Friend having trouble obtaining CC

[Bades]

My buddy got denied a credit card at a large bank. He's 24, and has no credit. He has always paid in cash for everything and works his butt off to save his money. He has a full time job at his Dad's family owned business. Problem is he has never had a CC or loan to build credit.

What's the next step? Try a different bank? Co-sign from a parent? He has zero debt too.

Thanks

[kork13]

My buddy got denied a credit card at a large bank.
... ... ...
What's the next step? Try a different bank?

Yup. He should try a local credit union. They tend to be more willing to approve someone for a credit card who hasn't established any credit yet. As long as he can prove his ability to pay, he should have no problem. Besides, credit unions are often easier/more friendly to work with.

[Petunia 100]

He could also try calling the bank which has just turned him down and speaking with a person. They do sometimes change their minds. (I have done this successfully).

[BMEPhDinCO]

A third option would be to get a secured credit card and try again in 6 months, since that'll give it time to report. Building credit is a must - paying interest is not.

[GrimJack]

Your friend needs to know why he was denied a credit card and should ask the bank for their reason(s) - there could be more to it than no credit history. He should get his free credit report; each of the 3 reporting bureaus are required to give one free report per year. It is possible to get a free every 4 months in perpetuity by rotating them.

I agree also with going the credit union route for the stated reasons.

[papa_squat]

I defiitely agree your friend should check their credit history if they haven't already done so just to ensure there's nothing bad on there they're not even aware of. Another option to build credit history other than the credit union suggestion is to get a store credit card. They tend to give them out a little more readily to people without credit, but you have to be just as responsible to pay the bill.

[kork13]

Your friend needs to know why he was denied a credit card and should ask the bank for their reason(s) - there could be more to it than no credit history. He should get his free credit report; each of the 3 reporting bureaus are required to give one free report per year. It is possible to get a free every 4 months in perpetuity by rotating them.

In this specific case (where someone is denied credit), the Fair Credit Reporting Act (FCRA) requires that the denying bank notify the person in writing of why you're denied, and also which credit bureau supplied them your credit report. You are further entitled to receive a free copy of your credit report from that credit bureau (and this one is not counted against the annual limit of one per year per bureau).

Your friend should definitely look into doing that -- it only takes a phone call or letter, and it's worth the minor inconvenience to ensure there's not any mistaken information on his credit report.

[Bades]

Thanks guys, I'll ask him if he got a letter from the bank and to pull a free credit report for more information.

[seen]

A third option would be to get a secured credit card and try again in 6 months, since that'll give it time to report. Building credit is a must - paying interest is not.

This.

When I first started working in the US I was 27 and didn't qualify for squat. My Canadian credit history didn't translate in any way, shape or form. I was able to get a secured credit card with my bank however (ie. Place $1000 on the card and use it like a credit card, replenishing as necessary. It won't allow you to withdraw more than what's on the card so there's no risk for the bank)

The benefit of doing this is that you start building a credit history just the same, or so I was told. Within a year I was mailed a pre-approved application for a Citibank (I'm with Bank of America so this was completely unexpected) Mastercard for $500. Woohoo!

[Wino]

As long as you pay off the card every month, a credit card is a benefit to have. The problem is when you let a balance sit on it. I don't believe in pre-paid credit cards. You are paying for the privilege of borrowing money from yourself. I have credit cards from my past, but I'll never get another one.

Credit cards are a trap. Honestly, when I was very deep in debt, I think I would have gladly chewed off my arm to get free of them. Luckily, that didn't happen.

[Bades]

Credit cards are a trap.

I wouldn't say they're a trap. You just have to be educated and disciplined enough to know how to use them correctly.

I get between $50-60 a month on rewards! That's $600 a year!

Also since I'm in the highest credit tier I can save thousands and thousands by getting a better interest rate on say a mortgage for example.

[Wino]

Not to argue, but I stand by my statement. For everyone one person making money off the perks, there are 10 to 100 carrying balances at usury-level rates.