Sunday, July 21, 2013

How I got started on a Credit Score

I came to US a year ago and I immediately wanted to get started on getting all the credit cards out there, that would give me all the miles and points I needed to go for that ever elusive trip and also travel in style, while I am at it. Oh was I na├»ve.. I soon realized that you need a Social Security Number to apply for any credit card or any credit application – including a postpaid mobile connection. That social security number would in turn be associated with my credit score. Banks would use that credit score to determine if I am worthy enough to get their privileged credit card. This was required even for the most basic credit card, notwithstanding its paltry $300 limit and no benefits or points whatsoever, leave alone the miles and points credit card that I actually wanted.

Once the realization dawned, I applied for a social security number (SSN) immediately. In case you don’t have one, you should get one, or this is game over for you before it begins. The struggle doesn’t end here, but actually begins with the SSN. A fresh social security number also means a blank credit score. One needs to start building his score from scratch and that’s what I set out to do. I soon realized that building a credit score is a catch-22 situation. You need a credit card or some form of credit to start building the score. You need a credit score to get the credit in the first place. What came first, the hen or the chicken?

The solution lied in simple patience. I started with a simple checking account. Most decent banks would let you open a checking account without a credit score. Infact most banks offer a good bonus, for opening a checking account with them. I got a $200 bonus from Chase when I opened mine. I got another $200 bonus from Capital One for opening a checking account with them. Make sure you maintain it. In case you can’t get any of the regular banks to open an account with, try American Express Bluebird. It will give you the checking accounts benefits and also help you when you need to meet the minimum spend requirements later. 

Once my account was about 4-6 months old, I was ready to risk a credit card account application. However, by then I had made the rookie mistake of applying for 2 store cards and 2 cell phone postpaid connections. All credit applications involved credit score pull on my credit account and each pull is a drop in credit score. That ensured that my credit score had started dropping even before I had the chance to build it up. Oh, and if you must know, I got rejected on all 4 counts.

Once I had waited it out for 6 months, I decided to apply for the Bank of American secured credit card. I would have to deposit $300 and there was an annual fee involved, but I would have a credit card and would start building on my credit score. However, I got lucky. A friend gave me a pre approved Capital One application ( thank you Jay). It was in my friends name but I still decided to try it. Applied online and voila I had a credit card. And so began the process of slowly but steadily building my credit score. I spent a decent amount of time on Transunion, Experian and Equifax website to understand what are the components of a credit score and what boxes I need to hit for my score to go up and what needs to be avoided to make sure the score doesn’t go down. I also opened an account on Credit Karma and Credit Sesame to monitor my score. Based on the feedback on the blogosphere world, I understand that they are not cent percent accurate, but they give you a good idea of where you are and they are FREE. Most importantly, I realized there were some serious mistakes in my credit report. I called Transunion and got those rectified.  I also got my annual free credit report from Experian to ensure that all my data is correct. Once all was in order, I set out to build my credit report.

Credit Score Components (Image courtesy: myfico.com)
2 months of spending a little amount on my credit card and paying it on time ensured that the scores were headed north. After 2-3 payments had hit my account, I ventured out and applied for the Discover card and the Barclays NFL card. Got approved for both. Now I had 3 cards that were helping me build my score. The good thing about these cards is that they are free of annual charge. So I am never going to cancel them. NEVER. This will ensure that my credit history has age on its side. They are the backbone of my credit history and score and they shall remain so.

Another 2-3 months of using all cards, keeping my spends below 20% of my credit limit and paying the bills on time ensured that my credit score was gaining speed. The only box that wasn’t gaining speed was average age, but then something’s can only be changed with time.

One year of time invested and some research on which cards are the best one out there at the given moment, I went for my A-o-R and boy was it fun.

The A-o-R has resulted in some fluctuation in my credit score. It’s dropped a few points because of the credit pull, picked up a little after a few weeks of no activity and dropped sharply after 3 of the credit cards showed up on the account with huge outstanding balances. But I am not worried. It will smoothen out in a few weeks when the payments post and they are always on time. I did go overboard in meeting the spending requirement and so I ignored the percentage of my total credit outstanding that I am utilizing – another rookie mistake. But it’s just been a month and I have the option of correcting it shortly. And so I shall. Time to keep building that credit score and meet those minimum spend requirements to get those big fat bonuses.


What are you upto ???

Monday, July 8, 2013

MY VERY FIRST APP-O-RAMA


I did it! I finally did it!!

I read, researched, understood and retained some information, din understand and couldn't retain a lot more, but after all the bed time reading and day time reading and work time reading and then researching my life away, I took the leap of faith and entered the field  for my first unsupervised-by-any-expert, not-sure-how-it-will-end App-O-Rama.

I won’t make you read all the way to the end to figure out how it ended – from my perspective it went well. Applied for 7 credit cards on the same day, got rejected by one, approved from another five and application declined for the last one (that is not a reject).

So net score of 5/7. I would say that’s not bad for a first app-o-rama.

Let’s go through my card choices, the reason I chose them, the process as it unfolded and some mistakes I made.

First thing first, I researched all cards that were presently available in the market. I found 16 credit cards that offered fairly decent number of miles with various airlines, hotels or with their own reward program. Here’s my list:

By Airlines (Bank-Airlines- Points Program):

1.       Chase – United – Mileage Plus*
2.       Chase – British Airways - Avios
3.       Citi – American Airlines – AAdvantage*
4.       Barclays – US  Airways – Dividend Miles*
5.       Amex- Delta Airlines – Sky Miles*
6.       Bank of America – Virgin Atlantic – VA Miles
7.       Barclays – Lufthansa – Miles and More

By Hotel (Bank – Hotel / Points Program):

1.       Chase – Hyatt – Hyatt Gold Passport Points
2.       Chase – Priority Club*
3.       Chase – Fairmount
4.       Chase – Marriott Rewards
5.       Amex – Starwood Preferred Guest*
6.       Citi – Hilton Honors*
7.       US Bank – Club Carlson

By Bank Reward Program:

1.       Chase – Ultimate Reward Points*
2.       American Express – Membership Reward Points*

My first and foremost criterion was that I will not select any card that doesn’t waive the first year fee. No exception. I don’t have a lot of cash this month and also, since this is my first foray into CC App world, I did not want to put any money on the line. So that left me with about 9 choices (refer to the ones marked with * above)

Second criteria was choice of type of points – my ranking list was- Airline miles, Hotel Points, Credit Card points. And last but not the least, the spend requirement or challenge total at any point shouldn't cross an average of $2000 per month. As my first app-o-rama, I wanted to play it safe.

And so I set out to apply for cards.

I started with Barclays US Airways. I found the 35000 after 1st spend link with first year fee waived. And considering it would soon disappear given the merger, I liked it even more.  I need AA miles – I have a travel coming up on their flight. The application was not approved instantly. But I was armed with the information and I knew this was to be expected. I called their re-consideration line and spoke with a specialist. He reviewed my case and responded that I already have a Barclay card and the limit on that card is the max they can give me. Plus my small length of credit history doesn’t appeal to them. I discussed about my need to keep my office expenses separate and so the need for two cards and my upcoming travels. I also offered to move my credit from my current Barclays card to this one, but it did not work. So I got rejected. I was disappointed but I didn’t give in just yet. I hung up and called back a little later. Same conversation was repeated and I offered to reduce the limit on my current card, but the specialist said it won’t help. I decided to pursue this further and called Barclays credit card help line and got my credit limit reduced by $ 1000. After a little wait, I called the reconsideration line again and started the conversation as if I have called the first time. The specialist immediately started off with – You have already spoken with two of my colleagues. This was my clue to stop acting smart and get straight to the point. I told her that I did speak and they pointed out the limit issue and so I got my limit on my credit card reduced. She wasn’t impressed and said all the same stuff and said due to the length of my history, she can’t approve me. My recent reduction in credit line for this purpose did not appeal to her one bit. So after a many months of strategizing and reading and finally applying the end result of my first application of my app-o-rama was this – A credit pull from my account, a reduction in the current credit card limit and no new credit card. Score 0/1

I was really upset. I was on the all-these-bloggers-are-liars mode. I was ready to write a scathing note to ‘Just another points traveler’ and ‘mommypoints’ and ‘milevalue’ (I love their blogs the most..!!!). After a coffee I calmed down and thought to myself – I already have one credit pull on my account. If I apply for any more cards, there won’t be any pull. What’s there to lose? So let’s go ahead with this and let’s see how it ends.

Next up, Citi AAdvantage card. Applied for the card and was not approved immediately. Called reco line and after the initial discussion, they said they are unable to verify my details with my SSN (I just moved to a new address). So was asked to fax or mail a utility bill. I asked if I could email and they answered in affirmative. So I emailed a CC bill immediately. The rep said it will take sometime for them to track it and evaluate my application. So need to call after 10 days. – Update here – I called regularly every 2 days, to see an update, but none was given. After 5 days I gave up and just waited for the rejection letter. In the meantime I received other confusing mails for sending more documents, which I ignored. After about a week of waiting and giving up, I received an email saying my application has been approved. Note though, this is one week after my application, so on the day, I am still thinking that I have 2 applications and 2 rejects, probably. Score 0/2

Took a deep breath and moved on to Chase United. Application wasn’t approved immediately, so I called the reconsideration. After the Citi fiasco, I decided to use the address that was there on my SSN file, for this application. This rep also asked for address proof, and I came to the realization that I don’t have a current utility bill that would serve my purpose. Requested the rep to change my address on my application, but they refused to do that. So after a lot of discussion, I came to the realization that I won’t be getting approved for this one either. I left this application hang, and said I will try to get some sort of address proof. Score 0/3
At this point, I was really sad. The day just wasn’t going as per plan. 3 applications, not a single approval. I was very very sad.

It was time to move to the hotel’s point category. I started with the world’s favourite Amex SPG. Applied, using my new address and were instantly approved. This raised my spirits real-real high. No need to call the reco line or anything, just gave me the card. Score 1/4

Given how well Amex application went, I decided to sneak in Amex Gold Premier Reward, ahead of the other hotel card. Applied and got my second approval in a few seconds. Now I was on a roll and really happy. Score 2/5

Moved on to Citi Hilton. Free for life card. Seemed like a great option. Application was rejected immediately. Called reco line and was told I can’t apply for more than 1 Citi card in a day. So application was rejected right away without any consideration. I wasn’t sure if this was correct or not, but I decided not to pursue this any further. Score 2/6

Last card on my list was Chase Marriott. Applied and not approved immediately. Called the reco line and after the standard why I need the card and some talk about checking account and saving account with Chase for one year, I was approved. I asked the rep if he could also change the delivery address on my application, as I had used the old address. He gladly did that. Day was still going good. Score 3/7

At this point, I pushed my luck and spoke to the rep about my other Chase application, and how it has got stuck because of the address issue. He pulled it up, reviewed it and approved it. I couldn’t believe it..!! in a few seconds I had an approval on an application that I was sure will get rejected. The hang up and call back mantra seemed pretty good right now. Score 4/7

At this point I was pretty pleased with myself. I had got myself 4 new credit cards with just one credit pull. The spend requirement was $ 9000, which was below my threshold but I still decided not to apply for any more cards this day. In case Citi AA came through, it would touch exactly $12,000 and I din want to cross that line. As luck would have it, that got approved a week later. FINAL SCORE 5/7

A few days later, the cards started pouring in. Though I realized later Amex credit pull came on my account a day later. So I effectively have 2 pulls. But at this point I wasn’t bothered. I couldn’t change it, so what was the point of getting bothered.


Next post – How am I meeting those spend requirements on small monthly budget..

Friday, July 5, 2013

Fly From Scratch

Another blog after travel and Miles..??????????????

Yes indeed.. I have been reading and reading a lot about the travel blogs of the stalwarts and I decided to jump in and see if things are really as amazing as they sound..

So here's my story, as it unfolds, told my way..

Update: 04/16/2014 - I know I have been pretty random in my writing and updating the blog.. but Im trying to be more regular with my experience.. One of my quarter year resolution is to update a post every week and I have chosen the holy day of Tuesday for this noble purpose. So starting next week, you can expect a post every Tuesday (unless I am on a Holiday !!)..

Disclaimer - This is just my true of version on my experience as it unfolds on the miles game.. I am not being helped directly by any blogger nor am I getting any referral bonus or points or any benefits from any program that I mention in any of my blogs. My blog is my opinion in my words. Any factual information relating to any credit card and/or miles & points programs etc. mentioned here are based on my research and you are requested to do your own homework. I will not be liable for any information that turns out incorrect or changes with passage of time. My opinion of any program is also my own and based on my personal experience.

Images: The images used on blogs will have the source of the images mentioned. I don't own the copyright to any image, unless they are my personal images.
Right now the background image on my blog is the many planes image, found through google. The source/copyright owner of the image is unknown.
The current image background of my twitter page https://twitter.com/flyfromscratch is by Akshay Jain (thanks Akshay). You can access more images by Akshay @ https://www.facebook.com/AkshayJainPhotography