FAQ about credit score,credit limit and credit card (09/16/2009)
How to get my first credit card ?
For the people who has a poor credit score or don't establish his/her credit history yet, it is hard to apply for the loans or new credit cards. Actually there are still some opportunities for these people to improve their credit scores.
1. The shopping credit cards from the department stores or shopping malls
Usually, the department stores and shopping malls will encourage their customers to apply for their own credit cards. Although these credit cards can only be used for shopping in these places, they are still the real credit cards, which can help you to improve your credit score or establish your credit history. These credit cards don't have a high credit limit and they are not difficult to get because of this low credit limit. (the low credit limit means low risks for the companies) You can use these shopping credit cards to gain a better credit score by always paying your credit card bills on time. Once your credit score is improved, you will have much more chances to get loans and other good credit cards.
2. Get your first credit card by opening a checking or saving account first
In the U.S., the big banks have many branches in the big cities. These bank branches provide a lot of services and will love people to open checking or saving accounts in them. They often come to the colleges to do the promotions. For the students who don't establish their credit history yet, this is a good chance for them to get their first credit cards. Because the purpose of these banks is to absorb deposits, you can open a checking or saving account first. This will help you to get your first credit card. These credit cards will not have a high credit limit of course. But they are still a good choice for the students or people with poor credit history to improve their credti scores. If you are a college student, usually, the local banks will do some promotions at the beginning of each semester. This will be your good time to get your first credit card.
3. The credit cards for students
Now the banks and credit card companies pay a lot of attention to the student credit card market. They have many student credit cards now. For those college students, you can find the materials for the student credit card application in the bulletin board of your school. These materials will help your to get your first credit card. Usually, you will need to send your student ID copy, registration certificate copy, tuition bill copy, etc to the banks or credit card companies. These will prove your pupilage and you will have a good chance to get your student credit card from them.
4. Find a cosigner
Why is it hard to get a new credit card for the people who has a poor credit score or don't establish his/her credit history yet? Because it is risky to give them credit cards when the banks and credit card companies are not sure whether they will pay their credit card bills on time or not. In this case, you will get your new credit card much easier if you can find a cosigner who has a very good credit history and credit score. He/She will be responsible to pay your credit card bills if you don't do it on time. You can use this method to establish your own credit history or repair your credit record. When your credit score is better, you can apply for your own credit cards (without cosinger) then.
5. The pre-approved credit card
Sometimes, you will find some pre-approved credti card application materials in your mail box. Because they are pre-approved credit cards, you will get them for sure if you submit your application. But these offers are usually sent to the people with good credit history and credit scores in my point of view. I never receive these kind of offers when my credit history is still very short. Now my credit score are very high and I receive these kind of pre-approved credit card offers every week.
6. Credit card from the credit union
My first credit card is a Mastercard from a credit union. You will not be able to get a very good credit card from them, like 5% cash back, $ 100 bonus, travel insurance, etc. But these credit union credit cards are not difficult to get and they can be your good choice to establish your credit history or improve credit score. By the way, the credti limit of these credti cards are very low. I only get a $ 500 credit limit for my first credit card. Now I have a $ 6000 credit limit discover credit card. But my request for the credit limit increase of my first credit is still rejected by the credit union. :-)
FAQ about credit score and credit limit
1. How many credit cards should I have?
The number of your credit cards has no impact on your credit score. You can still keep those credit cards that you don't want to use. If you cancel these credit cards, the length of your credit card history will be affected. This will have a negative impact on your credit score.
2. Is the credit limit the higher the better (for the credit score)?
Generally, if a credit card have a high credit limit, its "use of credit" will be low. This will have a positive impact on your credit score. Another good thing about the high credit limit is that you can get a better credit limit if your average credit limit (from your credit report) is high when applying for a new credit card. In the old days, the banks did not like loan applicants with a high credit limit, especially when you applied for the housing mortgage. But they do not care about this issue now.
3. How to raise my credit limit?
(1). You can call your bank or credit card company to ask for an increase on your credit limit every 6 months. (you will have a better chance to get an increase if you just returned a big amount of money recently)
(2). You can ask for an credit limit increase if you are planning to buy big stuffs (like computer, DC, DV, etc).
(3). Use the credit cards from MBNA, AMEX, CHASE or PROVIDIAN. These credit card companies are generous with their credit limit.
4. Do I get a inquiry in my credit report if I ask for a credit limit increase?
You can ask your credit card companies' customer representatives about this issue. Generally, If it is a pre-approved application, there will be no inquiry to your credit report. If you will need to fill out lots of forms, this credit limit increase application will probably put a inquiry to your credit report.
5. I don't spend a lot of money with my credit cards. How to produce some balance in my credit cards' bills?
(1). You can help your friends to buy big stuffs. (with your credit cards)
(2). Pay your tents with the balance transfer checks (from the credit cards with no transaction fee).
(3). Do some balance transfer (BT) if there is no transaction fee for your credit cards' BT service.
(4). Pay minimum during the "0% APR on purchase" period.
6. What is the best rate for "balance / credit limit" ?
Actually, what matters for your credit score is the "total balance / total credit limit". 1-2% is the best rate for you to improve your credit score. If you use more than 50% of one credit card's credit limit, this will have a negative impact on your credit score. If you are planning to apply for the housing loan or car loan recently, you can increase your credit score by decrease your balance of your credit cards. Your credit score can be improved significantly by controlling this "total balance / total credit limit" rate. In my point of view, the credit score is not that import for you, especially when you are not planning to apply for the housing loan or car loan. You don't need to care about this too much when making purchases. :-)
Can I use America issued debit or credit cards in China ?
As a Chinese graduate student pursuing my Master's Degree in the U.S. , I think I can have a better understanding of how to use the America issued debit or credit card in China. :-)
Lots of traveller have this kind of questions: Can I use America issued debit or credit card ( VISA,Mastercard,American Express,Discover ) in China? How to get cash and make purchases in China?
For most international travellers, they don't have a Chinese credit card. But the Visa and Mastercard credit cards are accepted at most ATMs (with the VISA or Mastercard logos in them) in China. You can get cash from these ATMs in China using your American VISA or Mastercard credit cards. Some Chinese banks also provide this kind of service and you can get cash (U.S. dollars or Chinese RMB) from your Visa or Mastercard credit cards by asking the tellers in these banks. But the fees are a little bit high and you will need to pay attention to this. For making purchases with the Visa or Mastercard credit cards in China, you will need to find the VISA or Mastercard POS machines. Most international hotels and high grade department stores accept the Visa and Mastercard. Technically, these 2 types of credit cards are accepted in China, but in most places of China, the VISA or Mastercard POS machines are not easy to find. Most Chinese retail merchants do not have these specail POS machines, all they got is the China UnionPay POS machines, which do not accept the Ameria issued VISA or Mastercard.
For the Discover credit card, it is much more convinient than Visa and Mastercard in China. China UnionPay is now the partner of Discover and they made a deal which enables the Discover cardholders to make purchases and get ATM cash in China. You can get cash in all the China UnionPay ATMs in China. ( Actually, about 99% of the ATMs in China are run by China UnionPay and this makes the Discover credit cards acceptable in almost all the ATMs in China ) Now China UnionPay has 80,000 ATMs and 365,000 retail merchants in China. For getting cash with the Discover credit cards from the ATM, you will need to pay some fees for this service. But if you wanna make purchases with them, there is no any hidden fees for your purchases in China. Pretty cool, right?
I used my Discover credit card many times in China. It is always working. No any hidden fees even when you use it in the small cities or towns in China. (you will need to pay a 3% foreign transaction fees for Visa or Mastercard credit cards) Some chinese cashiers do not hear about this Discover credit card before, you can just tell them it is a dual currency China UnionPay card. In China, your Discover credit card is the same as the China UnionPay card in making purchases. No differences at all !
One good thing I find out about getting cash in the Chinese ATMs is that we can use the BOA (Bank Of America) debit cards to get ATM cash for free in China. Now the BOA is the partner of the CCB (China Construction Bank) and they made a deal which enables the BOA debit cardholders to get cash (the Chinese RMB) for free in all the CCB's ATMs in China. No hidden fees for this service. For instance, if the exchange rate is 1:7 (1 U.S. dollars=7 Chinese RMB), you will get 7 rmb for every dollar in your BOA debit card account. Although BOA claims that the BOA debit cards are accepted in all the ATMs of the CCB, I found that it is not working in some CCB's ATMs. Some friends of mine got cash successfully from the CCB's ATMs in some small cities or towns of China. But I failed sometimes in some CCB's ATMs in Beijing and Shanghai. Maybe this is because of the differences of these ATMs. The CCB's ATMs are new in the small Chinese cities, but you will probably meet some old ATMs in the big Chinese cities like Beijing and Shanghai. A lot of people think that the old CCB's ATMs is not able to provide this kind of service to the BOA debit cardholders.
For the American Express credit card, it is not widely accepted in China. As I know, you can get cash with the American Express credit card in the Starwood and Ritz Carl Ton's international ATMs. The CITI's ATMs accept this credit card too. Most international hotels and high grade department stores accept this type of credit card in Shanghai and Beijing. But it is not as good as the Visa, Mastercard or Discover in China.
If you wanna make purchases online in China, most Chinese web sites do not accept the Discover credit card. I once bought something with my Chase Visa credit card. But I paid a 3% foreign transaction fees for it.
In summary, if you are planning your China travel, I think you can bring some U.S. dollars in cash. If you need some Chinese RMB, you can get cash with your BOA debit card in most CCB's ATMs (free currency exchange service). For the shopping in China, the best way to make the purchases is through a Discover credit card (no foreign transaction fees).
FAQ about the credit score,credit report
1. Who provides the the credit report services?
There are 3 credit bureaus in the U.S. and they are Equifax, Experian and TransUnion.
Equifax
P.O. Box 105873
Atlanta, GA 30348
(800) 685-1111
Experian (formerly TRW)
P.O. Box 2104
Allen, TX 75013-2104
(888) 397-3742
Trans Union
Consumer Disclosure Center
P.O. Box 1000
Chester, PA 19022
(800) 916-8800 or (800) 888-4213
2. What's the info in the credit report?
(1). Personal information like name, SSN, date of birth, current address, previous addresses, employer, etc.
(2). Credit card, mortgage and loan information like credit card number, credit card status, open date, balance, credit line (credit limit), update date, minimum payment, records of the money return, etc.
(3). Inquiry: (a). Hard inquiry: It is the inquiry from the banks or credit card companies, authorized by you. This kind of inquiry has a negative impact on your credit score. (b). Soft inquiry: When the credit card companies wanna do some promotions, they can run a soft inquiry on your credit report. This type of inquiry has no negative impact on your credit score.
(4). Collection information.
(5). Public records. (bankruptcy, mortgage, frozen assets, decree, etc)
3. Who is interested in my credit report?
Banks and credit card companies, cell phone comapnies, insurance companies, employers, landlords.
4. How do the 3 credit bureaus get the info on my credit report?
You credit report info is provided by these: banks, credit card companies, insurance companies, collection companies, government, court.
5. How long do they keep the info in my credit report?
Usually, it is 7 years.
bankruptcy: 10 years.
>$75000's work: forever.
criminal record: forever.
>$150,000's life insurance: forever.
inquiry: 2 years.
6. How to get my credit report?
If you are rejected when applying for a credit card or loan, you will receive a letter. This letter will tell you how to get your free credit report.
You can also contact the credit bureaus directly.
Online application of the Experian: https://www.experian.com/consumer/cac/01_loginInfo3.htm
7. What can I do if I find something wrong with my credit report?
You can dispute if you find something wrong in your credit report.
8. I did not find anything about the employers and insurance in my credit report, why?
It is possible that your employers or insurance companies do not provide any information to the credit bureaus.
9. How long does it take to update the credit report?
For the inquiry, it is the real-time update. The update speed of other records depends on the related corporations. Usually, the credit card records can be updated every month. If you are planning to get a housing loan or car loan, you'd better start to improve your credit score earlier. Because it takes time to update your credit report and to improve your credit score.
10. What should I do if my personal info is stolen?
1). Call your bank and credit card company.
2). Call the fraud department of the credit bureau to place a fraud alert on your credit file.
3). Close your stolen accounts.
4). File a police report.
5). File your complaint with the FTC, see http://www.consumer.gov/idtheft/
11. What's my credit score?
Currently, the most common credit score is the FICO credit score. It is calculated from the credit report. Because the 3 credit bureaus have different credit reports for you. Your credit score can be different for these 3 credit bureaus.
12. I can not find the credit score from my credit report, why?
You need to purchase your credit score. It is not free.
13. What's a good credit score? ( loan credit score, credit score mortgage )
Usually, the credit score is between 350 and 850. You will have a better chance to get the best offer when applying for the loans if your credit score is very high. For the housing loan, you can get a good offer if your credit score is above 650. For the car loan, it is 720.
14. What affects my credit score?
Negative factors: bankrutcy, collection, default payment, late payment.
Credit history (the longer the better).
Open accounts with balance.
Credit usage (the best ratio of Balance/Credit Limit is 1-2%, >50% is negative)
Inquiry (Hard inquiry will have a negative impact on your credit score, especially the hard inquiry within 6 months)
15. How to improve my credit score?
Pay your bills on time.
16. Is it good for my credit score if I pay minimum (for the statements of your credit cards) every month?
The "balance/credit limit" rate of your credit cards' statements will have some influence on your credit score. If you don't pay off in full on purpose, this may have a positive impact on your credit score. But you will have to pay for the interests if you do so. I will do this to improve my credit score if my credit cards are still in the 0% APR period. :-)
17. Does the credit cards' balance transfer(BT) hurt my credit score?
The "use of credit" will impact your credit score. If you do lots of balance transfer and make your "use of credit" rate too high, this will have a negative impact on your credit score. But this is just a short-term impact and it will disappear after you pay off your balance transfer debt. The good thing about the balance transfer is that you can ask for an increase on your credit limit when you pay off a BT debt. The BT will be helpful for you to get a better credit limit.
18. Does it hurt my credit score if I don't use a credit card for a long time?
No, this will not affect your credit report or credit score. But your credit card company will not be happy about this. :-)
19. Does it hurt my credit score if I have too many bank accounts?
No, there is no info about the savings, checking, money market or CD accounts in your credit report.
20. Can I do a shop around for my housing loan and car loan?
Yes, if you have the same type of inquiries in 14 days. You will only see one inquiry in your credit report. Your credit score will not be affected when applying for a housing loan or car loan if your inquiries are done within 14 days.
21. Does the subsidiary card (credit card) help to build the credit history too?
Yes, the subsidiary card's authorized user can build his/her credit history by using this subsidiary card, even you didn't provide the authorized user's SSN or ITIN number to the credit card company. ( He/she needs to have the SSN or ITIN for sure in order to build his/her credit history. )
22. My credit card's credit limit is too low, how can I raise it?
Your annual salary / income will impact the credit limit you can get from the credit card companies. This is why the students can not get a very good credit limit from them. Some tips here: You can ask to do a big balance transfer when applying for a new credit card. This will help you to get a better credit limit of your new credit card. You can also call your credit card companies to ask for a credit limit increase. But they will refuse to give you an increase if you just use this credit card for 2 or 3 months.
23. Do the merchant credit cards help to improve my credit score too?
Sure, you can get a good credit score if there are plenty of info in your credit report (general credit cards from the banks, merchant credit cards, housing loan, car loan, etc).
24. My credit score and credit report are ruined by the collection company, what can I do to fix it?
There are some methods to fix your credit report and credit score. You can see: InfiniteCredit.com