Author Topic: Building Credit Histry  (Read 3922 times)

acc7x3

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Building Credit Histry
« on: April 17, 2014, 07:58:23 AM »
Hi All,
I am going to ask this question to everyone and a few people might scoff at it.

But what is the best secured credit card?
She is expecting to have to travel a lot over the next two years and would like a card with airline miles. All of the research that I have done thus far I have found one. But that only has airline miles for Delta.

I am not asking this for myself, but for my girlfriend. Her background: she is in medical school with no loans (no credit history), she is in her second year and will have to travel for interviews in her fourth year, and her instructors told the classes that the better your credit the lower your malpractice ins will be.

I have tried to help her out as much as possible but have never had to go this route. Can y'all please help?

nereo

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Re: Building Credit Histry
« Reply #1 on: April 17, 2014, 08:14:07 AM »
In this case, getting rewards (airline miles) seems secondary to building up good credit.
I'd start looking for a credit card that has 1) no annual fee and 2) a reasonable APR (some go over 20%, yikes!). Only once you meet #1 & #2 would I even consider rewards cards. If she has no credit history it might be a challenge just getting her a card that meets 1 & 2.

Unless she is putting tens of thousands onto a credit card, she's unlikely to get much in the way of free flights over the next two years. At which point I'd be worried you are spending too much for someone in med-school.

randymarsh

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Re: Building Credit Histry
« Reply #2 on: April 17, 2014, 08:21:43 AM »
I've never seen secured cards that offer great rewards. Most don't offer any at all that I have seen. If they do it's like 1 point/mile per $1 spent with no sign up bonus.

Any secured card is going to build a credit history and that's what she needs. Rewards will come later. APR doesn't matter because she won't be carrying a balance. Most secured cards seem to have a low ~$29 annual fee, but you might find a couple without. I don't think the Wells Fargo card has one.

Discover is pretty good about approving people with no credit, she may have good luck there. The Discover IT is a regular card too, not secured.

Chranstronaut

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Re: Building Credit Histry
« Reply #3 on: April 17, 2014, 08:34:36 AM »
My position is a little different, but I can understand where your girlfriend is at.  I would recommend doing what I did, but time is your biggest friend when it comes to building credit history more than what card you get.  My big question is: does she really need a secured credit card instead of a traditional one?  Probably not.

I left college without credit history and it was a bit of a challenge for me to rent apartments.  I ended up paying huge deposits and fronting a lot of costs I didn't expect.  I'm not a fan of financing things, but I was worried about my ability to eventually get a mortgage without credit history.

I tried applying for a normal credit card directly with a company because I liked the rewards, but I was rejected due to having no credit history (this is apparently pretty common).  So I went to the bank where my checking account is held and told them I wanted a credit card.  Since I'd been using their bank for almost 5 years, they seemed really happy to offer me a card and didn't require a secured account.  The whole process took about 10 minutes and I got my card approved and shipped to me within about a week.

Because of my lack of history, my bank only offered me one card.  It was a no-fee card that wasn't listed on their website.  It's similar to their student credit card, and it only has a 1% cash back on everything and a very low limit, but it wasn't a "secured credit card" where they hold a deposit for it.  I would avoid one of those secured cards if possible.  It's a rumor, but I've heard they are not that good for building credit.

After about 6 months of buying all my groceries on the card and paying in full every month, I called and asked for a raise in my credit limit.  This could hurt your credit score a little, but with no other debt, it might not matter much.  It was no problem with the bank and required a single phone call.  Now I'm using this card for all my normal expenses and trying to hold onto it for several years.  Even if I get another card in the future, I will probably keep this card open to have a longer credit history.

Summary: Have her go directly to her bank and get a no-fee card; don't worry about rewards.  Her bank will be the most willing to lend to her and they sometimes have credit cards they don't advertise on their websites.  Avoid cards that require a deposit -- these are for people with bad credit who are known to not pay their loans, not people starting to build credit.  Keep the account open and paid in full every month for several years.
« Last Edit: November 11, 2015, 10:20:53 AM by Chranstronaut »