I'm looking for a credit card that will be approved for someone with bad credit..

I would like:
* nice sign-up bonus
* rental car insurance
* travel insurance
* rewards/miles per purchase

AA miles would be best, but others will work as well.

My "bad" credit is that I only have about a year's worth of credit history in the US (moved from Europe). My FICO score is only 720.

I did apply for the Citi AA MC Gold card, but was declined, and Citi generously offered me another card, which featured:
* deposit of credit-limit amount in locked citi account, at next-to-nothing apr
* 18.99% apr on the credit
* $50 annual fee
* inflated late/termination fees
* no sign-up bonus

I can only assume that the fine print contains a paragraph about how I regularly must go a Citi branch dressed like a chicken, so that they can beat with me with stick in public. Or to rephrase, I'm sure there's a better deal for me somewhere.. but where?

I'm no expert, but I thought 720 and above was generally considered a decent to pretty good score.

If your credit is poor you will likely have a hard time getting reward products. Perhaps just wait for a pre-approved credit solicitation in the mail with no annual fee, get the card, build up credit, and then trade up?

720 is a pretty good score; what reasons did Citi give you?

I assume they're worried about your short credit history.

d

Getting a rewards card with a short credit history will be hard. Take the Citi AA offer and you'll start getting flooded with offers in about 6 months. You can then call Citi and have them upgrade you to a non-secured card

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http://www.benjaminwagner.com
Great music!

Start off with some gas or department store cards, their are easy to get on the spot, such as Kohl's, Sears.
With a good payment history of some 6 months ,a 720 score should land with a lot of el cheapo interest rate offers later.

You need to establish a relationship with a financial institution. A credit union is the easiest way to do this.

Join a credit union, sign up for direct deposit of your paycheck and establish credit with them (convince them to give you a signature loan for 2 - 3k while they put a hold on the funds for the entire loan amount in your savings account there if you need to in order to get them to help you establish credit. You can be up-front with them about your reason for this, they should help you to do this.) Then make payments on that loan for 6 months (automatic deductions from your CU checking account is best for this) or so, pay off the loan in full, then get a credit card from them. Many CUs have credit card programs with points/miles, but they are usually the type where the points can be exchanged for a certain amount of credit on a revenue ticket .. not necessarily the best program, but at least they might have something.

CUs generally use their own history with their depostors. Keep a decent balance in your CU accounts during this period. Make sure they report your loan and status to the credit reporting agencies.

And get the store & gas cards too. Run a small balance on them month to month (so you pay interest charges), and then pay them off. Repeat for several cycles.

Forget miles and points, for now. Unless the bank has a history with you, you aren't likely to get them. Once you have established credit like this, and used it and payed it off (not necessarily in full monthly) you will eventually be able to get the better miles/points cards.

-David

[This message has been edited by LIH Prem (edited Dec 10, 2003).]

[This message has been edited by LIH Prem (edited Dec 10, 2003).]

I am in a similar situation. I did discover that US Bank has a secured Korean Airlines Skypass Visa - not the most useful FF account but it is a rewards card. Might be worth checking out if you are in an area that US Bank has presence.

Citi often follows its own logic in awarding credit. You may have much better success with another card issuer.

An excellent credit-card FAQ can be found here.

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Middle_Seat

Thanks all for the help!

Citi declined me because of "insufficient" and "short" credit history. I do have a credit card with my credit union, but it is the lowest tier with no rental car insurance and a very low limit. I did try to upgrade but was declined not so long ago. I now realize the reason probably is that I had a balance on my credit card, I never bothered paying it off since it had a great (introduction) APR, so that probably looked bad to the monkey in charge, especially if they ignore my overall financial balance of checking,savings and car equity. I assume that Citi only saw that I had used 2/3 of my current credit card limit, and therefore considered me thrash.

anyway, I keep my credit card payed off at all times now. Hopefully that will make me look better for credit card issuers. Maybe I'll even swallow my pride and do the citi pre-paid thing..

Paying off or not doesn't matter. What matters is a long track record of timely payments larger than the minimum amount due. The only way to do that is to carry a balance. The CU might view the minimum payments as a negative, even though it's interest free. Make payments at least 2x or 3x the minimum amount due, even on 0% interest cards/loans. Once you've established a credit history, you can use a different strategy to take advantage of 0% rates if you want to.

The other thing you can do at a CU is to sit down face to face with a loan officer and explain your credit situation with them and ask how they can help you establish a credit history faster. It helps if you carry a nice balance in your CU account over a period of time and have some history with them.

-David


[This message has been edited by LIH Prem (edited Dec 15, 2003).]

Just as a sidenote, it does matter for the FICO score, at least according to equifax. I got an online credit-report from them, and they let you experiment with your info to see how it affects the score. By removing my CC balance, I went from 714 to 724 on their FICO score.

Of course, whether Equifax's FICO score is an accurate indicator of credit approval is quite another matter, as you are saying.