Hello atkruse-ga,
You?ve posed an interesting question that has ramifications you may
not have considered. Getting your first credit card when you don?t
have an established credit history may be more difficult than you
anticipated. Having no credit history is considered as detrimental to
your credit application as a bad credit history. The answers to your
four questions will depend on your situation regarding your credit
history.
I?ve found several articles that provide step-by-step instructions for
getting your first credit card. Your options may be limited depending
on your situation.
Let?s review the process:
http://www.kiplinger.com/basics/managing/cash/firstcc.htm
Your First Credit Card
Credit card issuers can't seem to deal plastic fast enough to college
students with no credit history and no income. It's estimated that
more than two-thirds of college students have credit cards because
banks and other issuers are willing to gamble that parents will bail
out their kids if they get into trouble. But if you're among the
one-third of students who resist the pressure to get a card while in
school, once you graduate you may find that you're considered as risky
a credit prospect as Bonnie or Clyde.
Winning strategies
-- Start by checking copies of your credit report.
-- Apply first at the bank or credit union where you have a checking
or savings account.
-- Build a credit history over several months with a department-store
or gasoline card
-- Get a small bank loan, as long as your payments are reported to
the credit bureaus.
-- Don't shop for several cards at the same time.
-- One of the fastest ways to get credit is to apply for a secured card
-- Find out how the secured card will be reported to the credit bureaus.
-- Be careful about fees for the card
***** This article explains how you should approach getting a credit
card. I will take those suggestions and apply them to your situation.
1) Get a copy of your credit report.
Credit card and mortgage payments are regularly reported to the three
credit bureaus (Equifax, 888-532-0179; Trans Union, 800-888-4213; and
Experian, 888-397-3742), but most consumer payments -- including rent,
insurance and even student loans -- are not, unless there's a problem.
http://www.equifax.com/
http://www.transunion.com/
http://www.experian.com/
***** How you will be able to proceed depends on what is shown on your
credit report. If you don?t have a credit history you will have to
take the following extra steps. If you have a good credit report, you
can apply for a credit card anywhere and you can use your own criteria
for choosing the credit card issuer. I will explain the following
steps assuming that you don?t have a credit history.
2) -- Apply first at the bank or credit union where you have a
checking or savings account.
***** You mention that you have $10,000 in student loans and a full
time job. You don?t mention your checking or savings accounts and how
long you?ve been employed. I assume that you have a checking account.
It may be easiest to get a credit card from the same bank. If you are
a member of a credit union through your employer or through membership
in an organization be sure to explore getting their credit card. They
may be more willing to give you a card if you have direct deposit of
your pay check and agree to automatic payment from your bank account
to the credit card account.
If you can?t get a credit card from your bank or credit union move on
to the next step.
3) Build a credit history over several months with a department-store
or gasoline card.
***** Store cards are usually easier to get than credit cards. Don?t
worry too much about interest rates if you plan to pay the bill in
full every month. The important task will be to use the credit card
and then demonstrate regular timely payments.
4) Get a small bank loan, as long as your payments are reported to the
credit bureaus.
***** I assume that your student loans are not showing up on your
credit report. If you need to use this option to help establish
credit, apply for a loan with your current banks or credit unions.
This may be against your principles if you like to pay with cash, but
you will have to do it if you are to get a credit card.
5) Don't shop for several cards at the same time.
***** Apply for only one card at a time because too many requests for
credit reports from the banks where you apply can count against you.
6) One of the fastest ways to get credit is to apply for a secured card
***** If you can?t get a credit card using the previously cited
methods, apply for a secured credit card from you bank. In effect, you
are posting your own money as a guarantee of payment. Since you?ve
always paid your bills there should be no danger in doing this and you
will be able to develop a payment record. Be sure that the secured
card is shown as unsecured for credit reporting purposes. If you?re
getting it from your bank, this should not be a problem.
Below are some additional articles discussing how to establish credit
if you don?t have a credit history.
http://www.credit-cards-s.com/doc_establish.asp
How to Build A Credit History and Establish Credit
Building a good credit history is important. If you have no reported
credit history, it may take time to establish your first credit
account. This problem affects young people just beginning careers as
well as older people who have never used credit. It also affects
divorced or widowed women who shared credit accounts that were
reported only in the husband's name.
-------------------------------------------------
http://financialplan.about.com/library/weekly/aa042303a.htm
No Credit? No Problem!
A secured credit card is not the only way to establish credit
If you've never had credit in your own name, it can be difficult to
get a car loan or credit card. Having no credit history can be as much
of a problem as having a bad credit history. Students, other young
peole, and newly divorced or widowed women who have always obtained
credit jointly with their husbands often find themselves in this
situation. It seems like a vicious circle: you can't get credit
because you've never had credit, but you've never had credit because
you can't get credit. What's a person to do?
***** This article summarizes most of the same points as the Kiplinger article.
-------------------------------------------------
http://www.ftc.gov/bcp/menu-credit.htm
Consumer Information -- Credit
***** This is an excellent list of documents addressing every aspect
of getting and using credit.
http://www.ftc.gov/bcp/conline/pubs/credit/choose.htm
http://www.ftc.gov/bcp/conline/pubs/credit/choose.pdf
Choosing and Using Credit Cards
Facts for Consumers
***** This is a four-page report telling you what to look for in a
credit card and explaining your rights.
-------------------------------------------------
Let?s review where we stand regarding your questions in light of the
above information.
1. The card carries some type of insurance for auto rentals.
***** Almost all major credit cards carry such insurance and if you
get a card from your bank it will probably have it.
2. I will be approved and receive my card within 1 month of applying.
***** This is not easy to guess. I suggest that when you apply at your
bank you have with you a copy of your credit report, recent pay stubs
and a record of the payments you?ve been making on your student loan
to help convince them.
3. Appropriate for my credit history--I have a full time job, no
credit problems/delinquency in my past, and I have approx. $10,000 in
student loans which I have made regular payments on for the last two
years.
***** The discussion about getting a card with no credit history all
apply to this question. Everything depends on how you answered the
questions above.
4. I will not incur excessive interest or fees if I pay my balance at
least once a month.
***** If you?re getting a card from your current bank they should not
charge you excessive application fees. If you plan to pay your account
in full every month, you will not incur interest charges. If you plan
on carrying a balance, be sure to check all the conditions attached to
the card.
I hope that the information I?ve provided will help you with getting
your first credit card. I know that the questions I?ve raised about
possible difficulties might be distressing. Please don?t hesitate to
ask for clarification if any of the information I?ve provided isn?t
clear.
Best wishes for getting your card without a hitch.
~ czh ~
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