Credit Cards for someone who just turned 18

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ab1023
 
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Credit Cards for someone who just turned 18

Postby ab1023 » Wed Oct 22, 2014 10:58 am

So I turn 18 in 2 days and I am looking to get a credit card to start building my credit. So far I am looking at Unitus Starter Visa (but the application doesn't specify the starter, just classic) and the PNC flex visa. I have a bank account through PNC.

I'm excited to start building my credit because I'm going off to college this summer and I want to finance a car this summer.

I work two jobs so income isn't a problem.

Please help with suggestions and what cards may work me.


randeman
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Postby randeman » Wed Oct 22, 2014 8:26 pm

Well, you can apply for any of them. It's just that some of them have stricter approval guidelines than others. Some Capital One cards are easy to get, but are a real b***h to get credit limit increases. You might want to consider a secured card that will graduate to unsecured once you've been good for about six months to a year. I have heard that some people new to credit have been able to get Chase Freedom or Slate. You just have to apply for a couple and see what happens. I wouldn't apply for more than two at first. Don't expect huge limits right off the bat. Just get one or two, use the hell out of them for a year, pay one off every month and the other 90% off every month. If you decide you want more after that, I would say don't apply for more than one every six months. Don't be surprised if you get rejected now and then. Your biggest hurdle will be what you are already acutely aware of: you're new to credit. Think of it as crock pot cooking--low and slow. Also, most importantly, all credit is YMMV--your mileage may vary. The weird thing with credit is, two people may be in the exact same position when applying for the exact same cards, one may be approved and the other may not. One may get a $1000 limit and the other one may get $3000. There is no rhyme or reason. Just be patient and read these boards to learn of other's experiences. Good luck.
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CarefulBuilder14
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Postby CarefulBuilder14 » Wed Oct 22, 2014 9:57 pm

randeman wrote:...pay one off every month and the other 90% off every month.


I think (or I hope) what randeman means is to pay off all the purchases on one card before the statement closes. Then, with the second card, pay off most of the charges before the statement ends, let a small balance report, and then pay off the remaining portion.

For example: Say you have two cards, A and B. You make $100 of purchases on each one. Say a statement begins Oct 1 and ends Oct 31, with the bill due Nov. 20.

On card A, pay $100 on Oct 30 so you have a $0 balance on Oct 31.

On card B, pay $90 on Oct 30 so you have a $10 balance report on October 31. Then pay the last $10 before Nov 20.

Of course, you really only need one card at first. Discover has a good student card. I started with Freedom, but I had been a Chase checking customer for a few years and had an income.

Edit: Capital One is a reasonable way to start. So is Bank of America. You can also try a local credit union.
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Brad Bishop
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Postby Brad Bishop » Thu Oct 23, 2014 5:12 am

I don't really think you need to game the system to build credit. I know a lot of people here use rules like 30% utilization and all that.

My advice is:
- find someone who'll give you a credit card - someone out there will give you one. As said, it may be secured but you'll get one.
- every year or so revisit your credit with seeing if there is a better option out there. Maybe move away from the secured card. Maybe move to a card with lower interest. Just keep an eye out for such things and gradually move up to a better card.
- be patient both with what you buy (you don't need every new shiny thing) and with building credit
- don't be stupid and get into a lot of debt
- pay your bills on time.

If you'll just be normal about it and don't go nuts on racking up a lot of debt then the lenders will find you. They want to loan you money because that is their business.

I'd even suggest using it for larger must-have items. Let's say you have a card with a $1000 limit. You need tires. Go buy $600 worth of tires at your local tire place (you're going to buy them anyway) and pay them off as soon as you can (you should be able to knock those out within 1-3 months, not 1-3 years). Just normal living like that will build your credit. Sure, $600 bumps you over the magic 30% utilization threshold but if you pay it on time and pay it off then that is far more important than being over 30% for one or two months (which, I think, is over thinking it).

What the creditors are really looking out for is that you get a $1000 card and then keep it at $950 indefinitely, just paying the minimum and then buying more crap to bump it up when it just starts to fall. They're right to be leary about that because that's kind of dumb and you show yourself as irresponsible and a risk. Buying $600 of tires and knocking that out in 1-3 months makes you look like: Oh, he pays his bills on time and doesn't put us (the bank) at risk.

Be patient. Be responsible.

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Postby popamode72 » Thu Oct 23, 2014 7:00 am

The Journey Card from CapOne isn't a bad card to start out with at all. If you check back with them in a couple of months and see if they have any PC offers to the Quicksilver, definitely take it. They've gotten a lot better with CLIs lately as well.

Discover It for Students is also a great option too.
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Brad Bishop
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Postby Brad Bishop » Thu Oct 23, 2014 7:41 am

You may want to look into American Express - Green Card. I remember that being big for students way back in the day.

takeshi
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Postby takeshi » Thu Oct 23, 2014 8:47 am

Brad Bishop wrote:I don't really think you need to game the system to build credit.

Of course you don't have to. Some just prefer to eke out as much they can. Such people tend to frequent credit discussion forums.

Brad Bishop wrote:What the creditors are really looking out for is that you get a $1000 card and then keep it at $950 indefinitely, just paying the minimum and then buying more crap to bump it up when it just starts to fall.

Brad Bishop wrote:Sure, $600 bumps you over the magic 30% utilization threshold but if you pay it on time and pay it off then that is far more important than being over 30% for one or two months (which, I think, is over thinking it).

You're basically saying the same thing as the usual recommendation. Prolonged high utilization can lead to adverse action. Short term high utilization is not an issue.

"High" isn't just the 95% in your example (which would be maxed).

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Postby Vattené » Thu Oct 23, 2014 10:44 am

All good advice and I agree with Brad Bishop. You certainly can manage your utilization to squeeze all the points out of FICO you can, but at this stage it isn't too big a priority. If you don't want to mess with it, don't feel like you have to in order to get good credit. You are more concerned - and rightly so - with starting relationships early to build history.

Utilization is the only aspect of your credit score that is short term. Since it is just a snapshot in time, don't worry about it until you're gearing up to take out a loan or apply for another credit card. Just be sure to manage everything responsibly - use your cards as you like and always pay in full. As long as you aren't carrying a balance and nearly maxing out your limit consistently you will be good. Expect a low limit starting out. $500 is generous for someone with no history, so if you want to use your card a lot you may have to make multiple payments a month.

I would recommend avoiding secured cards, however. In my opinion there are better options out there. Store accounts are easy to qualify for and they don't tie up your limited resources. Put that security deposit towards something else - your savings, open an account to save money for a down payment on a car, live off of it and reduce the amount of student loans you would otherwise take out, whatever. The point is if you have a secured card you probably won't be earning any rewards, so it offers no benefit beyond establishing a history with a credit line (which is exactly what a store card will do). If I were you I would pick out a few prime cards to go for. Chase Freedom and Dicover it are examples that have been known to give small limits to newcomers. If you don't get accepted, then go for a store account. Racking up inquiries in hopes of getting a prime card with no history will only dig yourself into a hole.

Good luck! I speak from experience in saying that proactively starting out at your age will pay off down the road.
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Brad Bishop
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Postby Brad Bishop » Thu Oct 23, 2014 11:35 am

takeshi wrote:Of course you don't have to. Some just prefer to eke out as much they can. Such people tend to frequent credit discussion forums.
...
You're basically saying the same thing as the usual recommendation. Prolonged high utilization can lead to adverse action. Short term high utilization is not an issue.

"High" isn't just the 95% in your example (which would be maxed).


I think there is a difference in what we're each saying but it leads to the same result.

Some folks on here are consumed with what their FICO is that day. They fret over which card they should charge a pack of gum to in order to get their FICO from 703 to 704 (absurd example). They worry that if they apply for a credit card that they're FICO may drop 10 points temporarily. They won't close old, unused cards because they fear that'll change their overall utilization and it'll ding them on their FICO.

If it's your hobby to do that, then there's nothing wrong with that. There are the FICO rules in place which you can apply to your life and consider before each and every purchase and before opening or closing any card. You can literally think each day, "Will doing this thing make my FICO go up or will it make it go down?"

My take on it is: You don't need to fret about this. Be patient and be responsible and it'll pretty much fall into place. New and better cards will come along and you'll get them as needed. Older cards will go unused and you can just close them. You really don't need to be concerned with every move you make if you just act in a responsible manner. You don't have to hold onto that Sears card that you haven't used in 7 years because closing it would decrease your overall credit available and increase your utilization. Just close it and get on with life.

My example for tires was just a suggestion on an idea of how to use the card as something where he's showing he's paying something off to the bank without going into debt for dumb things.

I'd argue, too, to what end are you fretting about maximizing your FICO? If you're just being responsible, it's going to be high, anyway. You're going to get that lower interest credit card and home loan or whatever.

Yes, if you max out every credit card you get and go and apply for more, then you look risky. Your FICO will reflect that, sure, but you know you're risky. It's not a secret. You don't need to look at your FICO to tell you that. It reflects that.

You shouldn't need a low FICO score to tell you that you're unestablished or stupid. You should be a able to figure that bit out on your own. Conversely, you shouldn't need a FICO score to tell you that you're responsible as you're already living that way. It may be a nice curiosity but it shouldn't tell you anything you don't already know. All it really does is tell the banks: They're unestablished, irresponsible, or responsible, to some degree or another.

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Postby kir » Fri Oct 24, 2014 2:59 am

The first card that I got when I turned 18 was the Citi Dividend for students. I also got approved a month later for a Discover card (student) and they gave me a much higher limit.

I was/am an authorized user on other cards for about a year though, which is what may have helped me get these cards.

If you are an authorized user on any card, I would try going for a Discover card (I like my Discover card much more than my Citi card - better service, better rewards, free FICO score). Additionally, if they deny you, they may offer you a secured credit card (and, supposedly, the Discover secured card is one of the better secured credit cards).

Also, I would recommend keeping your utilization low. I let my card report with about ~42% utilization and my score dropped 58 points.

Good luck.



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