I applied for a credit card the other day. I don't have much of a credit rating, and I thought it might be a good way to start building. I was worried that they wouldn't give me one if I didn't have any income, and I was right, that was a concern. She said I still have a shot, because I do have a little bit of a credit rating, and it's good, and I have a solid amount of money in my chequing and savings account which has never gone in the red, but that it's very likely I will get rejected if I don't have any proof of income. She asked me if I'd like to wait until I had a proof of income. I asked if there would be any negative side effects if I applied and was rejected. She said that if it's just once, it's no problem, but if I failed over and over, yes, it would look bad. Sounded like my rejection would be recorded, and if I applied again someday, with someone else, they would see that rejection and call her to learn why.
It's kind of nerve-inducing when asking for anything from the bank. Even when opening my Savings account (which I did after I came back, but I don't think I mentioned it), it felt like a job interview. The people at my bank are all really nice, but it's not like going to a store... They're not there to service you, no matter what they say. They're there to forge a mutual agreement between you and them which should be beneficial for the two of you, and they have the authority to accept or reject you. Just like a job interview.
The woman I spoke to called me back, and asked if I'd be interested in a "Secured credit card". Sounds like I'd have a better shot with that. I think what that would be is, a credit card that I put my own money on, and then just take money off and pay off over and over again. In that way, I'd be able to build a credit rating.
It wouldn't be a "Real" credit card, but it would serve the function I wanted it for. So I think I'm gonna go for that.
Funny note. Remember when I said "My nicknames were Ali Bilébiléba (pronounced "Billabillaba", Bambara for Ali The Giant) and Samah (Bambara for Elephant)" Yeah, well, that was the first time anyone has ever written "Billabillaba" on the Internet. Ever.
If you Google "Billabillaba" you get only three results (probably four, now that I've said it again) and they're all links to places where I'd said that quote. One of them goes to someplace called "Friends of Samah", but it links to my post on Twitter where I say the quote. I can't figure out what "Friends of Samah" is, but it appears to be a place where they link every Tweet with the word "Samah" in it. Weird.
DON'T use that word! That word's mine now! Right now, everything that word is, is me! I AM Billabillaba! GRAWR!
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You're correct: a secured credit card is one where you deposit a certain amount of money in an account with a bank, and then they give you a credit line equal to the amount of money you have on deposit. (So you put in, say, $200, and then you have $200 in credit.)
ReplyDeleteThen you can charge things to the card, pay them off, and demonstrate to creditors that you can be responsible ... and there's no risk from the bank's perspective, because they have your money, so even if you stopped making payments, they'd just keep what you gave them.
You can also increase your credit line by depositing more money. With some banks, eventually they will give you more than just a 1:1 ratio between deposit and credit line. This is probably because as you improve your credit rating, you become a more likely candidate for an unsecured card, and thus you might go somewhere else to get a card, and they don't want that. They want you to have an outstanding balance and pay them interest. (This is all from personal experience, but that was a long time ago, 15-20 years, so things could have changed a bit, plus that's US banks, and for all I know, laws covering that stuff are different in Canada.)
Some people would say that you don't necessarily need to build a credit rating. Having a credit card would just tempt you to buy stuff you can't afford and go into debt, and as long as you aren't planning to get anything for which you'd need a big loan (car, house), then you can probably get by without one. (That may or may not include apartments ... I think that comes into play down here, in that people are more likely to rent to you if you have a good credit rating.)