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Rant: Credit....

Started by Perfunction Dec 16, 2004 at 4:06 PM 40 replies 4.9k views

Original Post

Dec 16, 2004 at 4:06 PM

UGH! I'm getting so god damn tired of being rejected for credit because I don't have credit established. Our world has become so retarded...You can't get a job without experience and you can't get credit without credit. I'm 20 years old making $24-31k a year and I can't even get a car loan for $6000...SIX THOASAND DOLLARS. In one year I make four times the amount that I am requesting to pay back in three. They keep telling me that I need a cosigner but I can't get a cosigner. My only two options are my grandparents (who got mad when I went to their house and ate some of their soup while I was sick) and my girlfriend's dad. The worst part is that your credit affects all important purchases...your house, your car, engagement rings, etc. Anyone else get irritated with all this shit?

Tron3k

Dec 16, 2004 at 4:15 PM

So I guess your girlfriend can't cosign it? [grin]

fraKtal

Dec 16, 2004 at 4:17 PM

yes. very annoying.

Ysaneya

Dec 16, 2004 at 4:19 PM

Maybe a stupid question, but if you make that much in a year, why do you need credit at all ?

kSquared

Dec 16, 2004 at 4:21 PM

Quote:
Original post by Perfunction
UGH! I'm getting so god damn tired of being rejected for credit because I don't have credit established. Our world has become so retarded...You can't get a job without experience and you can't get credit without credit. I'm 20 years old making $24-31k a year and I can't even get a car loan for $6000...SIX THOASAND DOLLARS. In one year I make four times the amount that I am requesting to pay back in three. They keep telling me that I need a cosigner but I can't get a cosigner. My only two options are my grandparents (who got mad when I went to their house and ate some of their soup while I was sick) and my girlfriend's dad.

Unfortunately, I'm a year younger and in the same boat as you. I asked my banker what kinds of things I should do to improve my credit rating, since it was a piddly 645 (which is on the somewhat low end). His e-mail back to me was:

Quote:
Establish an account with a bank. Make regular deposits and withdrawals. Don't miss utility or rent payments. Get a low-limit or student-offered credit card and make a few minor purchases that you can easily pay back in under a month (groceries, video rentals, that kind of thing). Bounced checks and overdrafts don't hurt you too much, but if you get more than 2 or 3 occurrences in a year, you might get nudged up a risk category, so don't do that either.

Bankruptcy, liens, foreclosures, repossession, or collection referrals cause crippling damage to your credit rating. Fortunately, these things only happen when you've really screwed up, so you should have plenty of warning by that time.

I followed his advice, and opened a low-limit credit card ($500 on my Bank of America account, since that's where I have my student checking account). I also opened a $1,000 line of credit at eTrade (where I do my stock trades). Six months later, my rating's jumped to 695, so I guess it really does work.

Also, you may want to make sure that your credit report is accurate. If you are turned down for credit, you are allowed a free credit report by law. The credit companies make mistakes too (frequently), so it can't hurt to double-check.

Perfunction

Dec 16, 2004 at 4:23 PM

Quote:
Original post by Ysaneya
Maybe a stupid question, but if you make that much in a year, why do you need credit at all ?

well you can't straight up buy a house or a nice car with that kind of money. many high class apartment/towne home complexes require a high credit rating as well.

kSquared

Dec 16, 2004 at 4:24 PM

Quote:
Original post by Ysaneya
Maybe a stupid question, but if you make that much in a year, why do you need credit at all ?

This is the reason banks exist! Loaners can spread out payments over time instead of having to starve themselves for weeks to save up the principal they need to make a purchase. Yum, capitalism.

Perfunction

Dec 16, 2004 at 4:27 PM

Quote:
Original post by kSquared
Quote:
Original post by Perfunction
UGH! I'm getting so god damn tired of being rejected for credit because I don't have credit established. Our world has become so retarded...You can't get a job without experience and you can't get credit without credit. I'm 20 years old making $24-31k a year and I can't even get a car loan for $6000...SIX THOASAND DOLLARS. In one year I make four times the amount that I am requesting to pay back in three. They keep telling me that I need a cosigner but I can't get a cosigner. My only two options are my grandparents (who got mad when I went to their house and ate some of their soup while I was sick) and my girlfriend's dad.

Unfortunately, I'm a year younger and in the same boat as you. I asked my banker what kinds of things I should do to improve my credit rating, since it was a piddly 645 (which is on the somewhat low end). His e-mail back to me was:

Quote:
Establish an account with a bank. Make regular deposits and withdrawals. Don't miss utility or rent payments. Get a low-limit or student-offered credit card and make a few minor purchases that you can easily pay back in under a month (groceries, video rentals, that kind of thing). Bounced checks and overdrafts don't hurt you too much, but if you get more than 2 or 3 occurrences in a year, you might get nudged up a risk category, so don't do that either.

Bankruptcy, liens, foreclosures, repossession, or collection referrals cause crippling damage to your credit rating. Fortunately, these things only happen when you've really screwed up, so you should have plenty of warning by that time.

I followed his advice, and opened a low-limit credit card ($500 on my Bank of America account, since that's where I have my student checking account). I also opened a $1,000 line of credit at eTrade (where I do my stock trades). Six months later, my rating's jumped to 695, so I guess it really does work.

Also, you may want to make sure that your credit report is accurate. If you are turned down for credit, you are allowed a free credit report by law. The credit companies make mistakes too (frequently), so it can't hurt to double-check.

well i've only had a few returned checks but before i got this job my bank hit me with plenty of overdraft fees. my rating is a 631 and i have a $500 target card and a $300 visa. i usually spend all the money i make as long as the bills get paid but it would probably be wise to start putting some in savings.

Perfunction

Dec 16, 2004 at 4:29 PM

Quote:
Original post by Tron3k
So I guess your girlfriend can't cosign it? [grin]

no she makes almost nothing....her dad on the other hand....maybe i should just ask him to buy me a car :)

terminate

Dec 16, 2004 at 4:31 PM

Quote:
Original post by Ysaneya
Maybe a stupid question, but if you make that much in a year, why do you need credit at all ?

I am in the same boat as the OP, I make around the same amount. Even so, I do have living expenses and simply cannot afford to pay $6000 in one lump sum.
-Evan

The Frugal Gourmet

Dec 16, 2004 at 4:40 PM

When I first got out of college, rent was the trickiest thing to get without credit. Almost everything else can be handled with cash, in our society.. luckily.

tHiSiSbOb

Dec 16, 2004 at 4:46 PM

Very wierd...My brother is 19, has no assets, and has no income, and he has like 10 credit cards (mostly visa, 1 discover). He signed up to get free food, and they accepted him and keep sending him cards with larger and larger limits...Yesterday I ordered my new computer (components) with it.

Perfunction

Dec 16, 2004 at 4:52 PM

Quote:
Original post by tHiSiSbOb
Very wierd...My brother is 19, has no assets, and has no income, and he has like 10 credit cards (mostly visa, 1 discover). He signed up to get free food, and they accepted him and keep sending him cards with larger and larger limits...Yesterday I ordered my new computer (components) with it.

well credit cards are rather easy to get as long as you are willing to deal with their stipulations. i get tons of crappy credit card offers.

kSquared

Dec 16, 2004 at 4:53 PM

Quote:
Original post by tHiSiSbOb
Very wierd...My brother is 19, has no assets, and has no income, and he has like 10 credit cards (mostly visa, 1 discover). He signed up to get free food, and they accepted him and keep sending him cards with larger and larger limits...Yesterday I ordered my new computer (components) with it.

I get offers for credit cards all the time in the mail. Having large amounts of unused balances on your credit cards is a surefire way to shoot bullet holes in your credit rating. Also, if he's in college and your parents are footing the bills, then he's listed as a dependent on their tax returns. The credit card companies take this as assurance that should your brother go a little wacky on his spending, Mommy and Daddy will be there to foot the bills.

tHiSiSbOb

Dec 16, 2004 at 4:58 PM

Quote:
Original post by kSquared
Quote:
Original post by tHiSiSbOb
Very wierd...My brother is 19, has no assets, and has no income, and he has like 10 credit cards (mostly visa, 1 discover). He signed up to get free food, and they accepted him and keep sending him cards with larger and larger limits...Yesterday I ordered my new computer (components) with it.

I get offers for credit cards all the time in the mail. Having large amounts of unused balances on your credit cards is a surefire way to shoot bullet holes in your credit rating. Also, if he's in college and your parents are footing the bills, then he's listed as a dependent on their tax returns. The credit card companies take this as assurance that should your brother go a little wacky on his spending, Mommy and Daddy will be there to foot the bills.

Yea, he's in college. I guess then that the compaines do look to the parents...good thing he doesn't use them. He just keeps them in his room. The only reason he let (wanted, I could have used my parents') me use his card is because he wants to get a credit rating [smile].

Ysaneya

Dec 16, 2004 at 4:58 PM

As an European, all of that sounds strange. What's that "credit rating"? First time i hear of it.

In Europe, you phone to your bank and you usually get a credit of a few thousand euros the next day, or even the same day. They accept pretty much everybody. They don't care what your financial situation is or if you can pay. That's a big problem for some people who don't know how to stop and get credit after credit after credit, and end up ruined for the rest of their lives.

I absolutely hate credit. I'm not making much more than you but i'm saving, and if today i wanted to buy a 6000$ car, i'd be able to, without getting a credit. Although i do understand credit is necessary for really big sums, like to buy a house.

Y.

Eelco

Dec 16, 2004 at 5:02 PM

i dont understand shit of this.

i didnt even know something llike a credit rating existed. does it outside the US?

anyway i dont like loaning money anyways, unless its for a house. anything else can be bought with saved up money if you dont have a hole in your hand.

then again i might be an exception, where other students are in the red all the time, i already get uncomforable at the thought of not having enough money to pay for the next two months of living.

in the end i cant help but think youre the one getting fucked lending money. someone is fiscally better off by it, and if its not the bank, its not going to be around for long. its nothing but making money off peoples impatience.

Salsa

Dec 16, 2004 at 5:09 PM

Quote:
Original post by tHiSiSbOb
Very wierd...My brother is 19, has no assets, and has no income, and he has like 10 credit cards (mostly visa, 1 discover).

That's generally a no no with maintaining good credit. You should be limiting your credit cards to no more than five or so.

jollyjeffers

Dec 16, 2004 at 5:09 PM

Quote:
i didnt even know something llike a credit rating existed. does it outside the US?

I'm not 100% if its the same as what you lot have in the states, but we have something similar in the UK. All I know is that whatever it is can have the same effect - that is, financiers can use it to judge what sort of deal they can give you (if any).

Quote:
then again i might be an exception, where other students are in the red all the time, i already get uncomforable at the thought of not having enough money to pay for the next two months of living.

I'm completely financially screwed at the moment, but luckily not in a way that'd show up on my credit rating.

Basically, I'm being paid a salary, yet manage to spend all of it (if not a little more) each month, and already being in debt as a student my bank balance fluctuates between £1500 and £1300 overdrawn each month. I also owe the government over £8000 in student loans.

Doesn't stop me having fun / doing what I want tho [grin]

Jack

kSquared

Dec 16, 2004 at 5:29 PM

You can go here to find out an estimation of your FICO score (the credit rating system most commonly used by US banks) by answering a few questions about your habits. To see how much a difference of a few FICO points make, check this chart:

Payments on $150,000, 30-year FRM (fixed rate mortgage):FICO Score       Interest rate    Monthly payment--------------   -------------    ---------------> 720 (Best)     5.65%                 $865> 700            5.77%                 $877> 675            6.31%                 $929> 620 (Risky)    7.46%                $1045> 560            8.53%                $1157< 500 (Worst)    9.29%                $1238

The person with a 500 FICO rating (the worst possible category) pays three times the $150,000 principal back in payments, for a total of $445,680. The person with a 700 rating (more than reasonable for most people who keep their credit in shape) gets to borrow that same $150,000 for only $311,400.

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