unsecured - The Road to Silicon Valley

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