Antoinette is a twenty-three year old graduate student in Ohio. She will graduate in May 2015 and begin to live her life, for the first time, not as a student. Fortunate for her, and unlike many graduates today, she won’t be saddled with student loan debt. Antoinette received full scholarships to pay for both undergraduate and graduate school. Unfortunately, she has not established any credit. Most lenders consider having no credit is just like having bad credit because they cannot view a borrower’s payment history. Nonetheless, there is a way for Antoinette to establish credit to prepare her for the next step in her life. I recently interviewed Antoinette to discuss her credit seeking adventure: A secured credit card.
TEAM: Why did you want to get a secured credit card?
Antoinette: I wanted to get a secured credit card because I wasn’t getting approved for any other credit or charge card. I think it would be a good starting point for me, who is learning how to establish credit, since I have no prior credit history. This seems like a good way to transition into an unsecured card once I have a better understanding of how the process works.
A secured credit card is not a store credit card, which should typically be easy for most people. But because Antoinette had no credit history she couldn’t get approved. The credit card laws are changing and getting stricter so lenders limit who gets approved.
TEAM: What do you want to get out of having a secured credit card?
Antoinette: I want to establish a good credit score; it’s as simple as that. I want to establish credit so that I can set myself up for when I am ready to make big purchases. It would be more difficult to try to purchase a car or rent an apartment, without a cosigner, so I’d rather have some kind of credit history because it will make my transition from student to full-time professional easier.
TEAM: What questions did you ask the representative at the bank?
Antoinette: Before I went into the bank, I went online to the PNC chat and inquired about a secured loan. The gentleman sent the credit card contract over email. I did some research before I went into the bank so that I had a basic knowledge of what I was getting myself into. It was good to have access to that information prior to applying for the secured credit card.
The lady at the bank was really nice. She explained the policy and procedures but didn’t really walk me through what the contract meant. So, I read the contract again and had her clarify what the contract said. Most of my questions were clarifying legal terms as well as just walking me through explaining the percentage rates and what it means. I wanted her to explain it out loud so that I was sure that I understood the details of the contract and what I was getting myself into.
TEAM: How did you feel about the process?
Antoinette: When I was at the bank, I felt a little nervous like wow, I’m really doing this and it’s really happening. I filled out the paperwork and was thinking this is the real deal because I had to sign my name. When I left, I was relieved because I was trying to convince myself that it was a good thing. But when I was in the moment I couldn’t believe I was doing it but I knew I needed to do it so that super-seeded any weird feelings I had. I felt those feelings were natural and I knew that this would do more good than harm. So, I got over those feelings and I look forward to the benefits of establishing good credit.
Antoinette’s Advice: Just do it! Take the plunge and be on your way to establishing good credit.
There you have it! Establishing credit isn’t hard but takes time and discipline. Understanding how your credit score is calculated is an important step in helping you establish a good credit history.
Be in the know before you owe!