Help a Student With Bad Credit and a New CC

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Help a Student With Bad Credit and a New CC

Postby mlexo9 » Thu Mar 05, 2015 9:36 pm

Hi, all.

I am currently a college student with ~20,000 in annual income. I was very admittedly an idiot with a credit card I got when I was 18. I maxed it out, it got closed and sent to collections while I went through a period of unemployment due to personal medical reasons. Upon the collector contacting me, I explained the situation and paid them off promptly and they actually forgave some of the debt. A somewhat understanding creditor - I'm still in disbelief.

Flash forward a few years: My credit score is obviously crap. I began an effort to rebuild it this summer with a couple of store credit cards. I have used them and paid them off in full every month. I then got a car loan through a credit union in November (didn't want a car loan, believe me, but the price of fixing my old car was more than what it was worth, and I needed something more reliable to get me through the rest of my college career). Payments are automatically deducted from a savings account, so always on time. I also have several student loans, which I make regular on-time interest payments on. I am a frugal spender now, having learned from my mistakes and my parents' (they have made several...). I cannot wait to prove I am a responsible adult and have it reflected by my credit score.

On a whim, and at the suggestion of CreditKarma, I applied for a credit card through Capital One last night. I was shocked when I was approved, because at this phase of rebuilding, my credit score is still only ~560 and I was declined a few months ago for a CC through my bank. My credit line is $1,000. My question is this: what is the best way to continue to increase my crummy credit score? I've heard putting a subscription such as Netflix on the card, so it is used every month but easy to pay off.

I'd also love to hear any success stories, whether they be about increasing dismal credit scores or paying off massive student loans! Thanks for reading, and for any advice and feedback!

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Postby lobbythis » Fri Mar 06, 2015 2:10 am

Is this a credit steps card from CapOne? If so, as long as you stay in good standing, you'd be automatically increased after 5 months of good payments.

If it's just a normal card like Prestige or Quicksilver, then you could have an increase after as early as 4 months from my experience.

Either way, with a 560, your absolute best bet is CapOne. You got a real card, not secured nonsense, and they do credit limit increases with soft pulls and not hard pulls, so it will never show up on your credit report.

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Postby kir » Fri Mar 06, 2015 8:52 am

Hey, just saw your location! Also a student in CU :)

Use your card as much you want for whatever you want (obviously, only buy things you can afford), but don't let the statement cut with more than 10% of your credit limit. In this case, don't let it post for over $100.

It will take time for the negative marks to fall off your credit report, and for your score to improve, but don't worry it'll surely happen. Good luck with bringing your score up.

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Postby Vattené » Fri Mar 06, 2015 11:58 am

I am also interested in what kind of card you got.

Honestly at this stage I think your best bet is to just use the card you have and always pay in full each month (not that carrying a balance will hurt your credit, but there's no point in paying interest and, as you've learned the hard way, letting balances build up without paying them off immediately is a dangerous game). It just takes time and responsible use - so much of a credit score is based on your history.

It is possible you could get approved for another card, but your chances are better after you let this account age and build a relationship of on-time payments. You'll have a more solid profile later. It sounds like you've learned the importance of not buying anything on credit you can't pay off, so don't be afraid to use the card - not necessarily for everything, but you want some activity to be reporting. Congrats on your improvements and good luck going forward!
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