sat, november 6, 1999
Use gas, department store cards to establish credit
Tribune Media Services
Last week, I wrote about how easy it is to get credit I today, with college students being solicited with tempting offers to go into debt.
Here's the other side the coin:
Q: How do I establish credit if I can't get a credit card?
I am a female in my 20s, college educated, have worked at the same place more than five years, have sufficient income, a checking and a savings account. I paid cash for my car. I purchase through catalogs and pay by check.
My mother has a serious illness, so I live at home, which has enabled me to save. I wish to vacation in the near future and establish credit to buy a home. I need a credit card. I get turned down because of no credit history. So how do I get credit?
I have recently seen where 4-year-olds and dogs have received offers for credit cards. People With foreclosures and bankruptcies get credit cards. Why not me?
A: I can sympathize with your problem because I was almost 40 before I got approved for my first credit card. I was rejected three times for the same reason no credit history because I didn't owe anybody anything, and in one case I even had a mortgage paid off.
You probably would have no problem if you could go back in time and enroll in college again.
"At college, the major card issuers are giving out applications right on campus," said Pelt Arena, director of education for the non-profit Consumer Credit Counseling Service of South Florida.
But now that you've graduated, the card issuers don't want you because you've paid for everything with cash. In their twisted minds, you have not shown you can handle money.
"It appeared this young woman is being penalized because she was trying to be responsible," Arena said.
But there are things you can do.
Arena suggests you apply for a gasoline card, which is much easier to get than a major credit card. Or when you go to a department store, apply for that store's credit card and charge your purchase. (As a bonus, many stores will give you a discount on your first purchase if you use their card.)
"If she just charges it, it will establish a credit history," Arena said. You don't have to carry a balance to do so, and Arena strongly advises that you pay your bill in full when it comes.
Another possibility is to apply for a "secured" card at the bank where you have your checking or savings account.
A secured card looks like an ordinary credit card, but your credit line is backed or secured by the money you have on deposit. While often not good deals - many secured cards charge high annual fees - they at least let you establish a credit history.
Arena also recommends that, if you have not already done so, you try to get some of the household bills, under your name rather than your mother's.
By the way, you do not need to have a credit card to get approved for a mortgage, Arena said, although a history of making other payments on time, including rent and utilities, is important. In fact, Georgina and I were approved for our first mortgage before we, were approved for our first credit card.