Hey mamas! I have a question regarding credit scores and was wondering if anyone can help me out it with it.
So I've never had a credit card and have never wanted one for many reasons. I've done just fine saving up for things I need/want and never needed a line of credit. Well I am looking into buying a house and so last month talked to a mortgage counselor about establishing credit and was told to open up three credit cards and begin charging them with little purchases. I signed up for one right then even though it had a horrible interest rate (against my better judgement) and went on. Well it got in the main and I had found better interest rates through my bank at that point and so I cut up the new card, never activated it or anything, and then let it be. So Capitol One called me today and said they could help activate it, etc. I told them I'd just like to go ahead and cancel the card and so he did. Then he said they would report to the credit bureaus in one month and I no longer have an account.
I am so bummed. I had no idea that that would impact my credit. I never even activated the card. All they had is my email address and address and a little bit of info about me. I'm so pissed that I have never used a credit card in my life, saved up thousands in cash and now have bad credit. While I know I should have educated myself a bit more about them, I feel so screwed! So I guess I'm wondering if anybody knows if anything can be done to change this situation, or perhaps how badly it will affect my score. Any information is greatly appreciated, thanks!!
What I do with my credit cards (well, I only have 1 now, since I don't need to 'create' good credit anymore) is charge all my routine purchases -- food, gas, phone bill, etc. -- and then pay it off completely every month. I don't believe you have to carry a balance (and pay interest) to develop good credit -- at least, I've never paid any interest or carried a balance, and had a perfect credit score when I bought my house. Since you mention you are pretty good with money, hopefully paying it off won't be too hard.
Another thing to know about Capital One (unless they've changed it in recent years) is that they only report your credit use related to the max amount you've charged, NOT your credit limit. Say you have $1000 limit and charge about $100 -- most other credit card companies will say you've used 100/1000 (1/10th) of your available credit. Capital One will take the most you've ever charged (say, $200) and use that number, so 100/200 or 1/2 of your available credit, so it looks like you are over-using the credit, if that makes sense. I can explain better when I'm not rushed if you need me to clarify lol. Anyway, so what I do is every once in a while charge up the card (make a couple of large purchases or something) to get that 'available credit' number up there & improve my percentages.
Wow, I'm exhausted, I really hope that made *a little* sense....
We're in the middle of this as my dh is Canadian and has zero US credit. Unfortunately credit scores don't cross the border! We were advised to open three types of credit, one of those is recommended to be a "store" credit card, not a big name like Visa or Mastercard. I hate the idea of a store credit card, but whatever. Actually, I hate the idea of credit cards in general! We've lived in the US for a year now and purposely didn't open any US credit cards so we wouldn't worry about creating debt. But yes, we tried to buy a house this spring and apparently now we need to play the building credit game!
What I'd suggest is getting some sort of a gas card. That's an easy and routine purchase that you're never going to overspend on. Then some sort of bank card. And then some sort of store card (that is, if your gas card is a big name like a Chevron Visa. If it's just a Chevron card, that covers your "store" card). Good luck!
OP- interest rates only matter if you plan on carrying a balance, if you pay the bill in full every month that rate has no bearing on your account!
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I agree & disagree. Yes if you don't have a balance it has no effect, but JIC some emergency happens & you don't have enough in savings it is still better to have a lower interest card.
OP - once you've established some credit you can ask that they lower the interest rate.
Dave Ramsey claims that it is still possible to find people who do manual underwriting and look at much more than your credit score to determine creditworthiness. You might try finding someone through his website, instead of playing the credit card game.