WTF.... I just got credit!
Dec 23rd 2008, 3:27 am
#16
Dizzy Blonde
Thread Starter
Joined: Sep 2007
Location: Cincinnati, Ohio.
Posts: 964
Re: WTF.... I just got credit!
It was the wierdest feeling when she said it had been approved - a mix of sheer horror at how easy it was, and joy that I could start on the credit ladder!
It does show how easy it is to get into credit problems over here - considering that neither me nor DH are working right now, and I've only been in the country for a week, its not surprising that people get out of their depth.
The plan is to pay off what I bought yesterday as soon as the bill comes, and then just spend a little bit each month and pay that off early or on time as well, in full so I can show activity on it. I've told DH that we don't get tempted to apply for anything else now for at least 3-6 months so we don't appear desperate!
I was worried about just getting on the credit ladder over here, to the extent that I considered transferring my HSBC UK visa to over here if I could, but considering that has a high balance on it I think it would probably do me more harm than good now!
It does show how easy it is to get into credit problems over here - considering that neither me nor DH are working right now, and I've only been in the country for a week, its not surprising that people get out of their depth.
The plan is to pay off what I bought yesterday as soon as the bill comes, and then just spend a little bit each month and pay that off early or on time as well, in full so I can show activity on it. I've told DH that we don't get tempted to apply for anything else now for at least 3-6 months so we don't appear desperate!
I was worried about just getting on the credit ladder over here, to the extent that I considered transferring my HSBC UK visa to over here if I could, but considering that has a high balance on it I think it would probably do me more harm than good now!
Dec 23rd 2008, 4:05 am
#17
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: WTF.... I just got credit!
Sooooo... I arrived here on my CR1 Visa on Sunday 14th, along with my little monkeys who are on the CR2.
I ticked the box on the DS230 at the embassy to ask for my social security number to be sent to me, and was very very very excited this afternoon when it arrived in the mail, just one week after my arrival - I was not expecting it to come through until after Christmas, and was actually expecting to have to go down to the Social security office to chase it up.
Anyway... tonight we went to Macy's to get my Christmas present off my mum (new suits for interviews) and at the till they had a good old 20% off if you apply for a card - DH told me to do it, to test drive my new SSN - I was very hesitant, as I didn't want a ding on my report so soon after arriving, and I was convinced that having only had my SSN in my hand for 8 hours, with nothing connected to it at all, that it would get declined and then I would start to screw up my score before I'd even really got started.
But - it got approved......... I was stunned - I don't know what the credit limit on it is, but the suit was $200 so I know its for at least that - and whatever it is, at least its got me started. It is a little scary though just how easy it was to do.
I've told DH that we need to use the card probably a couple of times a month and pay it straight off to start to show a history, and not to get carried away thinking we are super-credit worthy and applying for anything. So I guess we'll see how long it takes for all the credit junk mail to start arriving!
7 days - 1 social security number - 1 credit account!!
I ticked the box on the DS230 at the embassy to ask for my social security number to be sent to me, and was very very very excited this afternoon when it arrived in the mail, just one week after my arrival - I was not expecting it to come through until after Christmas, and was actually expecting to have to go down to the Social security office to chase it up.
Anyway... tonight we went to Macy's to get my Christmas present off my mum (new suits for interviews) and at the till they had a good old 20% off if you apply for a card - DH told me to do it, to test drive my new SSN - I was very hesitant, as I didn't want a ding on my report so soon after arriving, and I was convinced that having only had my SSN in my hand for 8 hours, with nothing connected to it at all, that it would get declined and then I would start to screw up my score before I'd even really got started.
But - it got approved......... I was stunned - I don't know what the credit limit on it is, but the suit was $200 so I know its for at least that - and whatever it is, at least its got me started. It is a little scary though just how easy it was to do.
I've told DH that we need to use the card probably a couple of times a month and pay it straight off to start to show a history, and not to get carried away thinking we are super-credit worthy and applying for anything. So I guess we'll see how long it takes for all the credit junk mail to start arriving!
7 days - 1 social security number - 1 credit account!!
My suggestion is that you either (a) carry a small balance (just watch the ridiculous interest charges) for a month or two, then pay it off in full, so that you can show that you can carry debt and repay it, or (b) just pay it off in full every month. Get a couple of these cards, but not too many, as too much credit can also be problematic. Do that for a while, and your credit history will actually have something for new, better creditors to chew on.
Once you've have had Visa, MC and AmEx for a time, you should cancel the department store cards. Cancel them in writing, and check your credit report to make sure that the account closing is shown as being done at your request, and not at the behest of the creditor.
Dec 23rd 2008, 4:10 am
#18
Not here much
Joined: Jan 2005
Location: Highland Park, NJ
Posts: 2,452
Re: WTF.... I just got credit!
That's pointless as it does nothing. For years I have always paid off everything in full, and never got anything where I was charged interest until I got my mortgage and had a very good credit score.
Dec 23rd 2008, 4:37 am
#19
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: WTF.... I just got credit!
Do keep in mind that we have a credit crunch, so it is going to take more diligence to build a credit rating now than it has for quite some time.
Dec 23rd 2008, 5:10 am
#20
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,884
Re: WTF.... I just got credit!
I wouldn't say that it's pointless. Creditors do like to see a history of balances that get paid off. I have always paid my balances in full, because I dislike the idea of paying interest for most purchases, but that method can slow the process of building credit.
Dec 23rd 2008, 5:51 am
#21
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: WTF.... I just got credit!
I'm sceptical. After all, even if you pay the full balance every month, you are carrying a balance from the time of purchases to the time the credit card bill is paid. And looking at my detailed Experian credit report, it lists "monthly balances" for my credit cards even though I paid off that amount in full each month.
Having unused credit lines is better than having none at all, and having credit lines maxed out is also seen as a bad sign. But something in the middle is viewed as being most positive.
Also remember that during ordinary times, creditors prefer customers who carry balances because those accounts are more profitable. At the moment, creditors have put a priority on getting cash in the door, but normally, they much prefer collecting the high interest charges.
In the worst case scenario, customers who "play the float" (pay in full every month) are seen as leeches who are scamming the system by borrowing money for free. Not that I'd lose sleep over it, but you need to charge at least a few grand per year on a card just for them to breakeven.
Dec 23rd 2008, 6:05 am
#22
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,884
Re: WTF.... I just got credit!
Also remember that during ordinary times, creditors prefer customers who carry balances because those accounts are more profitable. At the moment, creditors have put a priority on getting cash in the door, but normally, they much prefer collecting the high interest charges.
In the worst case scenario, customers who "play the float" (pay in full every month) are seen as leeches who are scamming the system by borrowing money for free. Not that I'd lose sleep over it, but you need to charge at least a few grand per year on a card just for them to breakeven.
Dec 23rd 2008, 6:15 am
#23
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: WTF.... I just got credit!
They don't quite see it that way. For this purpose, a "balance" is something that can accrue interest. Playing the float is not the same as carrying a balance.
I realize that monthly payments in full are reported -- everything is -- but it isn't quite the same thing from the creditor's standpoint.
If you use a department store card for a couple of purchases in a given month, don't add to it thereafter before paying it off in full, paying interest for just a couple of months, then it amounts to a few percent of the purchase price. It doesn't cost that much to do it, just so long as you don't allow it to spiral out of control.
I realize that monthly payments in full are reported -- everything is -- but it isn't quite the same thing from the creditor's standpoint.
If you use a department store card for a couple of purchases in a given month, don't add to it thereafter before paying it off in full, paying interest for just a couple of months, then it amounts to a few percent of the purchase price. It doesn't cost that much to do it, just so long as you don't allow it to spiral out of control.
Dec 23rd 2008, 6:26 am
#24
Not here much
Joined: Jan 2005
Location: Highland Park, NJ
Posts: 2,452
Re: WTF.... I just got credit!
They don't quite see it that way. For this purpose, a "balance" is something that can accrue interest. Playing the float is not the same as carrying a balance.
I realize that monthly payments in full are reported -- everything is -- but it isn't quite the same thing from the creditor's standpoint.
If you use a department store card for a couple of purchases in a given month, don't add to it thereafter before paying it off in full, paying interest for just a couple of months, then it amounts to a few percent of the purchase price. It doesn't cost that much to do it, just so long as you don't allow it to spiral out of control.
I realize that monthly payments in full are reported -- everything is -- but it isn't quite the same thing from the creditor's standpoint.
If you use a department store card for a couple of purchases in a given month, don't add to it thereafter before paying it off in full, paying interest for just a couple of months, then it amounts to a few percent of the purchase price. It doesn't cost that much to do it, just so long as you don't allow it to spiral out of control.
Dec 23rd 2008, 6:31 am
#25
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: WTF.... I just got credit!
However, carrying a balance of some amount, serviced with payments that exceed the minimum payment, demonstrates an ability to borrow and repay. Creditors like to see the borrowing and the repayment, as it gives them the comfort that you will repeat the behavior with them.
Dec 23rd 2008, 6:35 am
#26
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
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Re: WTF.... I just got credit!
That's what I said. It's not wise to max out credit lines or to make only minimum payments.
However, carrying a balance of some amount, serviced with payments that exceed the minimum payment, demonstrates an ability to borrow and repay. Creditors like to see the borrowing and the repayment, as it gives them the comfort that you will repeat the behavior with them.
However, carrying a balance of some amount, serviced with payments that exceed the minimum payment, demonstrates an ability to borrow and repay. Creditors like to see the borrowing and the repayment, as it gives them the comfort that you will repeat the behavior with them.
Dec 23rd 2008, 6:50 am
#27
Not here much
Joined: Jan 2005
Location: Highland Park, NJ
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Re: WTF.... I just got credit!
That's what I said. It's not wise to max out credit lines or to make only minimum payments.
However, carrying a balance of some amount, serviced with payments that exceed the minimum payment, demonstrates an ability to borrow and repay. Creditors like to see the borrowing and the repayment, as it gives them the comfort that you will repeat the behavior with them.
However, carrying a balance of some amount, serviced with payments that exceed the minimum payment, demonstrates an ability to borrow and repay. Creditors like to see the borrowing and the repayment, as it gives them the comfort that you will repeat the behavior with them.
I recalled a previous thread where this was discussed also: http://britishexpats.com/forum/showthread.php?t=489280
Dec 23rd 2008, 7:10 am
#28
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Joined: Feb 2006
Location: Maryland
Posts: 667
Re: WTF.... I just got credit!
What Giantaxe and I are saying is that you do not need to carry a balance (carrying a balance means not paying off in full).
I recalled a previous thread where this was discussed also: http://britishexpats.com/forum/showthread.php?t=489280
I recalled a previous thread where this was discussed also: http://britishexpats.com/forum/showthread.php?t=489280
But just to reiterate your score is made up of only things in your credit report. There is nothing on there to indicate whether you have paid off in full or have paid the minium. Credit card companies generally report your balance when your bill comes out - so even though I pay mine off in full every month I always get a balance reported to the agencies.
The only difference it could make is that to that specific lender they may see you as more profitable (which could lead to higher limits with them), or they may see you as a higher risk (lower limits). Apart from that unknown all you are doing by leaving a balance on the card is incurring pointless interest charges.
Dec 23rd 2008, 7:13 am
#29
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: WTF.... I just got credit!
What Giantaxe and I are saying is that you do not need to carry a balance (carrying a balance means not paying off in full).
I recalled a previous thread where this was discussed also: http://britishexpats.com/forum/showthread.php?t=489280
I recalled a previous thread where this was discussed also: http://britishexpats.com/forum/showthread.php?t=489280
If the OP pays the bill in full, and proceeds to carry the card with no subsequent activity, that card is doing nothing to improve her FICO score. You need usage and repayments to get a FICO score.
Carrying a low balance helps to generate a FICO score. Not a high balance, and certainly not a maximum balance, as those indicate that the risk threshold is too high, but a low balance. It shows the ability to service a card and repay it.
You can build a credit record without balances, but it takes longer. Paying off cards keeps your balances too low, which means that you aren't generating much of a history.
This does not mean that you should go into hock and indulge in credit madness, but it helps to know that carrying small balances for short periods will help your FICO. With the tight credit markets that we have now, it is important to take this into account.
Dec 23rd 2008, 7:17 am
#30
Not here much
Joined: Jan 2005
Location: Highland Park, NJ
Posts: 2,452
Re: WTF.... I just got credit!
I understand your point, and I am disagreeing with it.
If the OP pays the bill in full, and proceeds to carry the card with no subsequent activity, that card is doing nothing to improve her FICO score. You need usage and repayments to get a FICO score.
Carrying a low balance helps to generate a FICO score. Not a high balance, and certainly not a maximum balance, as those indicate that the risk threshold is too high, but a low balance. It shows the ability to service a card and repay it.
You can build a credit record without balances, but it takes longer. Paying off cards keeps your balances too low, which means that you aren't generating much of a history.
This does not mean that you should go into hock and indulge in credit madness, but it helps to know that carrying small balances for short periods will help your FICO. With the tight credit markets that we have now, it is important to take this into account.
If the OP pays the bill in full, and proceeds to carry the card with no subsequent activity, that card is doing nothing to improve her FICO score. You need usage and repayments to get a FICO score.
Carrying a low balance helps to generate a FICO score. Not a high balance, and certainly not a maximum balance, as those indicate that the risk threshold is too high, but a low balance. It shows the ability to service a card and repay it.
You can build a credit record without balances, but it takes longer. Paying off cards keeps your balances too low, which means that you aren't generating much of a history.
This does not mean that you should go into hock and indulge in credit madness, but it helps to know that carrying small balances for short periods will help your FICO. With the tight credit markets that we have now, it is important to take this into account.
