accounts, and your FICO score.

 

[DT4K]

Originally posted by: Special K
Argh, two weeks later and they still haven't made a decision. Their automated response is "you will receive a response in writing no more than 30 days from the date of application", but I guess I thought these decisions were almost instantaneous. Last year I was immediately rejected for a Dell DPA card when I tried to apply.

Chase always takes forever. There have been times when I forgot I even applied for a card by the time I got it in the mail. You could always try calling them though.
You might also want to try Citibank, Amex, or Discover. Avoid Capital One.
If you need any other ideas on cards that you are likely to be approved for with very little credit history, check out creditboards.com.

 

[Special K]

I finally received the Chase Freedom card today. They approved me for a $1000 limit. For now, I guess I'll never charge up more than $250 at any one time to keep my credit utilization low. Also, if 165 points of your FICO score is due to credit utilization, then how were those points calculated before, since I've never had a credit card before? Did I just get 0/165?

Finally, should I also apply for the Driver's Edge card now, or will my report still be too dinged from getting this one?

 

[Eos]

What's wrong with Capital One?

< curious

 

[manly]

Originally posted by: Special K

Originally posted by: Lothar

Originally posted by: kranky

Originally posted by: Xavier434
1. Get approved for a 12 month 0% APR card.
2. Use it for 11 months.
2A. Each month, deposit into a high-yield savings account an amount equal to your charges for the month.
3. Apply for another 12 month 0% APR card with a free balance transfer.
4. Transfer your old balance to the new card.
5. Shred the old card. (Don't cancel/close the account)
6. Rinse and repeat.

Fixed.

Fixed.

In that case, won't they eventually close it due to inactivity?

I have too many credit cards, and only one account has ever been closed due to inactivity.

 

[Strk]

Originally posted by: eos
What's wrong with Capital One?

< curious

I'm not sure how they can be any worse than any of the other ones. Their online stuff is kind of crappy compared to some of the other ones, I'll give them that.

 

[Reckoner]

Originally posted by: Special K
I would like to apply for my first credit card. Right now I am 24, and my only credit history is from the student loans I have taken out from 2001-2005. The loans were in deferment from 2005 until this summer because I was in grad school. One has been in repayment since May, while the other 2 won't actually go into repayment until September. I also bought a car last June and have a loan for about half the price of that ($7.5k). At the time of getting the car loan, my FICO was 730 IIRC.

Anyway, although I have a credit history from the student loans, and a bit of a history from the car loan, would it be too early for me to apply for a credit card? I want to get one soon to start taking advantage of the Cash Back offers. I received a targeted offer for a Chase Freedom World MC, and from my searching on FW, it seems to be one of the better general purpose cards out there. I'm going to pay it off in full every month - I just figure if I'm going to be spending money on gas, groceries, utilties, etc. every month anyway, I might as well start earning a bit of cash back as soon as I can. Plus the extra buffer of protection against fradulent use is better than the debit card I am currently using.

My only concern is, given my circumstances, how likely is it I would be approved? Would I have a good chance of getting it today, or would the relatively recent car loan hold me back? Should I go ahead and apply for it now, or wait a few months until after I have made a few more payments on my car loan, and my student loans have all gone into repayment and I have made a few payments on those? I'm not going to apply for any card except a rewards card - really the only 2 I am considering at the moment are the Chase Freedom World MC, and the Citi Driver's Edge.

Driver's Edge is an excellent card, and you shouldn't have any problems obtaining it, depending on your HHI of course. You may want to get an Amex card in addition to that, since Amex always looks good on the Credit Report. Amex Blue Cash is a nice card.

 

[Brainonska511]

Originally posted by: PaulNEPats
Driver's Edge is an excellent card, and you shouldn't have any problems obtaining it, depending on your HHI of course. You may want to get an Amex card in addition to that, since Amex always looks good on the Credit Report. Amex Blue Cash is a nice card.

The Blue Cash is only good if you spend more than $6500/year, as any money spent before hitting $6500 is rewarded at the lower .5/1.5% rate. Only money spent after $6500 is rewarded at the higher rate.

 

[crt1530]

Originally posted by: eos
What's wrong with Capital One?

< curious

They don't report your actual credit limit to the credit bureaus. Instead, they report "high balance," which is the most you've ever charged on the card. So if you have a card with a $3,000 limit, but have only ever charged $500 and generally charge $450-500 per month, it will look like your credit card is maxed out every month and your credit score will be negatively impacted.

Also, Capital One issues a lot of subprime cards (i.e. cards for people with bad or nonexistant credit histories). These cards have really low limits and really high interest rates. Even if you have a perfect record using one of their subprime products for several years, they will never upgrade that card to a prime product with a higher limit and lower rates. Most banks WILL upgrade your account once you've proven yourself.

 

[thomsbrain]

Originally posted by: amdskip
I've had a credit card since I was 16, you should have no issues at all getting accepted for one.

 

[thomsbrain]

Originally posted by: crt1530

Originally posted by: eos
What's wrong with Capital One?

< curious

They don't report your actual credit limit to the credit bureaus. Instead, they report "high balance," which is the most you've ever charged on the card. So if you have a card with a $3,000 limit, but have only ever charged $500 and generally charge $450-500 per month, it will look like your credit card is maxed out every month and your credit score will be negatively impacted.

Also, Capital One issues a lot of subprime cards (i.e. cards for people with bad or nonexistant credit histories). These cards have really low limits and really high interest rates. Even if you have a perfect record using one of their subprime products for several years, they will never upgrade that card to a prime product with a higher limit and lower rates. Most banks WILL upgrade your account once you've proven yourself.

Just had to chime in to say that Capital One not upgrading cards is flat-out false. They're a bit slow to do it, but they do it, and they increase limits, too. Not defending the company, but just clearing the air.

 

[Eos]

Originally posted by: crt1530

Originally posted by: eos
What's wrong with Capital One?

< curious

They don't report your actual credit limit to the credit bureaus. Instead, they report "high balance," which is the most you've ever charged on the card. So if you have a card with a $3,000 limit, but have only ever charged $500 and generally charge $450-500 per month, it will look like your credit card is maxed out every month and your credit score will be negatively impacted.

Also, Capital One issues a lot of subprime cards (i.e. cards for people with bad or nonexistant credit histories). These cards have really low limits and really high interest rates. Even if you have a perfect record using one of their subprime products for several years, they will never upgrade that card to a prime product with a higher limit and lower rates. Most banks WILL upgrade your account once you've proven yourself.

We're just trying to find the card with the best rewards. There will be no balance carried, so APR is of no concern. Just a high enough limit to put all of our monthly expenses on it, then make an online payment from the BofA free billpay thing. No stamps, no fees.

 

[novasatori]

Originally posted by: eos

Originally posted by: crt1530

Originally posted by: eos
What's wrong with Capital One?

< curious

They don't report your actual credit limit to the credit bureaus. Instead, they report "high balance," which is the most you've ever charged on the card. So if you have a card with a $3,000 limit, but have only ever charged $500 and generally charge $450-500 per month, it will look like your credit card is maxed out every month and your credit score will be negatively impacted.

Also, Capital One issues a lot of subprime cards (i.e. cards for people with bad or nonexistant credit histories). These cards have really low limits and really high interest rates. Even if you have a perfect record using one of their subprime products for several years, they will never upgrade that card to a prime product with a higher limit and lower rates. Most banks WILL upgrade your account once you've proven yourself.

We're just trying to find the card with the best rewards. There will be no balance carried, so APR is of no concern. Just a high enough limit to put all of our monthly expenses on it, then make an online payment from the BofA free billpay thing. No stamps, no fees.

http://www.creditcardtuneup.com/

Someone posted this link here before. (I think anyways)

I haven't used it to apply for any, but I am thinking about applying for AMEX Blue, and the Chase Freedom Cash Visa, as I need an AMEX and Visa.

 

[BehindEnemyLines]

How do these credit card companies (Capital One, Chase, etc..) compare to credit unions? I am thinking of joining BECU and apply for a Visa credit card with them. They claim to offer "lower rates" (fixed rate once approved) and a more personal experience.

I am eligible for BECU. Also first time applying for a credit card. I have $5000 student load right now that is federally subsidized.

 

[Special K]

Do credit cards normally allow you to pay off your balance before a statement has been generated? I wanted to pay off my balance right away to keep my utilization low but still allow me to keep using the card, but the website is not allowing me to make a payment because no statement has been generated. I know I should just contact Chase to get the straight answer, but I was wondering if it was common in general for CC companies to allow you to pay off the balance before the statement has been generated.

EDIT: n/m, all of the charges were made over the weekend, and are now showing up online. I can make the payment now. Maybe you just have to wait for the next business day to be able to make a payment.

 

[novasatori]

I can pay mine whenever I want, even if there are no charges to it, and carry a positive balance.

I would definitely call, maybe you could pay over the phone easier than online?