I'm currently stuck in a credit card quagmire. Help me escape!

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hamsterman
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I'm currently stuck in a credit card quagmire. Help me escape!

Postby hamsterman » Fri Nov 02, 2012 2:36 am

I am 22 years old, and five months ago I moved from the east coast to the west coast to start my career. I have been declined for numerous credit cards and a loan. So far I have only managed to get a Discover More Card with a measly $500 credit limit that runs out every few weeks. At this rate, I am worried about how I am supposed to be able to get a loan for a house or car. I am getting very frustrated and angry with the credit agencies...

Let me tell you a little bit about myself so we can figure out why the credit agencies hate me so much and how I can fix this.

After I moved five months ago, a lot of things changed. I started renting for the first time (previously I lived with my parents). I got my first phone number under my name (previously was on a family plan). I started my first full-time job which pays 90k salary + 10k in bonuses (previously I was making just over minimum wage part-time).

My experience with credit cards and credit agencies has to date been extremely poor. About a year ago, I attempted to sign up for a credit card through my bank, but I was rejected. Six months ago, I applied for a car loan but was turned down. Four months ago, I applied for a Macy's credit card and a Nordstrom debit card and was rejected both times.

Three months ago, I decided to apply for a credit card to build credit and rectify the above situation. I talked to some representatives about getting a Visa or Mastercard, but the only cards they said were right for me were "secured" and had annual fees. Luckily, I was accepted for a Discover card. Prior to that I had been using a debit card and this is my first credit card. Today, I tried applying again for the Macy's and Nordstrom cards because I thought it had been long enough and I had been using the Discover card, but I was rejected again.

There are some factors that might contribute to the mess I am in. First, I have never had a loan of any kind in my life. Second, since I got my phone five months ago I have changed phone numbers twice (three times if you count when I left the family plan). I use prepaid plans, and switched once to get a cheaper plan and then again because I was getting a lot of spam calls. Also, my only bank account is still a local bank on the east coast because it has a better interest rate than what I have seen here so far and I see no advantage to the hassle of changing banks.

I always pay my rent on time and have to pay off the Discover card multiple times a month because it keeps running out. What do I need to do to get the credit agencies to stop hating me and treat me like a normal person who can pay off their debt? I really want the department store cards and something better than this annoying Discover card that is constantly getting turned down by merchants. I can't even use it to pay my rent because the limit is so low! Could I at least get a credit limit that is greater than 6% of my monthly pay?

Maybe if I keep using my $500 Discover card for years the agencies will finally come to their senses, but this whole thing is absurd and I would prefer to have it behind me ASAP. Sorry that this is a bit of a rant, but I am just fed up with getting continuously rejected for stuff as simple as a Macy's card...


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Postby WS6R6 » Fri Nov 02, 2012 1:30 pm

The best thing you can do is keep paying off your discover card and your score will go up each month. After 6 months you can request a credit limit increase on your More card and can probably get some better cards then as well. Why are you wanting a department store card? Major credit cards are A LOT better and you will probably get a small limit on those department cards anyways.

Also what are the reasons you are getting denied in your letters your receive? That will tell you a lot about what you need to improve on in order to get accepted. Try a recon as well and try to plead your case to the companies and maybe you will have success with that.

Just don't go on a mad app-spree and get a ton of random inquiries when you aren't even getting accepted. Find out why you aren't getting accepted and go from there working on it for the future. It takes time.
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Snowman
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Postby Snowman » Fri Nov 02, 2012 1:46 pm

From my limited experience with credit cards, the only thing I can recommend to you is to wait for 6 months when you have your first card, then check your credit scores and see where you stand. Stay disciplined and if you need to keep a balance keep it low, like on a 500 dollar limit card, no more then 50$. Then if your scores are good enough start going for some better cards like a BOFA or Citi. I started with a BOFA and last Saturday I got accepted for a Discover More and a Citi Forward, and I will try for an AMEX at the end of December. It's a bout discipline, try not to carry a balance, but if you do, carry a small one, and so it shows your future creditors that you are capable of handling a bigger line of credit. FYI, Phone companies check your credit as well, as when I viewed in my free scorewatch trial AT&T pulled EQ to view my credit card, but it's under my name and not under anyone else's. My current scores are EQ: 731 EX: 737 TU:737. Just stay disciplined and stay patient and your credit will slowly get better. And we are always here if you need advice.
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Postby hematino » Fri Nov 02, 2012 4:24 pm

First thing's first: stop racking up inquiries if none of them are approving you. Every time you submit another application, regardless of whether or not it gets shot down, the inquiry lowers your credit score and makes is LESS likely that your applications will be approved. By reading what you posted, in one year you added a minimum of SEVEN inquiries applying for credit cards and the car loan (I'm guessing one pull on the car loan, but they may have pulled two or all three bureaus). That doesn't count each time you changed phone companies and if your new landlord pulled your credit before you moved in. I know the Discover card you got has a crappy limit, but frankly you are lucky to have been approved for a card as good as the More card which isn't secured, doesn't have annual fees of any kind, and has a great rewards program to boot. Many others aren't as fortunate and have to slog through subprime cards before getting anything as nice as a Discover. The bank representatives you spoke to are correct, most people in your position with a very limited history and trying to expand it, would get approved for little else than a secured card with an annual fee. The unsecured starter card you were approved for is not necessarily the norm anymore, not in the economy of 2012, regardless of your income.

Chill with the inquiries.... they're gonna be on your report for two years before they fall off, so be very careful with applying for anything else. Inquiries are far from the worst thing you can have on your credit report, but in your specific situation how often you applied for credit just recently is going to raise big red flags with most any potential lender. You aren't likely to get approved for very much at this stage. The best thing you can do is just relax, use your Discover card responsibly, and let it age. Like one of the previous posters said, give it at least 6 months, and then ask Discover for a credit line increase. If you want,call them and specify that you only want the increase if it will be a soft pull on your credit (so there is no inquiry). Be prepared to have reasons why you want the increase, in case they ask, and reinforce the fact that you have never made a late payment to them. Also make sure they have your correct income on file, so they know it is up to date in determining an increase for you.

It isn't just the inquiries either, you've only been with your job and house for 5 months now. From a bank's point of view, that really isn't long and doesn't seem indicative of a smart risk they'd want to take by extending you credit. Just sitting back and taking it easy for several months at least is the best way to go if you really want to start seeing steady approvals.

Personally I would wait a year before applying for anything else, but at the very minimum you should wait 6 months. This way all the inquiries won't affect you so much and lenders wont assume you are desperately seeking credit. Patience (and believe me, I am often an impatient person myself) really is the key word with building your credit. Best of luck to you.
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bisbicos
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Postby bisbicos » Fri Nov 02, 2012 4:46 pm

I called discover last month after having the card for 1 year and asked for a CLI. I also asked if they could do it without a hard pull and they increased my limit from 1500 to 4000. It never hurts to call and ask.
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hamsterman
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Postby hamsterman » Sat Nov 03, 2012 3:36 pm

Looks like the consensus is that I am being too impatient and just need to wait for my credit history to improve and for things to settle down. My friends and family agree. So I think I will wait for six months before applying for a credit line increase and the department store cards. What irks me is that I will buy more clothes between now and then and I am losing money without having those cards...

WS6R6 wrote:Why are you wanting a department store card? Major credit cards are A LOT better and you will probably get a small limit on those department cards anyways.


The Macy's card gets me an additional 20% off stuff I might buy there. The Nordstrom card gets me $100 of free alterations per year, which for a pair of $90 jeans would cost $15. The 5% cashback on my Discover card is nowhere near that.

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Postby MemberSince99 » Tue Nov 06, 2012 12:33 pm

hamsterman wrote:Looks like the consensus is that I am being too impatient and just need to wait for my credit history to improve and for things to settle down. My friends and family agree. So I think I will wait for six months before applying for a credit line increase and the department store cards. What irks me is that I will buy more clothes between now and then and I am losing money without having those cards...



The Macy's card gets me an additional 20% off stuff I might buy there. The Nordstrom card gets me $100 of free alterations per year, which for a pair of $90 jeans would cost $15. The 5% cashback on my Discover card is nowhere near that.


Not wanting to be at all rude, but you need to understand that no one owes you credit. it's a priviledge, not a right guaranteed by God or the constitution. We all start at the same place and that place is pretty dreary.

Until less than a year ago, I was only able to get Crapital One 500 dollar limit cards. They had no rewards. I got frustrated and closed the card as I found that really difficult to use. I've since done much better. But someone with no history just isn't going to start out with a 25k ultimate titanium rewards signature card unless you come from a really wealthy family with some great connections. It won't happen for most of us, and apparnetly you are like most of us.

Having said that, department store cards are about the easiest to get, along with gas cards. So those migth be worth pursuing first.

Another suggestion - you make a nice income, why not get a secured card and put a few k into it? Then you'll have your higher limit. Some history with that say 6 months to a year and you will be able to get the kind of cards you are looking for. But if you just stick with Discover, you can get there too. After you've had that 6 months, call and tell them you need a higher limit. Tell them it's your only card and you want some breathing room with it as you plan to use it heavily. They like that. And with good history you may get it.

Also if you can get added as an AU to someone else's account that will help.

But it seems you want to start at the top, and that just doesn't typically happen. It takes time and work. If you find a shortcut let us know - you could make a lot of money by selling it.

hamsterman
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Postby hamsterman » Thu Feb 07, 2013 7:45 pm

I know this is an old thread, but I'd like to give an update. Today I was approved for a credit line increase to $2,000 on my Discover card! Now I can actually fit my monthly expenses onto it and pay them off every month!

A few months ago my dad was also able to get a Macy's card in my name, although it is attached to his account so I do not think it affects my credit score or anything. But I can get their discount so I am happy.

So I have a few questions:

1. My credit utilization on my Discover card is still going to be pretty high--around 50%. Will this hurt me, and what can I do about it? Pay the card off before the statement is generated?

2. The Macy's card has my name on it but it is attached to my dad's account. Will this card affect my credit score in any way?

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Postby RewardHop » Thu Feb 07, 2013 11:58 pm

hamsterman wrote:I know this is an old thread, but I'd like to give an update. Today I was approved for a credit line increase to $2,000 on my Discover card! Now I can actually fit my monthly expenses onto it and pay them off every month!

A few months ago my dad was also able to get a Macy's card in my name, although it is attached to his account so I do not think it affects my credit score or anything. But I can get their discount so I am happy.

So I have a few questions:

1. My credit utilization on my Discover card is still going to be pretty high--around 50%. Will this hurt me, and what can I do about it? Pay the card off before the statement is generated?

2. The Macy's card has my name on it but it is attached to my dad's account. Will this card affect my credit score in any way?


1. Yes pay off before your statement is generated. You can pay your CC off many times per month, so don't be afraid to pay the balance early in your situation.

2. If your just an authorized user on the card, then it does not. If its a joint account, then yes. Sounds like no.

Congrats on the CLI. Make sure you keep an eye on your Credit Score, use Creditkarma.com, its free!
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Postby kcarter609 » Fri Feb 08, 2013 8:22 am

hamsterman wrote:1. My credit utilization on my Discover card is still going to be pretty high--around 50%. Will this hurt me, and what can I do about it? Pay the card off before the statement is generated?


I would say don't pay in FULL, but rather pay the card down to like a 5% ($100) balance a couple days before the statement posts. Don't pay it off completely. It will report to the bureaus when the statement posts, and you want it to show somewhere between 1% and 9% utilization. Then after the statement posts, immediately pay the balance off. This way, you're letting your account report with the perfect utilization, and you're paying in full inside the grace period so you don't pay any interest.

This is especially important if you want to apply for another card in a couple months, since it will make your score look the best.

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