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Member Since: January 2011
I am not an expert, but a prepaid or "secured" credit card my be your only option at this point until you can build your credit up enough to be able to apply for an "unsecured" credit card. Everytime you apply for credit, an "inquiry" is placed in your credit record. I believe with each inquiry, your score drops a few points. Too many or excessive inquiries can lower your credit score. These inquiries stay in your credit file for two years and after two years, then these inquiries will drop off your record. But the less inquiries you have, the better.
Credit is something that we have all heard of but know very little about. It is almost impossible to buy, rent, or reserve anything in this country without having good credit established. Credit is a sum of money made available to a person from a financial institution. When lenders open credit accounts for applicants, in exchange, interest is charged by the creditors on the money because the money has to be repaid over time.
Credit is based on a "scoring" system. This score is determined by the kind of information listed on the application. The credit issuing institution's computer uses software and awards a certain number of "points" for each item listed on the applicant's application. For instance, buying your home instead of renting will award the applicant more points.
Each financial institution has what is known as a "cut off" point total. If the applicant's application scores beneath this number, then the bank will waste no more time on this application and a rejection letter will be sent out to the applicant at once. If the application scores above this number, the institution will order a credit report on the applicant from one or two credit bureaus. If no negative or derogatory information is found in the credit report, and the credit report matches what is written on the applicant's application, and the applicant's debt to income ratio is not too high, and the applicant does not have too many open accounts with high balances or excessive debt, then the application is approved, and the credit card is sent to the applicant by mail.
kakiben's reply was:
Hi, a mortgage is what is considered "good debt". I think that perhaps creditors favor people with mortgages perhaps they see these mortgage holders as "responsible". Just my guess.