All you money people, Help a College Student!!

Discussion in 'Budget Board' started by plutofreak, Apr 4, 2005.

  1. plutofreak

    plutofreak See you in a month Mickey!!

    Sep 14, 2004
    Okay, so here's my deal. I am wanting to get another credit card, I really want the Disney Visa, I have been turned down twice by them. Right now, I have 1 credit card, it's a student card with a $750.00 limit, with about $700.00 on it right now, and an APR of 18.99%. :eek: I've been having the card for almost 3 years and no increase on my credit limit. I also have a $2000.00 loan cosigned by my dad I pay on monthly. When I got the loan my credit score was in the mid 600's. I think that's good. I also have about $10,000.00 in student loans.

    My question is what should I do to get another card or have my limit increased? It's not that I want another card to buy more stuff, but I graduate in December, and I will be looking into buying a house. I just want the best credit score I could possibly have. This credit stuff is so confusing, they should teach you this in school. Any tips or comments will help.

    Thanks everyone
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  3. RoyalCanadian

    RoyalCanadian A Proud DVC Member @ SSR

    Jan 10, 2004
    Why are you interested in piling more high-interest debt on top of other high-interest debt?

    I would strongly suggest paying down the 18.99% credit card debt.
  4. MrsPete

    MrsPete DIS Veteran

    Feb 24, 2002
    This probably isn't the answer you want, but it's the right answer: You should not get another credit card.

    You already have one card that's almost maxed out, you are paying on a loan, and you have a sizable student loan waiting to attack you once you graduate. You're pretty well maxed out, as evidenced by the two turn-downs for the Disney VISA. Another card will not help your credit rating in any way; rather, it will be a potential pitfall. Thinking towards your future mortgage, lenders care about your debt ratio (your income to obligations ratio); so if you make $2000/month, and your credit cards plus your car cost $400/month, they'd say you have a 20% debt ratio -- that is, you've already spent 20% of your paycheck before it's even earned. They also consider the credit you have "just sitting there" waiting because that could become new debt literally overnight.

    So I'd say forget about the Disney VISA. It would be a temptation to over-spend and would not help your credit rating. Instead, focus on paying off the credit card you have (pay something extra each month, even if it's only $5 -- at 18.99% it'll take you more than a decade to pay off $700 if you make only minimum payments).

    Since you're looking towards buying a house, I'll tell you what really matters: the downpayment. With a new college degree and a good job, you will qualify for a mortgage. Lack of a downpayment will keep you from getting a mortgage; a mediocre credit rating will only mean you'll get a higher interest rate. People who are turned down for a mortgage typically are trying to buy "too much house" or they have ruined their credit. A new college grad with moderate credit will qualify for a SMALL mortgage. And if your interest rate is high, you can always refinance in a couple years once your financial state is better.

    Incidentally, we DO teach these concepts in high school. Here's the main theme: You will never, ever, never get ahead by spending money you have not yet earned.
  5. my3kids

    my3kids <font color=blue>Helpful Cruise Board regular!<br>

    Oct 16, 2000
    Don't worry about your "score." Pay off your debt, graduate and SAVE SAVE SAVE. I can't imagine why someone would want a credit card just because the thing says Disney on it.
  6. cbrfan

    cbrfan DIS Veteran

    Feb 10, 2001
    I agree with the above posters. Another credit card will not improve your credit score. When lender look at your repayment ability they add up the maximum debt you could "potentially" have. So if you were to get another card with a limit of, say, $2,000 they would proceed as if you actually OWED the $2,000. That's not going to help your income/debt ratio at all!
  7. geetey

    geetey <font color=deeppink>Queen of the Smilies<br><font

    Feb 21, 2000
    The others are correct. Another card is not what you need. Buying a house is a huge responsibility and you need a good down payment and cash flow. Pay off your credit card, pay off the student loan, make all payments (cell phone, rent, utilities, etc.) on time or a few days early and you will have no problem qualifying for a mortgage in the future.
    Good luck!
  8. ziggystardust

    ziggystardust DIS Veteran

    May 11, 2004
    Be wary of constantly applying to credit cards. Every time you do, it acts as a credit check. Too many credit checks are not a good thing and can actually work against you. Especially if you keep getting rejected.

    You should call your current credit company and work on the interest rate getting lowered. They most likely will do it, unless you have done something that would negatively effect your account with them.
  9. plutofreak

    plutofreak See you in a month Mickey!!

    Sep 14, 2004
    Thanks everyone,

    Well here's what I'm going to do, pay off the credit card by the end of the summer and try to get to loan payed off. With my sign on bonus from the hospital I am working at, I could put that towards my student loan. Thanks again, I thought another credit card would increase my credit, but I guess having the least amount of debt possibe would be better. If anyother suggestions please feel free to respond
  10. pirateparrot

    pirateparrot Mouseketeer

    Aug 20, 2003
    If paying off the card is not in the near future, I strongly recommend finding a credit card with a lower interest rate. I really believe you can beat 18.99%. If you can join a credit union, I think you will have more luck getting a credit card with a lower interest rate.

    Just one opinion.
  11. disneefamily

    disneefamily DIS Veteran

    Apr 7, 2001
    Disnee Dad Says...................................................... Oh, the trouble with credit! Now I am not a professional credit person, but this is what I have learned over the years to get a 755 score. I know it can go higher, but I think I am hurt by all the unused debt I can have but don't use.

    Feel free to get a second card, and a third. I would go with one of the gas cards, and a department store, like Sears, or Penny's, or Kohl's. But here is the iron clad rule. Only use them once every couple months, for stuff like socks and, well, gas. Always pay off the balance EVERY MONTH.

    Within a year your credit score will jump as you have multiple credit cards and you will have a perfect payment record. PERFECT... right!???

    By 19 I had Master Card,Visa,Wienstocks,Sears and Firestone. And when my car blew up, Firestone saved me, the bill was like $600, more like $2000 by todays dollars, which took me four months to pay so they got a little interest, but since the other four were at ZERO, I just didn't use them until car was paid for.

    The funny thing about credit is, you want to get it so you have it, then just use it once in a while, saving it for when you really need it, like when my stupid Pinto blows a transmission! Lesson learned at 19, and is still true today.

    Our poor cat was dying, spent $1700 to get her back to life, on the Disney card. She is fine now, we get 17 disney dollars and we paid it off when the bill came in. Evil bank gets ZERO. That should be your mantra, EVIL BANK GETS ZERO.

    Use the system, don't let it use you.
  12. golfgal

    golfgal DIS Cast Member<br><font color=green>When did vacu

    Nov 27, 2004
    If you want to buy a house some day, you need to get your credit score up. 600 isn't a very good credit score, sorry. The best way to improve your credit is not with more credit cards but to show you are responsible and can pay your bills. Having the student loan and paying on them monthly for a year or two will really help. I would put your sign on bonus into a long term CD or something that will earn some interest, pay on your loans for a couple years and then take that CD out and pay off your loans-or use that money toward a down payment on your house. Get your credit card paid off and keep it that way. When you are more established in your job, you can then get a new credit card with a higher limit, but don't go wild. Use your credit card like a check book, recording every purchace like you wrote a check and then when the bill comes, you will have the money to pay off the card every month. Don't get suckered into spending, spending, spending and then think that just because you can make your minimum montly payment you are doing ok.
  13. Helene

    Helene Mouseketeer

    Jan 13, 2004
    Just a thought...........

    I would also suggest tuning into the Suze Orman show on CNBC Saturday Nights (9 pm eastern). She often deals with credit card issues as part of the overall management of our hard earned $$. Her style can be a bit annoying, but the info she shares is often quite good, especially for someone in your shoes who is just starting out.

    Good Luck with your future planning!!!!
  14. poohj80

    poohj80 Got Hunny?

    Jul 16, 2001
    Congrats on your upcoming graduation! Your credit situation should GREATLY increase when you graduate and start working. When applying for loans, lenders not only look at your credit score but also your debt ratio. As you earn more money, you will become eligible for larger loans like to buy a home. I agree with paying down your debt as much as you can. I am still paying off student loans but you can't put a price on education and knowledge.
  15. NancyIL

    NancyIL DIS Veteran

    Aug 19, 1999
    I ordered 2 copies of this book for my 2 college-age daughters: My Sam's Club sells it for ~ $16.82. Read it before you apply for more credit cards. :)
  16. vettechick99

    vettechick99 <font color=purple>Why do I open these threads?<br

    Jan 2, 2004
    I think you should call your current card holder and say you are considering getting a new card to reduce your interest rate. You're willing to keep the balance there if they reduce it for you...and see what they say. If they can't help you, then shop for a new card! No way anyone should be paying 19% interest when there are so many 0% offers out there.

    When you get the card, practice responsible spending - pay off the amount within a workable time-frame and don't put anymore purchases on there.

    CREDIT CARDS are the devil if you aren't careful! Good luck!
  17. JodyTG

    JodyTG It's a well known fact that a woman can never own

    Feb 17, 2003
    First of NOT apply for any new credit cards until you know for a fact that your score is good enough to get one. Every time someone pulls your credit, it takes points off of your credit score. When you're shopping and are told "if you fill out a credit application, you can save 10% on today's purchase", JUST SAY NO. Right now I'm helping my husband get his credit back to where it should be. (The "dreaded-ex" syndrome.)

    Go do and you can pull up your credit with all three bureaus, with your credit score from each, and check for error. This included incorrect names, addresses, everything. (There were 3 incorrect addresses on my husbands credit report and this also takes away from your score.) On you can dispute items and it helps you make out standard letters to print and mail. Keep a record and then follow up.

    Keep your credit card (or any credit)npaid down to no more than 20% of the balance. Credit companies like to see us use credit responsibly, so pay the card off, then buy gas...make the minimum payment the next gas off the balance the next month. Continue this and you're credit score will go up.

    I know this is a little long...but hopefully good information. I got my husband's credit score from a 580 (yikes) to a 670 in about 8-10 months doing this these things. It's just playing the credit game. We still have far to go, but we're getting there.
  18. Forevryoung

    Forevryoung DIS Veteran

    Jan 30, 2005
    Wow this post has made me feel really bad because I have always (for the last 5 years pretty much) had a credit card under my parents. It was to be used for stuff that they would necessarily pay for anyway without having to give me cash all the time like their grocery shopping, pharmacy stuff, some clothes and for emergencies. I know that the card has a high credit limit if I was ever in a bad situation and needed it. Last summer I got my own credit card with a $500 limit. I use it every so often, some months more than others, to pay for gas and little stupid things. I never spend more than $100 in a month. I pay it off every month too. Here is where I feel really silly now: On my last trip home I got one of those old navy credit cards because we (my mom, my sister, and I) were getting new summer clothes and it was going to save us some money. The card will be paid off when it arrives and will be used very infrequently (only every few months when I shop at the Gap or Old Navy). Should I pay it off and cancel the card or will it not hurt me to have it??? Would it hurt to cancel the card?
  19. WDWBetsy

    WDWBetsy found her happily ever after!!!

    Oct 17, 2000
    Just to note: there are many programs out there for people who do not have the money for a down payment. Many are 0 or 1% down - Nehemiah is one such program. You are "gifted" money paid to the mortgage company at closing - and it does not have to be repaid. There isn't any catch. It's awesome! The only downfall is that without sizeable down payment, you have to pay PMI, but after 20% is paid down on your mortgage, you can remove the PMI.

    We were able to use Nehemiah when we built our first house in 1999. Back then the interest rate we had was 8%. Then we built another house in 2002 and also used a similar program to Nehemiah. We were able to get a larger house with a smaller interest rate (5.5%). So more house for less $.

    While it is a good idea to be able to save up for a down payment, not everyone has it and there are programs to assist. Plus I hated throwing away rent money when I could have a house for the same price.

    A lot of people do not know about this, so I'm just adding my 2 cents.
  20. KarenAylwood

    KarenAylwood <font color=red>It wouldn't be the holidays withou

    Apr 5, 2005
    Forevryoung~ I personally don't think it would hurt you to hold onto it. That is, if you intend to use it. Btw, I'm one of those people that says "Would you like to save 15% today by signing up for a J Crew card?" ::: insert large smile here::: :wave2: (hey, it's my job, stop throwing things!!)

    If you are one of those people with good credit and who always pay off your bills I don't see how it can hurt you. Also, many times having those cards will get you coupons or deals when you use your card (esp around xmas time). I have great credit (with some help from the rents when I was younger like you had) and do not think I've been hurt by having one of these. I only have ONE though. I'm not saying that you should be one of those people who opens a card at every store you walk into! ;)
    If it's a company you buy from fairly often and would benefit from discounts it would give you, I say go for it. And like you said, pay off the ENTIRE BALANCE each month and not the minimum payment. That's where you get into trouble...
  21. WDWBetsy

    WDWBetsy found her happily ever after!!!

    Oct 17, 2000
    I think it's a good idea to have a credit card in your own name. Especially if you pay it off every month. After you've had it for a year, I would apply for a low interest Visa or Mastercard. Then use the Visa or MC either only for emergencies, or for everyday purchases that you would pay off each month. After getting a Visa or MC, I would then cancel the Old Navy card. But at least it will establish credit in your name.

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