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Credit Card Debt And The Interest Only Loan
Here is an example of the system gone wrong: a mortgage loan
that encourages paying off one debt, in order to over extend
yourself with another debt. This is what happens with the
interest only loan and credit card debt. As a borrowing nation,
I...
Credit Card Security Advice
Which of the following is the biggest threat to your credit card security? a) Shopping online with a credit card b) Shopping in a real store with your credit card c) Ordering something over the phone with your credit card The answer may surprise...
Credit Reporting Agencies
Credit reporting agencies maintain electronic records of your credit activities. Today, there are three major national credit bureaus: Equifax, Experian and Trans Union. If you are planning on applying for a loan or credit anytime in the near...
How to Get 'Triple A' Credit in 25 Days.
Good credit is everyone's dream. A wise use of credit can go a long way. It certainly makes certain goals in life (like acquiring business loan from bank) easily attainable.
But the key question remains: "What does it take to achieve 'Triple...
Is Your Website Credit Card Friendly?
Small Business Q&A with Tim Knox In my last column I discussed the process of credit card enabling your brick-and-mortar business. I pointed out that research has shown that accepting credit cards can help increase revenue and enhance cash flow....
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How to establish credit as an immigrant
This article is about establishing credit. I learned it the hard
way.
Spring 1997. I had moved from Germany to the USA around
Christmas and enjoyed my first Southern Californian year. While
I browsed the www, I saw some ads for credit cards, clicked on
them and was thrilled by the nice designs. They were issued by
First USA and I was given a choice of nice pictures of them. I
saw one with a nice winter landscape and wanted to have it.
It was so easy.. type in social security # .. little did I know
what I started ...
Nothing happened and a week later I saw a pretty card that
featured motives from the business world, looked cool, so
applied for that one too.
A few weeks went by and I got two letters saying something like
"insufficient credit history".
I did not really need such a card, because I still had a
Mastercard issued by my bank in Germany. The inconvenience of
that card is that they charge me 1% on all expenses made in a
foreign currency and I have to pay it off from my account back
in Germany.
After getting those two letters, my sports spirit came out, I
went on the web again and had no problem applying again :-)
Another letter came soon.
What had I done wrong? I did not understand it. I had lived in
Germany financially stable and was used.. umm.. to be given a
chance. I knew someone in San Diego who had never had a job in
the entire life but qualified for a card by their bank. I did
own a home in Germany with rental income, I never had had any
problems with banks before.
So I asked my friend who worked back then in a collecting agency
(she has her own finance brokerage business now). She yelled at
me 'how could you be so stupid???'.
* I had my address for 3 months only
* I had my job for 3 months only
* there was no record what I had done before and where I lived
before
* I had applied for several cards within short time
'In other words', she told me, 'everything is wrong
with you. You are bad credit. Yuck, will I catch that over the
phone line?'
What is important?
* Stability (same job and address over years)
Difficult for immigrants.
* Regular payments towards existing creditors
Well, I had none. My 4 successful phone bill payments did not
count. Since nobody would lend me money, I figured, how could I
have creditors?
My friend recommended me to get a Target (department store) card
and wait before I reapplied for a regular credit card.
I followed her advice and Target indeed qualified me for a $200
line. I forgot about the cards for a few months, since I was
doing fine without one. I used my
ATM card all the time.. no
problems.
More than half a year later I wanted to purchase airline tickets
online and was to cheap to give my German bank that 1% fee for
currency exchange. So I re-applied... did not work. My friend
had not told me that I actually had to use that department store
card . So here comes my big wisdom of 1997:
* You need to BORROW FIRST to be respected by a bank
My friend then told me to get a Secured credit card
I did this with my local credit union. They agreed with my
friend's statements that this would help me build credit. I
deposited $500 and got a credit line of $500. My friend told me
about secured cards that have a 1:2 or a 1:3 ratio. (1:3 means
that if you deposit $500, your credit line is $1500.)
I did not really care that much and used the card frequently.
Less than a year later, I applied for an unsecured card (www
again) and got approved.
End of story.
Here is some common sense
* do not bounce checks
* do not make late payments (phone, utilities). They will
report if you are a bad customer, but they will not report, if
you are a good customer.
* do not apply for credit frequently. It makes you look
desperate. This includes applications at x.com. Basically
everybody who requests your social security number is suspicious.
* do purchase things on payments.
I hate this advice! Upon arrival in California, I had bought a
12-year old car and paid cash. Big mistake. Buying a car is a
good way to get a creditor.
* Know that Discover card is useless to build credit.
Like utilities, they will report to the agency only the bad
customers but not the good ones.
A list of creditors for the beginner
* secured credit card - this worked best for me. It has a real
value.
* department store card
no deposit needed, limited use. (I did not visit that store very
often)
* gasoline charge cards
easier to get than real credit cards and useful.
* buy your car on payments
I don't know whether that dealer would have sold me on payments,
but for immigrants who need a car anyway, it's worth a try.
Good luck!
About the author:
Mr. Tiemann was born and grew up in Western Germany, where he
got a masters degree in Computer Science in 1991. In 1996 Mr.
Tiemann moved to Silicon Valley to the roots of the internet
revolution . This article reflects his personal experience as an
immigrant with America financial system. You can read more of
his articles on Personal Finances at his web site:
http://www.delphifaq.com/outside_the_cube_finances.htm
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