I just got rejected from a credit card for having no credit history

[Herman Munster]

This was the first credit card I ever applied for. I was raised that credit cards were evil. If you don't have the money, you don't spend it. Period.

I find it amusing I got rejected for this credit card. The only reason I applied was that this card had a special 1.5% cash back bonus. I was planning to use it for all my purchases in lieu of my debit card and get the 1.5% cash back. Of course I was going to pay the balance every month so I would never have to pay interest. I just wanted the cash back bonus and be one of those strange people that never runs up a credit card balance and costs the credit card companies money by giving me all these free rewards for being a horribly responsbile customer.

Of well, I guess credit cards were just never meant for me as I got rejected. I'm quite content with my debit card and checking account and debt free lifestyle.

[OPERATIONMINDCRIME]

1. Just Get A Secured Card To Establish Some Credit. That's How Many Have To Do It.

[skipos]

2. Credit cards can help you down the road

I am no Suzi Orman, but I believe it is a good idea to have credit cards (even if you don't use them) to help build your credit history. That will help you get a lower rate if you ever get a morgage. I'd get a credit card when you are able.

[Suich]

3. I agree with skipos.

My 42 yr. old son has never had one, so he can't rent a car, book a flight or hotel, or get anything online.

I live debt free, also, but I do have a credit card, which I use sparingly.

:hi:

[Herman Munster]

8. I guess the reason I never got a credit card

is I can do all that with my VISA debit card. It acts like a credit card. The only difference is it deducts automatically from my bank account.

[melm00se]

11. the problem with that

is when you buy, say, gas and use the card in the pump, the merchant puts a hold of X on your account and if you buy less than X the hold stays in place for several days until it automatically drops and that can cause issues when your balance is low...

Clark Howard has quite a bit to say:

http://clarkhoward.com/shownotes/category/7/40/225/

http://clarkhoward.com/shownotes/category/6/23/178/

[Nabia2004]

32. Clark Howard: informative - thanks

I have been using the debit card for at least 15 years and have been a victim of fraud once. To my surprise the bank refunded me.

[Dorian Gray]

25. Again, agree...

I have three credit cards: An American Express, a Visa, and a Discover Card. I get rewards on all three, and I pay them off monthly. As a result, I have fantastic credit, and every once in awhile, I get a free flight or a free hotel room, not to mention discounts on tickets to plays with my American Express.

They are a good tool if you pay them off monthly. They are a dangerous tool, however, if you have no financial education or the desire to spend more than you make.

[Ilsa]

4. ITA with skipos. Next time you need to buy a major item,

instead of paying cash for it, secure a loan for it at the bank with either the item as collateral or cash as collateral. With cash, maybe be able to get away with only paying a couple of points over the CD rate securing the loan. It might cost a wee bit to establish some credit, but it could save you maoney down the road if you need a much larger loan for something like a mortgage.

[unblock]

5. different banks have different criteria

it's not easy to get an amex card charge card with no history, unless you're a student, for instance.
washington mutual is pretty easy, though.

stay away from providian. i have found them to be willfully incompetent.

another tactic is to use store credit cards such as gas stations, home depot, jc penney's, etc. but DAMN sur to pay them off each month because they charge the highest interest rates. close these once you get unsecured cards, they don't look all that good on a credit report.

a secured card will always work, but try to avoid those if you can get an unsecured card.

[No Exit]

6. Don't get the credit card!

Okay, people are going to jump me, so I'll clarify: I mean, don't get it unless you absolutely can't make it through the month w/o it. Say, for example, if your income is irregular (as mine is) because, say, you're self-employed. Or if you only get paid once a month and sometimes run out of cash, or something.

But if you can get along without it, DON'T GET IT! I admit I don't know the details of those "cash back" cards, but I DON'T BELIEVE THEM. I don't believe that the cardholder will actually come out better financially after using their card.

I get oodles of credit card offers, almost every day. Unless something major changes in our society, you will soon also be inundated with these offers--believe me, most people get them. I don't know if you're in school, but for me, the credit card offers started when I first graduated, and they have seldom abated since then, and that was a long time ago.

You would think that signing onto a credit card was just a contract, right? Well, these days it bears little resemblance to a "contract", in the legal sense of the word. (I know whereof I speak.) Why? Because a contract is a meeting of the minds. The parties each agree to perform something, and they both do so, and if one of them doesn't, that party is in breach. The terms are carefully agreed to (and usually written) up front.

With these credit cards, you sign on. Okay. So you have entered into a contract with the credit card company, right? Sure, you have to do something (pay on time), but they also have to do something, too, right? Everything's fine. BUT... how come they can continually send you multi-page brochures (filled with fine print) that continually CHANGE THE TERMS of this "contract"? Well, I don't know why--but they can and do. And these changes are UNILATERAL. The credit card company notifies you of the change, and that's that. And they get something out of the change--but YOU, the other party, get NOTHING in return for the new terms/conditions. When you have a credit card, you will begin receiving these fine-print brochures regularly. Good luck wading through them. You won't be able to--unless you want to quit your day job and spend all your time studying them.

OTOH, if you ignore them, all sorts of terms in your credit "agreement" are unilaterally changed all the time. And some of those changes can be quite inconvenient.

[sendero]

12. The cash back..

... feature of the cards is real. But they typically come with many limitations.

First off, my card pays $300 in cash back in a year, and then that's it. We get the $300 in a few months and nothing the rest of the year. Secondly, there are generally all kinds of restrictions on what qualifies for the cash back. On my card, there are 3-4 categories of purchases that qualify for varying percentages, and some that qualify for 0% back.

The CC companies are by no means losing money when they give you 1.5% cash back. The merchant is paying a discount rate of 2-3% for purchases. What that means is, you buy $100 worth of goodies at the store and charge $100 to the card. VISA (or whoever) gives the merchant $97-$98. That 2-3% is where your cash back comes from.

I'm always posting here about the evils of mis-used credit. IMHO, the only things you should ever borrow money for are a house and maybe and only maybe a car. But, there is value in building up a credit score, and you cannot do that without taking on some debt and paying it off on schedule.

So, to the OP, I recommend getting a card however you have to (secured as a last resort), buying something for a few hundred bucks and paying it off ahead of schedule. It will benefit you in the longer term!

[No Exit]

14. Thanks for the post... I'm not surprised at the complicated conditions

the credit card issuer imposes!

Couldn't someone build up their credit by taking out a student loan and then paying THAT back? Judging by my own experience, student loans are granted without the necessity of one having any credit history. My son got one, and he had NO credit history. It doesn't have to be a large student loan.

Regarding holding credit cards and buying a house: If you have more than one credit card with a large limit on it, it can actually hamper you from getting a mortgage. The mortgage companies see them as potential debt for you--and that can mess up your "ratios" that they use to figure your mortgage eligibility. I know YOU did not advocate holding multiple credit cards.

The credit card company counts a credit card with a $10,000 credit limit as a $10,000 asset held by them. Even if the cardholder hasn't run it up to its limit, it is still counted as though he had. If someone "owes" Citibank a $10,000 debt, that's an asset on Citibank's books.

That poster could just do what you are recommending, and everything will be fine--but if he/she is in any way inclined to run the card up (carrying a balance from month to month), he/she should definitely not get it!

[sendero]

20. Yes..

.... credit is a huge exercise in discipline. Folks that treat CCs like money in the bank should most definitely stay away from them!

[seabeyond]

7. i have one credit card. small annual fee. charged no monthly rate

i use it for everything. then i pay off at the end of the month. i get frequent flyer's miles and can cash in for product. two years ago we bought (for free) a wide screen tv. was fun. i am not the only one who pays at the end of the month. i have been pleasantly surprised how many do on this board.

[Democrats_win]

9. Just say NO to credit cards. The worst EVIL on earth. PERIOD! FARKEM & NUKEM!

[question everything]

16. Unfortunately, use of credit cards determine one's credit score

and this score determined not only the mortgage rate - how many purchase their homes for cash? - but also the terms of car insurnace... I believe that even prospective employers now look at credit score and utilities when you sign for services.

Unless you live in a cabin in the woods in Montana with no running water, gas or electricity, with no mortgage payments and cars that require insurance, you do need to have at least one credit card to establish a credit history. Use it sparingly, pay the the bill in full and things will be easier and cheaper in the long run.

[Greyhound]

17. And that, my friend, is the root problem, isn't it? n/t

[Warpy]

10. Everybody who's deep in credit card debt started out

paying that sucker off every month. It takes very little to start falling behind, to start getting hit with all those junk fees.

You're better off with that ATM card. That 1.5% isn't worth the risk.

I got rid of mine in 1991 when they started charging junk fees and insisted on those minimum balance paybacks. I smelled the beginning of a scam, and I've been proven right by people who've missed a payment or been late on the light bill and have found themselves with interest rates climbing over 30%.

Those things are sucker bait unless it's a company card that you use when you travel.

[borlis]

15. You are so right.

For years, I paid my balances every month. But the more you make the more you spend. My debt is spiraling out of control and my husband doesn't know it because I am afraid to tell him. Now he is getting a new job and the company is doing a "background check" on him. I am so afraid that how much we owe will come out. I just don't know what I am going to do. :scared: On the bright side, I guess, he can't divorce me because we can't afford it. I am seriously thinking of telling him before the shit hits the fan. I would rather have him hear it from me than when he gets a copy of the report. I am thinking of cashing in part of our 401K to get a fresh start. Credit cards are EVIL!

[question everything]

19. Tell him!

If these credit cards are on both your names, this affects both of you.

Show him the invoices that you've received and perhaps together you can work on paying them down. Go to credit counseling - if you have to.

And please, go easy on Christmas shopping! These are our excuses: oh, this is a special occasion, and this once a year and will pay it eventually - and it never happens.

If you can take a home equity loan - use it to pay your credit cards and then destroy all but one of them. Keep the oldest one because credit score is determined by, among other things, the length that you have kept the card.

Good luck.

[Dorian Gray]

26. You need to tell him....

seriously, it will be difficult, and it will result in a fight, but you need to discuss this. Hiding it will eat away at you and your relationship.

As for the credit card being evil, I don't know about that. You obviously have a control issue with it, so it's probably best that you don't have one in the future. They aren't smart for everyone, obviously, but for those who have the ability to control their spending, they are good tools.

[Warpy]

27. Tell him, get it over with

only make sure you've already met with a credit counselor to help you figure out a budget that will allow you to pay those suckers off.

The damage is done and you've already saddled him with a joint debt, that's the bad news. The good news is that you can get out of it eventually.

Just be prepared when you tell him so that he'll know you've realized the party is over and that you're prepared to do the hard work along with him to undo the damage.

In the meantime, take a scissors to your cards. If he has cards, let him keep them, but advise him to keep them someplace you can't get them.

You've recognized the problem. You're halfway there already. Good luck!

[elocs]

13. Let's say that you apply for your first job and therefore have no work experience.

On what should the employer base the decision to give you a job? Similar situation. I have 2 credit cards and no debt because I pay off my balances in full each month. In essence, the credit card company floats me an interest free loan for 30 days. I use a credit card to benefit me, not the credit card company. They do not make a dime from me, but I take every advantage of them that I can.

[napi21]

18. I think the right credit card is great IF you use it to your benefit.

I have several and use each for a different purpose, but always pay each one off at the end of the month. I get $25.00 for each $2,500 in purchases and it has no restrictions on where you make the purchase.

I suggest you get at least one CC, as long as youare committed to paying it off each month. Like it or not, you do get a better insurance rate, better mortgage rate, and possible that job you always wanted. Right now, that's the way business works.

[Nye Bevan]

21. Get a store card first

Generally these are easier to get. Use it responsibly for a year or so to build up a credit history.

[MadHound]

22. Do yourself a favor, never, ever apply for a credit card again.

Frankly, you don't need one, and the drawbacks of a CC far outweigh the positives. If you need to establish a credit record, you can do so with a car or other big ticket item that you pay back. Or if you need a credit record in short order, go down to your local bank, get a loan for, say something like a few thousands dollars and pay it all back on time.

But stay far, far away from credit cards. I've never had one, I've never had a problem living life without one, and my credit rating is fantastic.

[madokie]

23. used to happen to me all the time, When I first started using credit

at about the age of 40 they wouldn't hardly talk to me, I had to have a co-signer just to get established I was told and did. Money was easy for me to save because the bigger the pile got the bigger I wanted it to be.

[Renew Deal]

24. That's normal

You need to go to a bank like a Chase or Citibank and apply for a secured card. Carry that for a year and don't mess up. You'll be set to go after that.

[Akoto]

28. I had a similar problem recently.

I'm only in my twenties, and I've never had need for a credit card. Recently, for business reasons, I tried to open an online account with Bank of America. They ended up rejecting me because I had no credit. I had to get my father to sign on as a joint account holder in order for them to change their minds.

[B Calm]

29. I was 40 years old before my first credit card. By that time I was

debt free, over 100 thousand in the bank and owned my own home.

[Marie26]

30. But you need a credit score

to get a mortgage or car loan. It's sort of a vicious cycle. But you might be wise to just not have a credit card, for now - though you can get a secured card or department card to build credit. Even if you intend to pay off the balance each month, the companies are good at sneaking in extra fees, and one late payment can create big fees & damage to the credit score. I was late for one payment, and the APR immediately zoomed up to a "default rate" of 21%! :wow: Credit card debt is one of the biggest causes of bankruptcy in this country, and it's very easy to get caught in a downward spiral of debt. (I just paid off my credit card this month! :party: It's such a relief.)

[knitter4democracy]

31. Join a credit union, and get one from there.

It'll help you up your credit score, in case you want to buy a house or whatever, and it'll have low interest. That's how we did it.

[B Calm]

33. Save your money for a 20% down payment on your house and no

bank (regardless if you have a credit card)will refuse you on a home loan.

[knitter4democracy]

34. That's true, too. Still, credit unions are the way to go.

We love ours. No fees, no messing around, good treatment.

[Lone_Star_Dem]

35. Try with a different lender

There are many out there that will allow you to begin your credit history with them. Most will charge an annual fee, but once you've established credit you can negotiate and get that waved. Or if you prefer you can simply get another card which doesn't and cancel the other one.

I dislike credit cards, but I can see how they can help one establish credit history. If you were to get one with a low balance, say $200-$500 and keep a running balance of about half your limit. You can create credit by simply paying the minimum for 18 months. Then you'll have more choices available to you in the future. After three years of a record of good payments your in great standing with your credit score.