> However, I qualify for zero unsecured credit cards.
That’s normal. You don’t live in the US so American banks have zero recourse if you decide to default.
For comparison, I had a very easy time getting 3 unsecured cards back when I was a 18 year old student with nearly zero income. It also helped that I had checking/savings accounts with the same banks and years of deposit history.
> they do a credit check, which for some reason has a negative impact on your credit score
You lose a few points, but hard pulls are the smallest component of your score. You can easily apply for 6 cards (2 per bureau) every 6 months before you start getting rejected. The “some reason” is obviously because people with many hard pulls are slightly more likely to default. IMO there’s no point complaining about losing 5 points from hard pulls when you’re losing 500 points because your AAoA (average age of accounts) is zero and no bank wants to take a leap of faith with someone they’ll never be able to put pressure on.
I'm American, and have no reason to believe the credit reporting services are aware of my physical location. This is evidenced by conversations I have had with various agencies (governmental, credit bureaus, etc.) over the past year.
> For comparison, I had a very easy time getting 3 unsecured cards back when I was a student with nearly zero income. It also helped that I had checking/savings accounts with the same banks and years of deposit history.
I've used the same primary bank for 20 years and counting.
So did you lie about your address on the credit card application? If not, that’s how the bank knows you don’t live in the US and that’s why you were rejected.
Lemme simply: Either you need credit history in the US or you need to live in the US. You fail both criteria. Maybe your rejection letter only mentions the first reason, but banks definitely issue cards (with very low limits like $2k) to students with zero history. Speaking from experience.
> same primary bank for 20 years
Then walk in there and apply for a card after you get back in the US.
> So did you lie about your address on the credit card application? If not, that’s how the bank knows you don’t live in the US and that’s why you were rejected.
I didn't lie on anything, and frankly a bit offended you would even assume such. I travel back and forth to the US, often. My home address (one of the properties my family owns, and where I lived my entire childhood) is the one I use on everything US related. It's my actual physical address in the US.
People can have multiple residences across countries. Is that "simple" enough to understand?
Is your name on any of the house items like utility bills, deeds, etc...? Where do you pay taxes? How do you pay for things while living outside the US? Are you employed by a US company?
Keep in mind the people you speak to on the phone have no idea what goes into the model. They mostly read the same score/rejection that you do. My guess is the model is picking up signals you aren't in the US and that's causing the rejection.
Not my intention. IMO my tone matches your first post re “The entire system is broken”.
> It's my actual physical address in the US.
Ah I wish you mentioned that. In that case I’m not sure why you’d be rejected by every bank. My understanding is that if you don’t get auto-approved based on your credit history the bank has to use its own homegrown risk assessment which is a lot more conservative. Maybe the internal tool instantly rejected the application because your IP address didn’t match your address? Try calling and asking them (not the front line CSR, but a credit analyst that can override the software):
https://www.doctorofcredit.com/credit-cards/credit-card-reco...
https://ficoforums.myfico.com/t5/Credit-Card-Applications/Ba...
I started with a blank credit folio late in life. This was not my experience. It may make sense for you to speak to your bank or to a financial advisor.
Edit: The rejection note that I normally receive is: insufficient credit history.
To me it's a catch-22 situation. It always boggles my mind when I see 20 somethings with 10s of thousands of dollars in credit card and loan debt, while I can't even get in the door. Not saying I plan on having any debt, just that I would like the opportunity to receive a loan when I want it.
Are you applying from outside America? Playing devil’s advocate, a college friend skipped paying a bunch of loans by emigrating outside the reach of collectors. It informs why creditors are wary about lending to international clients with whom they have no prior relationship. Hence the advice to work through your bank and financial advisor; they know you, and that relationship builds trust.
My working theory is that this case exists because they have no data to calculate and classify risk on you with.
No, when your credit history is non-existent, the free credit score sites will happily tell you it’s much higher than that (mine was reported as 720-740 when I lacked history), but you’ll still get auto-rejected for everything.
Interestingly, I emailed Arnold Kling, an economist writing about the subprime market at the time (2007) and he refused to believe that was happening, and insisted I must have some horrible default on my record. (I didn’t.)
A 500 credit score from a default is much better than having no history.
(I’m not the OP but was in a similar situation.)
Edit: ah, you’re the OP. Did you have that same issue, where sites would assure you you have a good credit score even as you keep getting rejected on any credit application?
[1] If they lean further on credit reports as a job applicant filter, that could turn into an even worse catch-22!
Have you ever defaulted on a debt or something similarly bad? If you haven't, have you checked your credit reports (from all 3) to make sure there isn't false/fraudulent info on there?
I decided to check my credit report, and noticed a default from like 5 years ago that had been sent to collections -- it was a paltry sum. Some years ago, I was in the US for a couple months for work, and got a monthly phone contract with a large mobile provider and paid for my device upfront. I EXPLICITLY chose electronic billing ONLY for the service, as I was based out of a hotel during the time.
So, when it was time to return to my country of residence, I went to the shop where I got the phone and service, and closed the account. All was well.
Fast forward 5 years, and it seems that the mobile provider had actually sent (via snail mail) a final bill to my hotel address. They didn't mention this to me when I closed the account IN PERSON. I had no idea this last bill even existed till I checked my credit report. So, since I had no other credit history -- this was the single line item on my credit report from all 3 reporting agencies.
I called the provider, pulled up my old contract (good thing I never delete emails), and proved to them that I had signed up for electronic bills only, thus they were in err. I paid the last bill, and they expunged it from my credit report. This all happened over a year ago. That negative item is no longer listed with any of the big 3.
So I don't know if this line item is still there but unlisted (I've checked my reports from all 3 in detail), and was told by them as well that the record is 100% gone, yet I still can't make any headway in loans or credit cards. The _only_ thing that makes sense is that I'm being flagged due to my physical address in the US -- high-crime, low-income inner city neighborhood.
Hmm, you may want to check if there are other public records with respect to this. That seems much more likely than redlining. (Also, credit card companies have been criticised both ways on this—for denying credit to such neighbourhoods as well as for flooding them with offers.)
It’s not, a lot of us have had credit cards and “bad” zip codes / addresses. You just don’t have verifiable W-2/1099 income.
Here's a fun read from DHH: https://twitter.com/dhh/status/1192540900393705474
One trick if you have family that trusts you is to have them add you as an authorized user. Then their multiple year old account history for that account will be part of your credit, bringing up the average age
Sorta. The most popular credit score (some version of FICO) ignores authorized user accounts so this doesn’t improve AAoA nor credit utilization. I guess too many people were taking advantage of this hack back in ~2012 lol.
I suspect it’s still useful for initializing a credit report so you don’t get stuck having to verify your identity/address and improves your odds with the bank’s internal risk assessment.
If you could buy a car with cash, take out a auto loan at any interest rate. Pay off the entire balance except $1. You’ll have no balance due each month, but each payment will be recorded as having been made on time. Then pay off the last $1 in the last month.
Double check to whether this actually works, I haven’t done it and I’m just regurgitating something I saw in Reddit. Also make sure there’s no sort of prepayment penalty on the loan.
The second is close to true, but you should actually leave a little over one month's payment, not $1. This SE answer explains it better than I ever could: https://money.stackexchange.com/a/59311 (ignore the "Accepted" answer which contains awful advice).
Yep. I love how the accepted answer with 130 votes totally ignores how credit scores work. I suppose it would be excellent advice if the OP never intends to get a home/car/cards and is too mentally impaired to handle a $1 loan.
My gut says that having two of the same age wouldn't be much/any better than one, but then again it's the credit industry and my intuition has bitten me in the past.
There are two types of debt (for the purposes of your credit score): revolving (you regularly borrow money and pay it back, like a credit card) and fixed (you borrow a lump sum and make regular payments).
Just having any type of fixed debt at all (car loan, mortgage, even a personal loan) is a huge boost to your score. Thus, a second car loan will make much less of an impact because OP would already be getting this boost from their first loan. (Similarly, having any type of revolving debt at all provides a boost, so for anybody new to the credit score game try to get any shitty credit card that will approve yoy and buy at least one thing with it each statement).
On top of that, getting approved for a second car loan (at the same time) is wayyyy harder than the first. I have no idea why this is, as the economics should be the same, but maybe lenders have some data that shows people with two car loans are more likely to default or something.
I generally wouldn't recommend this strategy to OP unless they were already going to buy a second car for a spouse/family member/etc. Cars depreciate very quickly even if you don't use them at all and the score boost won't be very big.
But it's not like similar industries.
It's the industry of treating you like shit. You are biomass to them, they want 20% interest while paying 1% interest (like two years ago), you can't compare saying it's a 19% spread what it is is the 18th power of the interest they pay. That's very abnormal historically, most usurers in the Middle Ages getting the whole town to kill them for their avarice had much skinnier spreads. 18th power is very unusual. Stretches out their time by a factor of 18. It's like street businesses, like crack dealing or pimping, which perpetually insult the people who are the foundation of their wealth.
The process of building a credit history has been enlightening and frustrating. I'm in the tech world, as most people in this forum is as well. I make a pretty decent salary in said tech world. However, I qualify for zero unsecured credit cards. I also don't qualify for any small personal loans. I attempted to get both in order to build a credit history. I mean, I can't even get a personal loan for $500.
Nothing, nada, zilch. All I can do now is get a secured card and hold on to that for some time -- which is what I have been doing for about a year so far.
However, I am constantly, and I mean constantly flooded with emails with special "pre-approved" credit cards and personal loans. I applied for a couple and of course was rejected. Oh, and of course, when you apply for these "pre-approved" offers, they do a credit check, which for some reason has a negative impact on your credit score.
It's insane that we let 3 companies (Equifax, Experian, and Transunion) control so much of our lives, with little insight as to what their scores actually reflect. CreditKarma is just a vehicle within this sector. The entire system is broken and needs a complete overhaul.