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Author: NoMoneyMoPrblms Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308674  
Subject: Re-establishing Credit Date: 2/8/2001 6:23 PM
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Hello everyone!

I just recently ran into this discussion board, and would very much appreciate some help with this question.

Background: In college (stop me if you've heard this before) :) I destroyed my credit. Had over $7K in credit card debt, past due dates of over 60 days...several times. Accounts were canceled and most of them were sold off. After graduation, I signed up with a non-profit CCA. Since then, I have made every payment (around 20 months) on time, without exception. I have finally paid off ALL CC debt. I have student loans, and have paid on-time for about 20 months as well.

Sitaution: I want to re-establish my credit. For the first time in years, I have receieved a few 'pre-approved' offers from Cap One.

Terms: 19.8% Variable
$72 Annual Fee (charged at $6 per month)

All I want to do is re-establish credit. I don't really care about the interest, as I will not carry a balance. I don't like the annual fee, but with my credit history, I don't know what choice I have.

Question: Is it a good idea to go for this card? Will this help re-establish credit, or is Cap One evil? Is this one of those cards extended to people desperate to fix their credit that actually looks bad on a credit report and reflects poorly on a credit score?

If this is not a good idea, what is the best way to go about re-establishing credit? Any suggestions on specific banks/cards?

Sorry for the long post. As a newbie to this board, I really appreciate any insight you all may have.

Thanks in advance!
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Author: jbales Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57347 of 308674
Subject: Re: Re-establishing Credit Date: 2/8/2001 7:02 PM
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If this is not a good idea, what is the best way to go about re-establishing credit? Any suggestions on specific banks/cards?


Are you in a credit union? They will often give you better terms, as they are nonprofit and run for the benefit of members.

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Author: yankeesmyteam Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57352 of 308674
Subject: Re: Re-establishing Credit Date: 2/8/2001 9:18 PM
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Capital One is not evil, and has a very good business model. Capital One's client base for the most part is higher risk clients, but I from what I have read of them (thinking of buying some stock) they are good.

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Author: vakoala Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57384 of 308674
Subject: Re: Re-establishing Credit Date: 2/9/2001 9:56 AM
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Personally I had a very bad experiance with Cap One. Could well not be the norm but I would not ever deal with them again. They lost enough mailed payments that I eventually had to send them in certified. At first I had my bill pay sending them the check and after one didn't get credited both me and the credit union called and they refused to wave any fees. On top of that the next check I mailed (2 weeks before the due date was not credited on time). After than I would send them certified and although they signed for the check on day it would take 3 or 4 to actually credit my account.

Anyway, just my experiance...everyone else I know who has them seems to do OK. I would try a credit union or a bank where you have been doing business with first. The anual fee seems very high. You might want to try Amex. I know they have an annual fee but it is usually less than what you are being quoted. Also try store cards. Ususally no annual fee. Pick a store you usually shop at so you can use the card and pay it off. After that then try for a major card.

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Author: mlomker Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57390 of 308674
Subject: Re: Re-establishing Credit Date: 2/9/2001 10:08 AM
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Anyway, just my experiance...everyone else I know who has them seems to do OK.

I didn't have any problem getting payments credited with Cap One, but their interest rates, annual fees, and service charges seem to be the worst out there. I have actually preferred working with Providian (a sub-prime lender) rather than Capital One (when I had good credit).

I also like making electronic payments on Providian's web site. They grab the money right from my checking and I get credit for it the next business day. Love that.

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Author: sabaka1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57468 of 308674
Subject: Re: Re-establishing Credit Date: 2/9/2001 8:14 PM
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Unless you specifically need a card for travel, I'd start with a store card from a store you shop at frequent. Once you've established your credit by paying the balance in full each month, I would assume you'd get some pretty nice offers without the annual fee. If you do need a VISA/MC, you might try some of the online offers - just don't go overboard filling out applications or it will reflect negatively on your report for future attempts.

Teri

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Author: skymuse Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57490 of 308674
Subject: Re: Re-establishing Credit Date: 2/10/2001 9:10 AM
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Cards with annual fees are unFoolish. I would suggest that for now go get a department store or gas card and use them a little bit to get some history; it would actually be a good idea to carry a small balance for a month or two to demonstrate consistency in payment. Remember, your credit reports are not necessarily updated if you're not using the card.

In the meantime, you can do much better if you shop some more for a credit card without the annual fee, I'm sure. Also, getting the store/gas card and using it wisely will help you to get an offer for a fee-less CC in the near future.

skymuse

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Author: yankeesmyteam Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57498 of 308674
Subject: Re: Re-establishing Credit Date: 2/10/2001 10:06 AM
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i would goto capital one or somebody like that who will allow you to put in a deposit and give you perhaps 2 or 3x your deposit amount in credit.

Or just try a secured card, nobody knows they are secured,

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Author: sabaka1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57518 of 308674
Subject: Re: Re-establishing Credit Date: 2/10/2001 2:26 PM
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it would actually be a good idea to carry a small balance for a month or two to demonstrate consistency in payment.

Untrue. You get just as much bang for your credit rating by using the card and paying it off each month as you do carrying a balance. As long as you make the payments on time, there is absolutely NO reason to pay interest.

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Author: PLATINUM31 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57528 of 308674
Subject: Re: Re-establishing Credit Date: 2/10/2001 11:01 PM
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I don't know what area you live in, but I get offers in the mail from Cap1 all of the time. It's usually in the "throwaway mail", but you can usually get one of those postcard-type mailers that gives you a better interest rate and a lower annual fee. There's an 800 number that you call to apply over the phone.

Also, like a previous poster has said, Providian is another one that's good to start with if you have had credit problems in the past. Just like any other card, make sure you pay them on time.

Have a good one!

Marla

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57530 of 308674
Subject: Re: Re-establishing Credit Date: 2/11/2001 12:06 AM
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it would actually be a good idea to carry a small balance for a month or two to demonstrate consistency in payment.

Untrue. You get just as much bang for your credit rating by using the card and paying it off each month as you do carrying a balance. As long as you make the payments on time, there is absolutely NO reason to pay interest.


If you are correct, then why does http://www.fairisaac.com/servlet/SiteDriver/Content/1701/NextGenClassic1pgr.pdfsay that "No recent revolving balances" is a factor of your credit score? Please cite the source of your information?

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Author: FoolEugene Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57540 of 308674
Subject: Re: Re-establishing Credit Date: 2/11/2001 8:19 AM
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You get just as much bang for your credit rating by using the card and paying it off each month as you do carrying a balance.

If you are correct, then why does http://www.fairisaac.com/servlet/SiteDriver/Content/1701/NextGenClassic1pgr.pdf say that "No recent revolving balances" is a factor of your credit score?


"No recent revolving balances" does not necessarily mean that you carry a balance from month to month. It might mean "No recent balances on revolving accounts" (because you do not use your cards at all). Looking at the credit report, there is no way to find out if you carry the balance from month to month or are paying it off every month.

The confusion probably comes from not knowing what exactly they mean by "revolving balance". Technically, the minute you charge something on a card, you are that much more in debt, even if you are going to pay it off before the due date. The credit scoring model has no idea if you are carrying a balance from month to month, or are paying it off in full every month. So, your balance is called "revolving balance" even if you personally choose not to revolve. It's a word play.

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Author: estermae Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57553 of 308674
Subject: Re: Re-establishing Credit Date: 2/11/2001 12:39 PM
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I have to agree with FoolEugene.

The creditor who pulls your report cannot tell from the report if you carry a balance or not. The report shows the balance and date of the last transaction (and of course if and when the account was past due). So, do not carry a balance thinking that it will help your credit. It will not.

It will help your credit to use the account every couple of months. If you have an account in good standing, but haven't used it in 3 years, the creditor will probably not give it much consideration. If you use it, have no past due and currently have a zero balance, then that account is a positive.

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57603 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 12:49 AM
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FoolEugene said:

"No recent revolving balances" does not necessarily mean that you carry a balance from month to month. It might mean "No recent balances on revolving accounts" (because you do not use your cards at all). Looking at the credit report, there is no way to find out if you carry the balance from month to month or are paying it off every month.

The confusion probably comes from not knowing what exactly they mean by "revolving balance". Technically, the minute you charge something on a card, you are that much more in debt, even if you are going to pay it off before the due date. The credit scoring model has no idea if you are carrying a balance from month to month, or are paying it off in full every month. So, your balance is called "revolving balance" even if you personally choose not to revolve. It's a word play.


-----------------

estermae said:

I have to agree with FoolEugene.

The creditor who pulls your report cannot tell from the report if you carry a balance or not. The report shows the balance and date of the last transaction (and of course if and when the account was past due). So, do not carry a balance thinking that it will help your credit. It will not.

It will help your credit to use the account every couple of months. If you have an account in good standing, but haven't used it in 3 years, the creditor will probably not give it much consideration. If you use it, have no past due and currently have a zero balance, then that account is a positive.


-----------------

Eugene and estermae, I'm not confused, I'm amused. My "Experian Online Personal Credit Report" I obtained directly-- from those tricky word-players, Experian-- shows historical balances. For example, one revolving account has a history of balances for 23 consecutive months... I swear it does (am I allowed to swear here?).

The statement to which I replied said, "You get just as much bang for your credit rating by using the card and paying it off each month as you do carrying a balance."

I assume you don't know what day of the month the creditor reports to the credit bureaus. So, in your premise, if the credit bureau scores you on whether or not you have a current balance, and you have no idea when the creditor reports to the bureau, and you pay off the account before they report, you don't get any credit for having a revolving balance for that account ("No recent revolving balances"). That might be detrimental to a credit score. So, about the only way to make sure there is a balance (since you don't know when the creditor reports, or at what frequency) is to carry one for a while.

It seems basic to me. Credit scores are based on performance. There has to be some performance with which to create a score.

estermae, you said, "It will help your credit to use the account every couple of months." What's wrong with every month? Which has a more positive effect on a credit score? From whom did you obtain your information?

Those are some very detailed answers you both gave. Congratulations on your Recommendations.

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Author: FoolEugene Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57604 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 1:44 AM
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I assume you don't know what day of the month the creditor reports to the credit bureaus.

I do not know this for sure, but what would make sense to me is making the date of the report irrelevant. That is, the rule might be "no matter what day of the month you report, report the last balance on the statement date", or "the highest balance of the previous month", for example. If they just stick to a certain date of every month and report whatever the balance happens to be on that date, the result is not indicative and would not make sense, as you said.

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Author: ClubJuggle Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57678 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 2:26 PM
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Greg,

A credit report does not show a balance history for any accounts. It will show the current balance, high balance or credit limit, and payment history (meaning whether the most recent and past payments were on time).

This probably refers to a lack of activity, such as if the account had a zero balance for a long time.
-Terry

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57696 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 3:18 PM
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Greg,

A credit report does not show a balance history for any accounts. It will show the current balance, high balance or credit limit, and payment history (meaning whether the most recent and past payments were on time).

This probably refers to a lack of activity, such as if the account had a zero balance for a long time.
-Terry


Then I must be dreaming. Experian's report about me has, for example, one revolving account with a history of balances for 23 consecutive months. I'm holding it in my hands and looking at it, right now.

If "a credit report does not show a balance history for any accounts," what are those marks on this paper, then?

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Author: lanshark Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57702 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 3:42 PM
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Greg,

Even if you pay the previous balance in full, a credit card is still classified as a revolving account.

My source? Copies of old Trans Union and Equifax credit report (disclosures) that show a steady stream of "1's" for activity on the account. Never paid them interest, but as far as the bureau is concerned there was activity.

- Lan

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Author: lanshark Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57704 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 3:48 PM
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Greg,

The trick is to show activity. Dates will vary, but once every other month would probably show peaks of a purchase, and the valley of the paid-in-full month.

Personally, if I "pay in full" I am paying the previous month's purchases, not the ones I'm making each day. I use my 30-55 days whenever possible. :)

- Lan

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Author: TchrP Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57705 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 3:51 PM
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I have my Experian report right here.

For an active account, it shows the balance as of the closing date for each of the preceding 23 months, but it does not show how much I paid or whether I carried any balance over. There is one month from which you could deduce that I had paid the entire balance the previous month, but only because the new balance was zero.

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Author: ClubJuggle Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57732 of 308674
Subject: Re: Re-establishing Credit Date: 2/12/2001 5:41 PM
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Every account I have ever seen on a credit report shows the balance as of the statement date.
-Terry

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Author: FoolEugene Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57785 of 308674
Subject: Re: Re-establishing Credit Date: 2/13/2001 12:22 AM
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Experian's report about me has, for example, one revolving account with a history of balances for 23 consecutive months.

My Experian report also shows balance history for one account. Issuers do have a choice of reporting it.

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Author: utahtea Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57787 of 308674
Subject: Re: Re-establishing Credit Date: 2/13/2001 2:14 AM
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I assume you don't know what day of the month the creditor reports to the credit bureaus. So, in your premise, if the credit bureau scores you on whether or not you have a current balance, and you have no idea when the creditor reports to the bureau, and you pay off the account before they report, you don't get any credit for having a revolving balance for that account ("No recent revolving balances"). That might be detrimental to a credit score. So, about the only way to make sure there is a balance (since you don't know when the creditor reports, or at what frequency) is to carry one for a while.

I have never paid one cent in interest because I have NEVER carried a balance on any credit card but my credit report show otherwise. If I charged on the card then there was an amount on the credit report.

If you feel that not having a balance could be detrimental to a credit score then all you need to do is to make sure you charge something on the card after the cards closing date or at least by the time you pay off the current statement.

IMHO, I see no reason to ever pay interest on a credit card if you don't have to.


Utahtea






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Author: ClubJuggle Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57827 of 308674
Subject: Re: Re-establishing Credit Date: 2/13/2001 12:05 PM
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Then I must be dreaming. Experian's report about me has, for example, one revolving account with a history of balances for 23 consecutive months. I'm holding it in my hands and looking at it, right now.

If "a credit report does not show a balance history for any accounts," what are those marks on this paper, then?


The credit report that is available to a consumer is different than the credit report available to a creditor. For example, there are certain types of inquiries that show when you pull your own credit report that a creditor does not see.

I have ordered my own credit report from Experian in the past and have not gotten a balance history. Perhaps I will order one tonight and see what I get.
-Terry

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Author: ClubJuggle Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57834 of 308674
Subject: Re: Re-establishing Credit Date: 2/13/2001 12:58 PM
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Experian's report about me has, for example, one revolving account with a history of balances for 23 consecutive months.

My Experian report also shows balance history for one account. Issuers do have a choice of reporting it.


I work for a bank and just double-checked with one of our branch managers. He confirmed that the credit reports Experian provides us do not include a month-to-month balance history. Keep in mind, again, that not all the information provided on a personal credit report appears on the reports potential creditors see.
-Terry

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Author: sabaka1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 57841 of 308674
Subject: Re: Re-establishing Credit Date: 2/13/2001 1:54 PM
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If "a credit report does not show a balance history for any accounts," what are those marks on this paper, then?

Is it possible those are a list of balances as of each month's statement date? These would still list whether you paid off the balance each month or not, since you'd get billed each month (balance on statement date), then write a check for the total amount, thus paying no interest.

I still stand by my original comment - paying off your balance each month cannot reasonably hurt your credit history.

Teri
who is working diligently to get to that point.

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Author: married2debtor Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59263 of 308674
Subject: Re: Re-establishing Credit Date: 2/23/2001 3:09 PM
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I just received my credit report from all 3 credit bureaus and Experian shows a full history of my balances on each card every month for the past 3 years.
I think it is very spooky--Like Big Brother is watching.

Whoever receives this report knows how much I spent on each credit card for every month. I think this should not be legal. If they want to show I was late on a payment ok but to reveal any spending patterns that I have established -well frankly, I just don't think it is anyone's business.

Just my 0.02

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Author: FixitWoman Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 59283 of 308674
Subject: Re: Re-establishing Credit Date: 2/23/2001 5:21 PM
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I just received my credit report from all 3 credit bureaus and Experian shows a full history of my balances on each card every month for the past 3 years.
I think it is very spooky--Like Big Brother is watching.



No need to fear. It's been established on this board that you are the only one that sees the balances like that.


Kim

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