Tag: banks

How to get an unsecured credit card

The following is an account of my experience with obtaining an unsecured credit card. I hope it helps you getting your credit card faster and a reasonable credit limit. You can apply for credit card after listening to my advice.

Credit history – guilty until proven innocent

You should get a credit card when you 1st arrive in America.

But guess what, no large bank will give you an unsecured credit card since you have no credit history. In comparison to Australia, American credit rating system works backwards. In Australia you are innocent until proven guilty and in America you are guilty until proven innocent. Which means that in America you start with 0 credit history and you must build credit up from nothing. Chicken and egg scenario. How can you borrow to build credit when they wont let you since you are viewed as a high risk borrower. Read my prior blog post on this topic here.

Secured credit card – your money

The only option you will have is to obtain a “secured” credit card. This is you putting your money down (say $2,000) into your bank of choice and using that line of credit as though it’s a credit card. Basically you lock away $2,000 of your money and use your money as though it was the banks and you pay it off. On time! Else you will not get good credit rating. What’s important to remember here is that the bank records (keeps tracks) your credit behavior and reports it back to the credit bureau. It feels like being ripped off because it’s your money and the bank treats you as though they are doing you a favor. They are actually. Read on.

This process has to go on for 13 months. By the end of the 13 month period the bank will let you know whether you are eligible for an “unsecured” credit card and if you are what is it’s credit limit. Read my prior blog post on building credit history to make sure you do not break any of the credit card rules like maxing out your credit card (yes I know it’s your money but..) or that you pay on-time (yes, it’s your money but Uncle Bob is looking over your shoulder).

Patience young Aussie.. patience..

Getting a secured credit card faster (before the 13 months)

Yes, there is a faster method to get that unsecured credit card. Actually, you can get it 5-6 months faster, but be careful and make sure that during the entire time you protect your identity by doing identity verifications via video-chat like the one from Fully-Verified. Otherwise, you will lose a ton of money and get a bad credit score.

So the major banks have that 13 month policy (mentioned above) of watching your behaviour and reporting back to the credit bureau on your credit behavior. If you get Citrus Loans then this would have been building your credit history ALOT faster then a secured credit card. A car loan is by far the best way to build credit history because it is a sizeable investment which you are responsible for servicing. This is a big plus (if managed properly) at the folks in the credit bureau.

So after 6 months of servicing your car loan with TechCU, approach them for an unsecured credit card. I did this after 8 months and they impressed me with an approval for a substantial amount (4x more then my secured credit card at Wells Fargo) the following day. Not only that, I also received a nice warm fluffy blanket (it is winter here after all) becuase I applied for a credit card with TechCU.

Next steps

I’m curious to see what will Wells Fargo come back with after the 13 months process is up. Are they going to match TechCU’s credit offer or come back with something lousey. I read a recent Prosper loans review, and I’m disappointed with their risk assessment of my account since I have kept all my American income in their bank and have great history with the secured credit card being paid on time. While TechCU using only my car loan payment history, credit rating and my professional history was able to see that I am a low risk customer and offer me an outstanding credit card product with maximum rewards.

Let’s see how things go. I will update this blog post with the outcome from Wells Fargo in the next few months.

~ Ernest

Links mentioned in this post

Expats guide on building Credit History in America
http://www.theroadtosiliconvalley.com/finance/building-credit-history-america/

Choice of Banks
http://www.theroadtosiliconvalley.com/finance/choice-banks/

Build credit history superfast – get a car loan
http://www.theroadtosiliconvalley.com/finance/car-loan-credit-history/

Build credit history superfast – get a car loan

Yes it’s true. If you want to build credit history in America you should consider getting a car loan. There is no better or faster way to building credit history then through a car loan. Here’s why.

Why a car loan?

Remember my last post on building credit history? If not then click here to read about building credit history in America. In a nutshell, getting a car loan is the BEST way to quickly building your credit history. You need to have a listing on your credit history that you are capable of paying off a sustainable large dept, like a car loan. This loan must be no smaller than $5K.

Get a loan from Technology Credit Union (TechCU)

TechCU were the only folks who would even consider giving me a car loan. And remember I came to America with 0 credit history. TechCU caters for technology folks in Silicon Valley with no credit history. The downside is you will be on a higher interest rate – around 15%.

According to Zmarta Fi and their loan experts, no big American bank will lend you money on good rates because you are a liability, someone without credit history. I have a personal account with Wells Fargo Bank (one of the largest in the US) with plenty of money in it sitting in a special high yield checking & savings account and they they still thought I was a liability when I wanted to get a loan through them. Again, because I had no credit history. Loans Now is the option available to customers at the click of a mouse.

Well Fargo would only give me a “secured loan” – a loan which was backed (locked up) with my own money. This is not good enough for me since:

  • it’s using my money and
  • it is not what the credit bureau considers a “car loan” – not good in building credit history.

Before you can get the loan approved by TechCU they will need from you:

  • Paper work from the dealer on the car you are purchasing inc. it’s Kelley Blue Book value. See my post of purchasing a car from a dealer located here.
  • See certificate of purchased for “car insurance”. Also the dealer won’t let you drive off the lot without one, and so, it’d be a good idea to take one from Utility Saving Expert
  • See that you are a “software engineer” – basically you need to bring a letter from your company’s HR department showing your income and your position/title of a software engineer. The position/title is important since TechCU is for technology folks only.
  • A copy of your Californian Drivers license. Your International Drivers license will not do. It’s worthless. Read this post on getting your Californian Drivers license. All you need to do is pass the Theory exam to get your temporary drivers license number. But don’t forget to schedule your practical exam since your temporary drivers license expires in 3 months.

Sounds painful? it is! But it pays off in the end.

Links mentioned in this post

TechCU website: http://www.techcu.com/

Building credit history: http://www.theroadtosiliconvalley.com/finance/building-credit-history-america/

Let me know if you found a quicker way to get around this by posting in the comments below.

Ernest

Choice of Banks in America

The following is a short list of Major Banks you can use in America. Last in this list I included a Credit Union which is not a major bank since those guys look after new engineers (with no credit history) in the bay area. If you want to visit a bank online, then check out https://www.wecu.com/business-banking/cash-management/.

Wells Fargo

About: Wells Fargo is the fourth largest bank in the US by assets and the second largest bank by market capitalization. In 2007 it was the only bank in the United States to be rated AAA by S&P, though its rating has since been lowered to AA- in light of the financial crisis of 2007–2010. Wells Fargo is the fourth largest bank in the US by assets and the second largest bank by market capitalization.In 2007 it was the only bank in the United States to be rated AAA by S&P, though its rating has since been lowered to AA- in light of the financial crisis of 2007–2010.

Experience: This is the 1st bank I established my accounts with. As soon as I walked in I was greeted by one of their representatives and asked what help I needed. Once this is established, they directed me to the right bank associate. All Wells Fargo banks share this personal service. The atmosphere inside the bank feels warm and comforting eliminating any anxiety you may face regarding finances. Everyone is smiling.

In comparison to CitiBank and Bank of America branches (which I also visited), they both were very corporate, high booth everywhere, felt cold with no Wells Fargo like personal touch – just a line where to line up. Felt like a processing plant.

URL: https://www.wellsfargo.com/

Bank of America

About: Bank of America Corporation is a financial services company, the largest bank holding company in the United States, by assets, and the second largest bank by market capitalization. Also known as BOA – short for Bank of America.

Experience: Very corporate, high booth everywhere, felt cold with no Wells Fargo like personal touch – just a line where to line up. Felt like a processing plant.

URL: https://www.bankofamerica.com/

CitiBank

About: Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York. As of March 2010, Citigroup is the third largest bank holding company in the United States by domestic deposits, after Bank of America and JP Morgan Chase.

Experience: Very corporate, high booth everywhere, felt cold with no Wells Fargo like personal touch – just a line where to line up. Felt like a processing plant. BOA must be their idol. I setup an account with CitiBank because I have a Credit Card in Australia with Citi. However as soon as I did I realized that their service is just as poor as the one in Australia – I’m surprised that for a bank this size the low understanding of what a good consumer experience is like both offline and online.

URL: http://www.citibank.com/

Technology Credit Union

About: Tech CU is now among the top 1% of the nation’s largest credit unions with ten full service branches in the Silicon Valley. Now with more than $1.3 billion in assets and still growing. Also know as TechCU – short for Technology Credit Union.

Experience: Best way to describe this is a very small-scale of Wells Fargo. There is the personal touch component and also the booths for fast service. They only work with folks in the technology space like software engineers / entrepreneurs. TechCU also takes risks and will give you a loan for a car so that you can start building credit history. This is the bank which I approached after Wells Fargo said no for a car loan.

URL: http://www.techcu.com

If you have any specific questions about these banks please use the comments section below. I typically respond within 48 hours to all questions. If you have other banks which you’ve had experience with or want to add to my experience above please feel free to do so by commenting below.

Happy Banking!

~ Ernest