Credit Cards & Credit Score

[BinaryData]

Hey guys and gals,

 

Let me explain before people start asking questions.

 

I'm 26. I made a lot of mistakes throughout my life. I signed up for a credit card when I was 18, and had zero self-control. I had no job either, so I wasn't paying my bills. Well, I recently started paying my bills off. I haven't been able to get a credit card since I started working (9 months, and switching jobs). So, I got a letter in the mail from a bank, stating if I paid 100$, they'd give me a card with a 400$ limit. Problem is, my family has never heard of this bank, and I wanted to know if it was a scam.

 

My Score is between 525 and 650. I won't say the exact number.


The bank in question is; First Premier Bank. They want $100 up front, for a $400 card.
 

I roughly make $2500 now, take home. $3200 before taxes. But when I switch jobs, I'll be making more.

I'm paying off one of my student debts this fall, October to be exact. I've been paying $325 since February, and before that it was $275.

So my question is; is this normal? What are things I should look out for? I need to start building my credit, are there any companies that can help me collect information on who I owe money too, and start working on that.

 

I hope you all can help me out. I want to get my life straightened out, so I can focus on building my future.

[Daedroth]

Doesn't seem to have the best of customer reviews: http://www.consumeraffairs.com/credit_cards/premier.html

[Mr. Gibs]

Don't do it with banks like First Premier Bank. They will charge you a fortune in fees and interest just to give you some ###### amount of credit.

Since your not sure whats on your report, the best thing would be to get your credit report and see exactly whats on it. Sites like creditkarma.com can get you a free one. Alternatively sites like myfico.com can get you a more "accurate" score but they will charge you for it.

Second if you want a credit card but find it hard to get approved because of your low score, get a secured credit card from legit banks (BOA has one). Basically you'll have to put down a deposit that will become your credit line. The interest rate is a little bit higher but nowhere as ridiculous as FPB. This will get reported to the credit bureaus as a legit credit card and over time it will help build your score.

If you parents have credit cards ask them to put you on as an authorized user. This won't improve your score as much as having your own credit card will (and I believe FICO changed their scoring methods to not include it) but it'll help improve your credit history...and hey every little bit helps in the long run.

[Skiver Veteran]

Can I ask why you want a new Credit Card in the first place?

 

IMO it sounds like a scam, maybe things work differently but I don't see a reason why you'd have to provide $100 up front, what's the guarantee you'll see that come back?

 

Are there no comparison websites that you can go on that compare different credit cards, the rates they offer and bonuses? I think no matter how good it may seem, an unknown provider would always worry me.

 

Being outside of the US its hard to compare like for like in terms of salary nor what that score truly means but if I were you I'd try and focus on getting rid of debt first where possible.

 

I'm not much older than you but I've had a similar past with debt and ran up more than I could afford and I'm not paying that back properly. However as much as I know about the mistakes in the past, temptation can sometimes be far too great so having another credit card may be held with the best intentions but those morals can easily slip (mine still do).

[BinaryData]

Doesn't seem to have the best of customer reviews: http://www.consumeraffairs.com/credit_cards/premier.html

 

Thanks. I'm trying to take these sorts of things seriously.

 

Don't do it with banks like First Premier Bank. They will charge you a fortune in fees and interest just to give you some ###### amount of credit.

Since your not sure whats on your report, the best thing would be to get your credit report and see exactly whats on it. Sites like creditkarma.com can get you a free one. Alternatively sites like myfico.com can get you a more "accurate" score but they will charge you for it.

Second if you want a credit card but find it hard to get approved because of your low score, get a secured credit card from legit banks (BOA has one). Basically you'll have to put down a deposit that will become your credit line. The interest rate is a little bit higher but nowhere as ridiculous as FPB. This will get reported to the credit bureaus as a legit credit card and over time it will help build your score.

If you parents have credit cards ask them to put you on as an authorized user. This won't improve your score as much as having your own credit card will (and I believe FICO changed their scoring methods to not include it) but it'll help improve your credit history...and hey every little bit helps in the long run.

 

I was wondering about that. My family doesn't have credit cards. We're all impulse buyers, and that's a bad thing. I've managed mine fairly well in the last few years.

[Mr. Gibs]

I was wondering about that. My family doesn't have credit cards. We're all impulse buyers, and that's a bad thing. I've managed mine fairly well in the last few years.

A secured credit card would then be your best bet. Eventually (usually like 12 calender months or so) if you maintain it well with no late payments, stay below your credit line etc, the bank will return your deposit and upgrade you to an unsecured card.

You can choose to give additional cards to family members and most banks will allow you to set limits for those additional cards too. This will be important because in the future if you apply for a mortgage together with your wife the bank will take into account both of your credit scores. If yours becomes good and your wife remains low, that will count against you.

The best advice I can give you to managing your credit cards is don't think of them as a loan. Think of them as cash. So If you want to buy that big giant flat screen tv, do you have the cash right now to cover that purchase. If you don't or you won't be able to pay it off by the end of the month, don't buy it. Too many people fall into the trap of "oh its a credit card, I can put thousands of dollars on it and then pay it off over time" no...the interest rates will start eating away at your money and you'll basically be throwing money down the drain. Emergency purchases like a giant hospital bill, you may not have a choice and that's understandable. But any other purchase, make sure you can pay it off immediately (or before the next billing period). This will help keep your credit utilization low, you're a much lower risk for the bank (certain card issuers like Amex are happy to let you carry a balance, but prefer if you didn't) and over your life you'll save yourself thousands of dollars on interest.

If you do need to make a giant purchase that isn't an emergency, like you're renovating your kitchen or w/e there are private loans that are more suited for that purpose. The interest rates are significantly lower and you'll save money if you went that route instead of dumping it all on multiple credit cards.

[+Xinok Subscriber²]

I got a secured credit card back in August with a mere $300 secure deposit. I charged all my small purchases to it like groceries and gas and paid it off in full every month. As such, I never got charged a bit of interest. By March, I had "average credit" and I qualified for a real credit card with a $500 credit limit. I'm continuing the same trend, charging small purchases and paying it off in full every month, so I can continue to build by credit.

 

My advice, never respond to credit card offers you receive in the mail. The mail offers are usually scamming you in one form or another, whether it be high interest rates or something else. Instead, find a bank you trust and apply for a credit card with them.

[+Warwagon MVC]

When you say you make "I roughly make $2500 now, take home. $3200 before taxes" ..is that per year or per month or what time frame are we talking about? I know you want to improve your credit score, but I also don't want you to see you swiping plastic, to the point were you are go into debt.

 

[tsupersonic]

My advice, never respond to credit card offers you receive in the mail. The mail offers are usually scamming you in one form or another, whether it be high interest rates or something else. Instead, find a bank you trust and apply for a credit card with them.

Not the best advice. Depending on your credit history/score, you can get nice targeted offers, and if you're really advanced, you can start "churning" credit cards. The best advice for any credit card is to treat it like cash. Ideally you should pay off your credit card in full to avoid interest charges.

 

Keep in mind your credit score is composed of many different variables:

• Payment history
• Credit card utilization
• Length of credit history
• other things

[BinaryData]

Can I ask why you want a new Credit Card in the first place?

 

IMO it sounds like a scam, maybe things work differently but I don't see a reason why you'd have to provide $100 up front, what's the guarantee you'll see that come back?

 

Are there no comparison websites that you can go on that compare different credit cards, the rates they offer and bonuses? I think no matter how good it may seem, an unknown provider would always worry me.

 

Being outside of the US its hard to compare like for like in terms of salary nor what that score truly means but if I were you I'd try and focus on getting rid of debt first where possible.

 

I'm not much older than you but I've had a similar past with debt and ran up more than I could afford and I'm not paying that back properly. However as much as I know about the mistakes in the past, temptation can sometimes be far too great so having another credit card may be held with the best intentions but those morals can easily slip (mine still do).

Well, since I didn't properly respond, boss was being nosy about what I was up too. Anyways, I'm trying to build my credit, so in the future I can purchase a house, rent a place if needed, or things of that sort. I use to be incredibly irresponsible but things have changed within the last 3 - 5 years. I guess you could say I "grew up".

 

A secured credit card would then be your best bet. Eventually (usually like 12 calender months or so) if you maintain it well with no late payments, stay below your credit line etc, the bank will return your deposit and upgrade you to an unsecured card.

You can choose to give additional cards to family members and most banks will allow you to set limits for those additional cards too. This will be important because in the future if you apply for a mortgage together with your wife the bank will take into account both of your credit scores. If yours becomes good and your wife remains low, that will count against you.

The best advice I can give you to managing your credit cards is don't think of them as a loan. Think of them as cash. So If you want to buy that big giant flat screen tv, do you have the cash right now to cover that purchase. If you don't or you won't be able to pay it off by the end of the month, don't buy it. Too many people fall into the trap of "oh its a credit card, I can put thousands of dollars on it and then pay it off over time" no...the interest rates will start eating away at your money and you'll basically be throwing money down the drain. Emergency purchases like a giant hospital bill, you may not have a choice and that's understandable. But any other purchase, make sure you can pay it off immediately (or before the next billing period). This will help keep your credit utilization low, you're a much lower risk for the bank (certain card issuers like Amex are happy to let you carry a balance, but prefer if you didn't) and over your life you'll save yourself thousands of dollars on interest.

If you do need to make a giant purchase that isn't an emergency, like you're renovating your kitchen or w/e there are private loans that are more suited for that purpose. The interest rates are significantly lower and you'll save money if you went that route instead of dumping it all on multiple credit cards.

 

Well, what I'm looking to use the card for is like gas, groceries, or occasional some what larger purchase. I haven't heard of secured cards before, I stopped taking an interest in credit cards when I had no job. My co-workers suggested, if you have a $400 limit, buy what you want, but pay off all but 1/3 and carry that over every month. I'm trying to gather all the information I can.

I got a secured credit card back in August with a mere $300 secure deposit. I charged all my small purchases to it like groceries and gas and paid it off in full every month. As such, I never got charged a bit of interest. By March, I had "average credit" and I qualified for a real credit card with a $500 credit limit. I'm continuing the same trend, charging small purchases and paying it off in full every month, so I can continue to build by credit.

 

My advice, never respond to credit card offers you receive in the mail. The mail offers are usually scamming you in one form or another, whether it be high interest rates or something else. Instead, find a bank you trust and apply for a credit card with them.

I don't really need a huge limit, $500 - $600 is the most I'd ever need.

 

When you say you make "I roughly make $2500 now, take home. $3200 before taxes" ..is that per year or per month or what time frame are we talking about? I know you want to improve your credit score, but I also don't want you to see you swiping plastic, to the point were you are go into debt.

 

Well, right now I make $20 / hr, I work straight 40 hours a week. When I switch jobs, I'll be working this schedule;

Week A: 36 hours @ 25$ / hr = $900

Week B: 40 Hours + 8 Hrs OT = $1,000 + 300 = $1,300

Monthly Income Before Taxes: $4,400

After will probably be $3600 or so. I lose about $190 / check right now in taxes.

 

 

Not the best advice. Depending on your credit history/score, you can get nice targeted offers, and if you're really advanced, you can start "churning" credit cards. The best advice for any credit card is to treat it like cash. Ideally you should pay off your credit card in full to avoid interest charges.

 

Keep in mind your credit score is composed of many different variables:

• Payment history
• Credit card utilization
• Length of credit history
• other things

 

 

So, from what I gather, you're saying I should avoid large purchases, like a brand new 72" Flat Screen TV, or a $500 PCI-E SDD. Stick to smaller purchases, like groceries.

 

 

I'm nervous as hell about this because I don't want to screw this up, and break the camels back.

 

This is one of the documents I received. I haven't paid for anything or used it at all. So, I'm holding off.

[Alwaysonacoffebreak]

APR 36%? Are they nuts? I got an fixed APR on 16%. Well, different country but still.

 

SERVICING FEE: $99! LMAO.

 

Stay as far away as you could.

[Arachno 1D]

Im from the UK and to me that looks an extortionate rate with high charges have you checked online for sites like we have i.e. confused.com that give advice on cards and available rates?

[T3X4S]

It certainly looks to be insanely high, but I think that is pretty typical of these "credit-building" credit cards.

They know you need credit
They know you have bad credit and cant get a normal credit card - so they stick it to you.
Their thinking is "well you have proven to be a poor credit risk, so we have to protect ourselves"
 

[Skiver Veteran]

If I understand, you still have debt now right, you're still paying it off?

 

IMO a better choice for you would be to get a loan - something you can afford, typically will come with a much lower interest rate then any CC and you use that to settle any outstanding debts. If you were like me you probably have a bit here and a bit there. This makes your current debt a lot easier to manage as its with one bank. Paying this off regularly and meeting payments will probably do more for your credit rating then owning another CC and keeping it under control. Also once paid off, close any CC's to remove temptation to use it again.

 

I went years paying x off this Credit card and y off this overdraft etc and never seemed to get anywhere because I was paying so little off each lump that the interest was wiping out most of what I was paying in. One loan over 3 years has seen me wipe around $8500 instead of the 4 years where that number just didn't seem to go down at all because as soon as I paid a chunk off I'd just spend again.

[Alwaysonacoffebreak]

Im from the UK and to me that looks an extortionate rate with high charges have you checked online for sites like we have i.e. confused.com that give advice on cards and available rates?

 

Well the 36% APR is MAYBE somewhat understandable from a company who offers cards to people with bad credit score (they are basically skinning you alive) but the $99 annual servicing fee. Oh give me a break. That's too far already.

[Arachno 1D]

Some advice here http://www.thesimpledollar.com/best-credit-cards-for-bad-credit/

 

How Can I Fix My Bad Credit to Get a Better Loan?

Because even the most sympathetic lender won

[BinaryData]

If I understand, you still have debt now right, you're still paying it off?

 

IMO a better choice for you would be to get a loan - something you can afford, typically will come with a much lower interest rate then any CC and you use that to settle any outstanding debts. If you were like me you probably have a bit here and a bit there. This makes your current debt a lot easier to manage as its with one bank. Paying this off regularly and meeting payments will probably do more for your credit rating then owning another CC and keeping it under control. Also once paid off, close any CC's to remove temptation to use it again.

 

I went years paying x off this Credit card and y off this overdraft etc and never seemed to get anywhere because I was paying so little off each lump that the interest was wiping out most of what I was paying in. One loan over 3 years has seen me wipe around $8500 instead of the 4 years where that number just didn't seem to go down at all because as soon as I paid a chunk off I'd just spend again.

 

Yes I am. I signed up on CreditKarm, and almost crapped my pants when I saw who I owed too. In total, I'm 35,000$ in debt, but the numbers haven't been fixed. Most of that is school loans, 20,000$ + 5,000$ in other debts, the rest is interest rate for not paying on it. I was young, dumb, and didn't give a flying crap about anything. I figured sooner or later they'd stop calling me. Nope, they started calling my siblings, mom, aunts and uncles. My 9 year old niece (she was 5 at the time), got a phone call about it.

 

Well the 36% APR is MAYBE somewhat understandable from a company who offers cards to people with bad credit score (they are basically skinning you alive) but the $99 annual servicing fee. Oh give me a break. That's too far already.

 

Yeah. I still have it, just not sure I want to use it or how to even cancel it.

Some advice here http://www.thesimpledollar.com/best-credit-cards-for-bad-credit/

 

How Can I Fix My Bad Credit to Get a Better Loan?

Because even the most sympathetic lender won

[Crisp]

I got myself a credit card a few months back, I have no need for one and only put food shopping on it now and again and pay it off instantly before the end of the month so it gives me a good credit rating. I think the card company wants me to use it more as they've started sending me letters about upping the limit... resisting the temptation to go crazy

 

Pretty sure I also have a bad credit score from years ago when Three kept billing me after I cancelled my phone contract and direct debit.

[BinaryData]

I got myself a credit card a few months back, I have no need for one and only put food shopping on it now and again and pay it off instantly before the end of the month so it gives me a good credit rating. I think the card company wants me to use it more as they've started sending me letters about upping the limit... resisting the temptation to go crazy

 

Haha. I don't want a card with more than $500 on it. I've been told to not exceed what I make in 1 week, which is currently $618 (minus taxes + 401k).

[tsupersonic]

 So, from what I gather, you're saying I should avoid large purchases, like a brand new 72" Flat Screen TV, or a $500 PCI-E SDD. Stick to smaller purchases, like groceries.

 

    I'm nervous as hell about this because I don't want to screw this up, and break the camels back.

    Attachment Credit_Card_Info.PNG

    This is one of the documents I received. I haven't paid for anything or used it at all. So, I'm holding off.

 

Haha. I don't want a card with more than $500 on it. I've been told to not exceed what I make in 1 week, which is currently $618 (minus taxes + 401k).

Replying to both your posts in one shot. If you have a $500 credit limit, try not to carry a balance after each billing cycle, that is try to pay it off every billing cycle in FULL. You want to show you can pay your credit card bill on time. If you can't pay it in full for whatever reason, try to limit the utilization/balance to <10% of the card's limit (ideally the lower the better). Also, by paying it off in full, you're not getting screwed by the extremely high interest rate. The annual rate suck, and monthly fee? That is absolutely terrible. There are cards out there with no annual fees (or monthly fees).

 

It's actually nice to have a card with a higher limit. Let's say you have a card with $500 limit, and you spend $400 monthly, you're utilizing 4/5 (80%) of your credit limit. Now let's say you have a card with $2000 limit, and you spend the same $400 monthly. You're now utilizing 20% of your credit limit. Lower utilization is obviously better. It's all about responsibility and holding back - remember I said treat your credit card like it's cash. If you don't have enough money to pay off the bill in full, you can't afford it. Don't make that purchase for a new 72" TV or PCI-E SSD, unless you can really afford it.

[BinaryData]

Replying to both your posts in one shot. If you have a $500 credit limit, try not to carry a balance after each billing cycle, that is try to pay it off every billing cycle in FULL. You want to show you can pay your credit card bill on time. If you can't pay it in full for whatever reason, try to limit the utilization/balance to <10% of the card's limit (ideally the lower the better). Also, by paying it off in full, you're not getting screwed by the extremely high interest rate. The annual rate suck, and monthly fee? That is absolutely terrible. There are cards out there with no annual fees (or monthly fees).

 

It's actually nice to have a card with a higher limit. Let's say you have a card with $500 limit, and you spend $400 monthly, you're utilizing 4/5 (80%) of your credit limit. Now let's say you have a card with $2000 limit, and you spend the same $400 monthly. You're now utilizing 20% of your credit limit. Lower utilization is obviously better. It's all about responsibility and holding back - remember I said treat your credit card like it's cash. If you don't have enough money to pay off the bill in full, you can't afford it. Don't make that purchase for a new 72" TV or PCI-E SSD, unless you can really afford it.

 

Makes sense! I signed up for a Capital One card. I just need to pay $200 deposit, and I get a certain limit.

[#Michael]

Well, since I didn't properly respond, boss was being nosy about what I was up too. Anyways, I'm trying to build my credit, so in the future I can purchase a house, rent a place if needed, or things of that sort. I use to be incredibly irresponsible but things have changed within the last 3 - 5 years. I guess you could say I "grew up".

 

 

Well, what I'm looking to use the card for is like gas, groceries, or occasional some what larger purchase. I haven't heard of secured cards before, I stopped taking an interest in credit cards when I had no job. My co-workers suggested, if you have a $400 limit, buy what you want, but pay off all but 1/3 and carry that over every month. I'm trying to gather all the information I can.

I don't really need a huge limit, $500 - $600 is the most I'd ever need.

 

Well, right now I make $20 / hr, I work straight 40 hours a week. When I switch jobs, I'll be working this schedule;

Week A: 36 hours @ 25$ / hr = $900

Week B: 40 Hours + 8 Hrs OT = $1,000 + 300 = $1,300

Monthly Income Before Taxes: $4,400

After will probably be $3600 or so. I lose about $190 / check right now in taxes.

 

 

So, from what I gather, you're saying I should avoid large purchases, like a brand new 72" Flat Screen TV, or a $500 PCI-E SDD. Stick to smaller purchases, like groceries.

 

 

I'm nervous as hell about this because I don't want to screw this up, and break the camels back.

Credit_Card_Info.PNG

 

This is one of the documents I received. I haven't paid for anything or used it at all. So, I'm holding off.

 

That is a true scam...The CFPB put into law that all credit cards, gas cards, and store cards could no longer charge greater than 29% interest.

[#Michael]

Yes I am. I signed up on CreditKarm, and almost crapped my pants when I saw who I owed too. In total, I'm 35,000$ in debt, but the numbers haven't been fixed. Most of that is school loans, 20,000$ + 5,000$ in other debts, the rest is interest rate for not paying on it. I was young, dumb, and didn't give a flying crap about anything. I figured sooner or later they'd stop calling me. Nope, they started calling my siblings, mom, aunts and uncles. My 9 year old niece (she was 5 at the time), got a phone call about it.

 

 

Yeah. I still have it, just not sure I want to use it or how to even cancel it.

 

Thanks!

 

I planned on using my credit card to pay for groceries, itunes music purchases, and things of that sort. Even as a potential back up in case I mess my financials up, like I did last week. I wasn't expecting a $245 bill on pay day for my insurance, but I was able to cover it, and then my landlord (mother) demanded rent. So my $600 check went to $50 in a day

I have a goal in life, my goal is to own a nice chunk of property, build a house, and build a smaller "cottage" for my mother to live in when she's older. Out of 3 kids, I'm the only one whose opted against putting her in a home, and I'm the only one who makes above $20,000 / year. My brother, and sister are both selfish pigs, and will throw her into a home, and visit her once a year. Nah, I'm a family man. I take care of people who I love and care about. I'd do the same for my future wife's parents as well.

 

Understand that during the recession, as part of the requirements for the bailout, banks had to get out of the student loan business.  They had to sell their student loans back to the government for pennies on the dollar.  One of the consequences of this is that this can now be counted as a negative on your credit history.  Before the banks collapsed and all that happened, I had perfectly good credit of around 770.  After all that crap happened and my student loans were sold, my credit suddenly dropped to 550 in less than 6 months.

 

It has taken me almost 6 years but I am finally getting it re-built to a respectable number.  I cannot tell you how embarrassing it was to be turned down for even the most basic of loans or credit cards.  

[BinaryData]

Understand that during the recession, as part of the requirements for the bailout, banks had to get out of the student loan business.  They had to sell their student loans back to the government for pennies on the dollar.  One of the consequences of this is that this can now be counted as a negative on your credit history.  Before the banks collapsed and all that happened, I had perfectly good credit of around 770.  After all that crap happened and my student loans were sold, my credit suddenly dropped to 550 in less than 6 months.

 

It has taken me almost 6 years but I am finally getting it re-built to a respectable number.  I cannot tell you how embarrassing it was to be turned down for even the most basic of loans or credit cards.  

 

I'm doing a Loan Forgiveness plan now. This company is paying off my debt, in full, and I'll make monthly payments to them. This'll clear up my credit score a bit, or so they said.

 

 

I got a Capital One Secured Card. Just need to pay $200 down.

[#Michael]

I'm doing a Loan Forgiveness plan now. This company is paying off my debt, in full, and I'll make monthly payments to them. This'll clear up my credit score a bit, or so they said.

 

 

I got a Capital One Secured Card. Just need to pay $200 down.

 

Loan forgiveness is nothing more than another scam.  They are just in business to make money.  This will do nothing to repair your credit.