applying for first credit card

[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.

 

[amdskip]

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

 

[dullard]

Originally posted by: Special K
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?

Actually, you are about 6 years too late. You really should have had a credit card years ago. Why? Because then you'd have 6 more years of history, 6 more years of on time payments, 6 more years of increased limits, etc. You could have had a much better credit score and no problem getting any card you want.

But that is the past and you can't go back and fix that mistake. With a credit score right near average, you should be able to get many credit cards that you might want. But you certainly can't get all credit cards you may want. We can't say the exact formulas used by CC companies. But you might as well apply to the ones you want. If you don't get them, don't be frustrated. Get another CC, build up some more history, and then reapply.

 

[pstylesss]

You'll be given a credit card, no problems. I'm surprised you got a car loan without first getting a credit card. Was it an inhouse loan or through a bank? One of the best way to build your credit is to get a credit card, buy what you can pay for and pay the full balance when you get your statement. Just get a capital one card or something, once you build more history, go for a better one.

 

[Special K]

Originally posted by: dullard

Originally posted by: Special K
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?

Actually, you are about 6 years too late. You really should have had a credit card years ago. Why? Because then you'd have 6 more years of history, 6 more years of on time payments, 6 more years of increased limits, etc. You could have had a much better credit score and no problem getting any card you want.

But that is the past and you can't go back and fix that mistake. With a credit score right near average, you should be able to get many credit cards that you might want. But you certainly can't get all credit cards you may want. We can't say the exact formulas used by CC companies. But you might as well apply to the ones you want. If you don't get them, don't be frustrated. Get another CC, build up some more history, and then reapply.

Well I meant too early in the sense that getting that car loan probably resulted in a slight drop of my FICO score, right? So I figured maybe if I waited until I had made some more payments on the student and car loans, maybe the FICO score would go back up, increasing the chances of me getting the rewards card I want.

 

[Special K]

Originally posted by: ZeroIQ
You'll be given a credit card, no problems. I'm surprised you got a car loan without first getting a credit card. Was it an inhouse loan or through a bank? One of the best way to build your credit is to get a credit card, buy what you can pay for and pay the full balance when you get your statement. Just get a capital one card or something, once you build more history, go for a better one.

Yeah, my mom had to cosign on that car loan, I wouldn't have qualified by myself.

 

[pstylesss]

Originally posted by: Special K

Originally posted by: ZeroIQ
You'll be given a credit card, no problems. I'm surprised you got a car loan without first getting a credit card. Was it an inhouse loan or through a bank? One of the best way to build your credit is to get a credit card, buy what you can pay for and pay the full balance when you get your statement. Just get a capital one card or something, once you build more history, go for a better one.

Yeah, my mom had to cosign on that car loan, I wouldn't have qualified by myself.

Ok, that makes sense. Its a shame your parents didn't advise you on building you credit history sooner. Definitely get a credit card and start to build history. If you have a cell phone, make automated payments with the CC then make automated payments on the CC from your bank account and throw the CC in the sock drawer if you think you'll have spending problems. I would try to get another one a couple months after your first from a different company and start using both cards.

A tip I received was to set up automated payments through the CC for any bills you have, and then just be sure to pay off the CC every month. I'll be 19 here soon, I had no problems getting a CC as soon as I turned 18, I've had no co-signers for anything.

 

[AgaBoogaBoo]

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.

At 16, it would have been under your parent's account but with you being listed as an authorized user. You can get one under your own name when you're 18.

<---- got it a month after turning 18

 

[Xavier434]

The odds of you not getting approved are slim to none. The credit card industry is so cut throat these days that they will approve almost anyone. If you do happen to get denied, just call the next guy. You will get one.

Also, I would suggest going here and picking out a card that gives you 0% APR for 12 months:

http://www.creditcards.com/low-interest.php

 

[Special K]

Originally posted by: Xavier434
The odds of you not getting approved are slim to none. The credit card industry is so cut throat these days that they will approve almost anyone. If you do happen to get denied, just call the next guy. You will get one.

Also, I would suggest going here and picking out a card that gives you 0% APR for 12 months:

http://www.creditcards.com/low-interest.php

Are the cash back/rewards cards more difficult to be approved for than the plain vanilla ones though?

 

[Xavier434]

Originally posted by: Special K

Originally posted by: Xavier434
The odds of you not getting approved are slim to none. The credit card industry is so cut throat these days that they will approve almost anyone. If you do happen to get denied, just call the next guy. You will get one.

Also, I would suggest going here and picking out a card that gives you 0% APR for 12 months:

http://www.creditcards.com/low-interest.php

Are the cash back/rewards cards more difficult to be approved for than the plain vanilla ones though?

Not really. The cash back thing is just a gimmick for you to apply for their card instead of the other guy's card. Don't let the cash back thing make or break your decision when choosing a card though. The benefits really are not that good unless you use it for business or simply use it a lot which isn't a good idea for most people. The best thing you can do is choose one with a 0% APR intro and the lowest APR afterwards.

...you can also be slick following this routine:

1. Get approved for a 12 month 0% APR card.
2. Use it for 11 months.
3. Apply for another 12 month 0% APR card with a free balance transfer.
4. Transfer your old balance to the new card.
5. Cancel the old card.
6. Rinse and repeat.

Doing this means never paying a dime in interest. The only way that this can backfire on you is if you make late payments. Just be responsible and you will be fine. The sheer cut throat behavior of the credit card industry is what allows us consumers to take advantage of this loop hole.

 

[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. Cancel the old card.
6. Rinse and repeat.

Fixed.

 

[Special K]

Originally posted by: Xavier434

Originally posted by: Special K

Originally posted by: Xavier434
The odds of you not getting approved are slim to none. The credit card industry is so cut throat these days that they will approve almost anyone. If you do happen to get denied, just call the next guy. You will get one.

Also, I would suggest going here and picking out a card that gives you 0% APR for 12 months:

http://www.creditcards.com/low-interest.php

Are the cash back/rewards cards more difficult to be approved for than the plain vanilla ones though?

Not really. The cash back thing is just a gimmick for you to apply for their card instead of the other guy's card. Don't let the cash back thing make or break your decision when choosing a card though. The benefits really are not that good unless you use it for business or simply use it a lot which isn't a good idea for most people. The best thing you can do is choose one with a 0% APR intro and the lowest APR afterwards.

...you can also be slick following this routine:

1. Get approved for a 12 month 0% APR card.
2. Use it for 11 months.
3. Apply for another 12 month 0% APR card with a free balance transfer.
4. Transfer your old balance to the new card.
5. Cancel the old card.
6. Rinse and repeat.

Doing this means never paying a dime in interest. The only way that this can backfire on you is if you make late payments. Just be responsible and you will be fine. The sheer cut throat behavior of the credit card industry is what allows us consumers to take advantage of this loop hole.

I thought you want to build a long history though? Doesn't that make up like 45% of your FICO score? I thought it was better to keep cards active, if for no other reason than to build history.
Even if you made interest on the money you borrowed on the 0% APR card, I thought it would still be better to build up a history by not cancelling cards?

Also I don't plan on using the CC to buy anything that I couldn't pay for in cash at the moment if I needed to.

 

[Terabyte]

You don't get charged any interest as long as you pay off your credit card off fully each month, right??

So, technically, it doesn't matter what the APR is as long as you pay off the card fully each month?

 

[HammerCurl]

I'm kinda in your position, except no loans or anything to give credit support. I was denied because I wasnt working during school when I applied for menial credit cards and still got denied even after working, the applications that don't ask for salary always have turned me down. Capital one approved me, and Amazon.com has credit cards. They gave me a 2k credit line immediately because I wrote down the entire household income ~110k. If theyre not going to be specific, I'm going to give the answer I want to give. 110k = me+2 roommates income. And after the 2k, when I got the credit card they gave a 5k line, after I've been denied for like 10 different places, (even gas cards wtf?). But the amazon one has like $30 autocredit for some amazon amount spent + cashback for gas/groceries/restaurants or something. And they'll approve you immediately online if you have a good household income. Im not a credit risk at all either, I checked my credit score, was like 730 so I have no clue why when ask for gas cards and weenie $300 credit lines I was denied. But amazon was instant so I'd say go with that

 

[Special K]

Originally posted by: Terabyte
You don't get charged any interest as long as you pay off your credit card off fully each month, right??

So, technically, it doesn't matter what the APR is as long as you pay off the card fully each month?

Correct, although the 0% APR offers allow you to borrow their money and do other stuff with it.

 

[imported_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.

 

[HammerCurl]

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.

I'm stuck at step one, how long have you had a credit history/how old were you when you first got offered your 0% rate?

 

[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?


It sounds like you are describing a mini-AOR or something.

 

[Terabyte]

Originally posted by: Special K

Originally posted by: Terabyte
You don't get charged any interest as long as you pay off your credit card off fully each month, right??

So, technically, it doesn't matter what the APR is as long as you pay off the card fully each month?

Correct, although the 0% APR offers allow you to borrow their money and do other stuff with it.

Oh, gotcha. If I were you, I would never borrow their money unless you're really in a jam.

 

[Xavier434]

Originally posted by: Special K
I thought you want to build a long history though? Doesn't that make up like 45% of your FICO score? I thought it was better to keep cards active, if for no other reason than to build history.
Even if you made interest on the money you borrowed on the 0% APR card, I thought it would still be better to build up a history by not cancelling cards?

Also I don't plan on using the CC to buy anything that I couldn't pay for in cash at the moment if I needed to.

It doesn't look bad if you cancel the card yourself. In regards to your FICO score improving over long periods of time on a single loan, let your student loans, car payments, and house payments (if you have one) take care of that.

Ideally, you will want to pay off your credit card in full every month. I also agree with Kranky about putting money into a savings account equal to the charges. That will help you build up money for a rainy day. Still, sometimes life just takes a crap on you and you need to spend a lot of money that you simply do not have. There are many solutions that people would recommend to solve those problems. Having savings is the best, but if you don't have enough saved then a 0% APR card can help. Just make sure that you pay it off asap. Don't let it sit around for a while because it will catch up with you.

 

[Xavier434]

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.

Shredding it and not canceling it is a very bad idea. The reason why is because your score will be lower if your debt exceeds something like 33% of your total gross income. Think about it like this:

Let's say you have $15,000 in available credit, $10,000 debt for a car, and $20,000 in student loans. Now let's say your total gross income is $50,000 per year. The way that lenders will look at you is that you have a total of $30,000 debt, but you could potentially become $45,000 in debt overnight. That makes you a higher risk customer and it will have an impact on getting loans. In conclusion, having available credit is good, but keep it to a minimum.

Also, they do not close it due to inactivity.

 

[Xavier434]

Originally posted by: HammerCurl
I'm stuck at step one, how long have you had a credit history/how old were you when you first got offered your 0% rate?

I am 26 and started establishing a credit history when I was 18. I got my first 0% APR card at 19 after I realized this loophole. Do you get junk mail saying that you are "pre-approved" advertising 0% interest if you sign up for a credit card? They are not lying to you about being pre-approved. You really can just call them and sign up.

Again, be responsible. It is the people who abuse credit cards that get screwed. I don't even like the name "credit card". I prefer the term "liability card".

 

[SoulAssassin]

The guy is applying for his first credit card, sweating that the car loan he got more than a year ago would negatively affect his approval on a credit card today and you guys are trying to talk him into an app-o-rama? Christ people...consider the target audience here. You have to crawl before you can run.

OP - you're fine to apply for the card. 99.9% chance you'll get approved...only advice I have is that if you live with your parents or roommates make sure you include their income when asked for the total household income. Even if it's your roommates who would obviously never have the responsibility to pay back your debt, it's perfectly legal and acceptable to include this.

 

[Special K]

Originally posted by: SoulAssassin
The guy is applying for his first credit card, sweating that the car loan he got more than a year ago would negatively affect his approval on a credit card today and you guys are trying to talk him into an app-o-rama? Christ people...consider the target audience here. You have to crawl before you can run.

OP - you're fine to apply for the card. 99.9% chance you'll get approved...only advice I have is that if you live with your parents or roommates make sure you include their income when asked for the total household income. Even if it's your roommates who would obviously never have the responsibility to pay back your debt, it's perfectly legal and acceptable to include this.

Just to clarify, the car loan was in June 07. I have only made 1 payment on it so far. I'm not sure if that matters, but just thought I'd mention that.