After 10 years abroad, credit record must be restarted
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Dear Opening Credits,
I returned to the USA in September 2014 to find that, having lived abroad for more than 10 years, my credit history was "automatically deleted." This was a shock. I am married and my husband is living here for the first time -- therefore no U.S. history. He works, I am retired.
I got a secured card from Wells Fargo, being told that as I didn't have bad history, I should probably be approved and my deposit money would be returned within three to four months. Evidently not so. I was also not told how to spend (keep credit utilization low), so the first few months I probably damaged my credit. Not knowing this, I applied in the past six to eight months for a Macy's and Best Buy credit card and was refused. The reason was mainly too little credit history. My score is now 665. My secured card is for $500 only and it looks like limited history (less than a year at least) is a negative. I have also recently got a secured loan of $1,500 from a credit union as I was told this would help.
Is there anything I can do to move my credit score along and obtain credit and without it being secured? Is my age a determining factor as well as my being retired? Can they discriminate? I have paid early every month and in full on the credit card and so far two months on the 12-month loan. Would it help getting another higher limit secured card? In other words, is there anything else I can do to improve my chances on getting a "regular" credit card with the same or higher limit? Thank you. -- Dorothy
Unfortunately, an excellent borrowing record isn't eternal. After being closed for 10 years, even the best, most-positively managed accounts will drop off your consumer credit reports forever. There is a sound reason for this data purge. Whatever you did a decade ago is ancient history to lenders. Both the good (and the bad, most of which remains for seven years) is simply too old to be relevant.
You did the right thing by applying for a secured card. They are terrific vehicles for people without a credit history. Since the credit line is collateralized, risk is minimized, so the issuer is more likely to approve the account. But did Wells Fargo renege on a promise to return your security deposit after a few months of use? I don't think so.
It is possible that a customer service representative mentioned that the bank does review secured accounts periodically. Then, if you qualify for an upgrade to an unsecured credit card, they'll offer it. Accept the change in status and they'll refund your cash.
However, according to the terms outlined on the bank's website, "There is not a preset time that Wells Fargo performs account reviews for potential upgrade." Also to note, it is only available to U.S. citizens and permanent U.S. residents.
What you absolutely can do, though, is use your secured account to increase your credit score, and then qualify for other cards. To do so, you must understand how scores are calculated.
You say your credit score is 665, but I'm not sure what kind of credit score it is. That could be an OK score, if you're citing the base FICO score, which ranges from 300 to 850. Other types of credit scores have different ranges. But regardless of the score, you want it to go higher. To get there, you don't need another credit card, you just need to use the one you have often and strategically by:
- Paying on time.
- Paying the entire balance in full. Making sure you never carry over 30 percent of the credit limit is a fine guideline, but no debt is even better.
- Keeping it up for at least a year.
If you do so, you'll satisfy the most important factors of the FICO scoring model, comprising 80 percent of the score. The remaining 20 percent are comprised of the mix of credit products you have (a variety is helpful, so that secured loan is working in your favor as long as you send payments according to schedule) and to pursue new forms of credit prudently. Excess applications make you appear desperate. Although there are credit products for nearly everyone, I suggest you back off applying until your score jumps several dozen points, so a wider range of unsecured cards -- that also have valuable rewards programs -- are within reach.
Finally, age has absolutely nothing to do with credit approval. Aside from what is listed on your credit reports and the scores that are derived from them, qualification is based entirely on your current financial situation -- most importantly your household income. Retirement plan payouts, investment earnings and Social Security distributions are all considered income. Have all that? Wonderful! With 12 months of perfect credit card and loan activity, you should be transformed into a most-desirable customer.
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