Montigo Dominic
Astri
Have you tried getting a student card?
The first thing to remember is that
someone will always want to give you credit. Why? Because they want you to owe them money because that means they make more money. Lending is how banking institutions make money. Your wealthier institutions won't lend to people with poor credit because they have more to lose. What does this mean for you? It means your first credit card will be with the First Union Bank of Booglesville, not with Citibank or Bank of America.
It may seem hard to get your first credit card, having no credit history and all, but it isn't. The key is knowing which cards to apply for and how to apply for credit.
Who Will Give You a Line of Credit?Three groups: Gasoline companies, airlines, and major department store chains; local merchants; and banks that offer "secured" credit cards.
Gasoline companies, airlines, and major departments store chains want to give you credit. Why? Because the more money you think you have to spend at their store, the more you will spend at their store. The more you buy at their store, the more loyal a customer you'll become. Then, you'll spread the word about what a great store you buy your stuff from. In our competitive business environment, stores are always attracting new customers, and this is a perfect way for them to hook you.
Local merchants, such as furniture stores or appliance outlets, will often extend first-time credit to local residents. A similar idea applies. The more they let you buy for credit, the more you'll buy; the more you buy, the more you'll spread the word. For local merchants, this is how they get the majority of their business.
Secured credit cards are like ordinary credit cards. They look the same, they smell the same, they even talk about the same things and wear the same clothes. They work differently, however, in that they do not represent short-term loans (if you didn't realize it, that's what credit cards facilitate) by the issuing agency. Charges made to a secured credit card are drawn from an existing account. You are, in effect, lending yourself money. The balance in that account sets your credit limit. If you deposit $300 into your account, you can use the card until your balance reaches $0. Then, you cannot use your account again until you put more money into the account.
While secured credit cards do not direcly establish credit, they establish a relationship with the issuing agency (e.g. a local bank). Often, when the account is depleted, a bank may extend an unsecured line of credit on the card. Unfortunately, this may negatively affect your credit score. If this happens, continue to use the card in moderation and make payments on time each month.
How do You Apply for Credit?When you first apply for a credit card, you'll have to fill out a credit application (later on, when your credit improves, you'll get offers for "pre-approved" cards in the mail... which is why I hate Capital Bank so much). Different lenders use different forms, but most ask you about employment, income, assets, and banking. These forms are put through a computerized system that comes up with a rating based on positive and negative factors based on the information you gave them. Positive factors include home ownership, savings accounts, job stability, and a low debt-to-income ratio. Negative factors include things like too many dependents, no history of saving, job-hopping, and high debt-to-income ratio.
You want to apply in such a way as to increase your chances of getting a credit card. For example, in the Employment and Income section of an application, you may want to list the income of any family members who share in household expenses. If you're employed by a company or corporation, list a job title that sounds official, like "account executive" instead of "salesman," or "administrative assistant" instead of "secretary." In the Banking section, list all of your current checking and savings accounts. If you don't have one of each, then open them before applying for credit. They really help your chances.
Hope all that helps.
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