Store Cards Suck Like 10% Off Hookers

A side thought on Christmas shopping…..  now I’m gonna be honest.  I have not done one lick of holiday shopping this year, thus far.  None.  I have been avoiding the whole experience like the plague!!  (aka… Im freakin’ broke.  BROKE!)  And truthfully… I haven’t missed it.  I am not really that big on shopping to begin with.  I find it dull, and I find commission-hungry cashiers to be obnoxious and pushy.  Furthermore, our business has made me a fairly recognizable figure…. and the constant mingling and shameless self promotion can turn a simple shopping trip into an exhausting ordeal with a quickness.

My last post touched on how holiday shopping is heavily laden with pressure.  Consumers are pressured to buy bigger and better, and the tried-and-true American method of paying for things we can’t afford normally is to CHARGE IT.  Just ring it up on a credit card, and pay it back later.  What a novel idea.

Okay anyway, in order to drum up business this time of year, many stores will offer promotional coupons, one day sales, lay-away options, and my own personal favorite…. the store credit card!  Simple premise…. you sign up for a credit card with whatever store, you get 10% of that day’s purchase, and you get to charge it to your personal store credit line.  Freakin sweet, right?  I get a discount AND I get to charge it, like it’s free money at my disposal!

Not-so-much.  The problem with these store cards is that their interest rates tend to be super high…. we’re talking like 20% or more which is awful, sub-prime even.   And the real kick to the nuts is that it lowers your credit score to apply for new credit.  And this will keep affecting your credit score anywhere from 1-2 years from the date of the credit report pull.  Which in lamens terms will drastically reduce your chance of being approved for credit which you actually need.  This is because of two reasons.  Number one, obviously lower score means less of a chance of getting approved for loans, and also less desirable loan rates.  The other reason is because applying for multiple lines of credit within a short amount of time makes you look needy and desperate.  And nobody likes needy and desperate people.  Especially not Fannie Mae and Freddie Mac….. although I’m convinced those suckers don’t like anyone.

Point is, if you have any desire to apply for credit to buy a new house or car over the next year, then don’t get baited into opening new credit lines at department stores.  The 10 bucks you might save on your hundred dollar purchase is not worth limiting your luck with lenders on the cool shit like houses and cars.  I hold tight to the idea that when it comes to gifting, if you can’t pay in cash, you have no business buying.  I know that this is not always feasible for everyone, so if you have no choice but to charge it, my advice is to use a card that is already in your wallet and has the lowest interest rate.  Good luck out there….

Credit Cards Are Evil….. And I Hate Them….

Bob Hope once said, “A bank is a place that will lend you money if you can prove that you don’t need it.”    You ain’t $hittin’ Bob!

I pulled my credit report a couple of days ago, and with sheer mortification, saw what I was up against.

Fico Scores: Experian: 494 Equifax: 558 Trans Union: 608

If you know anything about credit scores, than I am sure there is some serious snickering going on right now.  Credit ranges are as follows.

• Between 700 and 850 – Very good or excellent credit score.
• Between 680 and 699 – Good credit score.
• Between 620 and 679 – Average or OK score.
• Between 580 and 619 – Low credit score.
• Between 500 and 579 – Poor credit score.
• Between 300 and 499 – Bad credit score.

So basically, I am Low at best and Bad at worst.  Things working against me are:

• Amount of Delinquent accounts, either paid or unpaid
• Amount of Collections Accounts
• Lack of established credit history
• No open credit accounts  (i.e. revolving or installment)

I really tried hard when I was younger to establish a good credit history; I had a handful of credit cards, but times got tough, cards got maxed, then went unpaid, and now the balances sit in collections.  My student loans also failed to get paid, so those loom ominously on my credit report in Default.  And let me tell you, it was a very quick and easy process to trash my credit so thoroughly.  So why does it have to be so freaking hard to claw my way back into good credit standing?

Step one to rebuilding credit is to take out new credit cards so you can being establishing a good payment history with revolving credit lines.  Bad thing is, with crappy scores like mine, the only place to look for cards that will give people like me credit are companies with sub-prime interest rates and appallingly low credit limits.

For those that can’t get approved for any credit cards with dismal scores, you have the further option of taking out a secured credit card.  These cards are considered “secured” because you use your own money as collateral, and however much money you put in is how much the company will establish as your credit line (ex, I give Bank of America 500 bucks for a secured credit card and they issue me a 500 dollar credit limit.  Then they are happy because if I fail to pay them, they get to keep my deposit.)  And then after a year or two of good payment history with the secured card, companies will usually issue you your deposit back, and your credit line will become unsecured.  While some of these secured credit card companies do report monthly to the big 3 credit bureaus (it’s always best to check that they report before you sign up for one of these secured cards, because if they don’t report, they won’t do squat to help you rebuild your credit.)  I would use this only as a last resort if you can’t get approved for an unsecured credit card, because they build your credit much slower than a traditional credit card, plus you have to use hundred of dollars of your own money to get one, and that just sucks royally.  Total salt on the wound, insult to injury.

Ok so I applied for 7 cards.  Applying for that many cards is generally frowned upon as well.  Applying for lots of credit all at once makes you look desperate, and I guess lenders don’t like desperate people .  Makes them think you’re gonna be irresponsible with there money.  Applying for too much credit all at once can also lower your credit score.  And I get that.  But my credit score already sucks, so I don’t think 5 or 10 points is gonna be the end of the world.  And I’m desperate.

At the end of the day, the only card I was approved for was Capital One Platinum Visa with a credit limit of $300.  I also applied for an Orchard Bank Classic Mastercard, which I prequalified for a credit limit of $300, and after submitting, it said I was approved, but I had to send off $39 for an application fee (and then it said in fine print they could still deny my application).  Still waiting to hear back from them.  I am really hoping I actually do get approved for the Mastercard as well.  It has been a week since I put the check in the mail, and still no word.  My fear is that I over-applied for too many cards, and now I will get denied because of it.  Orchard Bank is notorious (along with Capital One and First Premier, which I didn’t apply for because their application fee is much higher and they are very stingy with limit increases) for issuing unsecured cards to the least credit worthy.  It was my goal to get approved for 3 credit cards so I could begin establishing a strong revolving credit history, but if I can get two, I will be satisfied.  I will be pretty bummed if I only get the one.

So for now I will play the waiting game, checking my mail box daily with bells on my toes, and checking my application status online daily as well.  Here’s to keeping my fingers crossed…..