O mystical credit gods

March 18, 2008 6:49 AM

Why do I keep getting credit card offers when it is sure that I'll be denied? Or is it?

My credit is not so much bad...I get the idea it's more a lack of good credit to offset the late payments on my one dept. store card, a couple unpaid utilities, a couple minor payments that got sent to collections. I realized I was irresponsible with money, that's why I didn't get any cards right when I turned 18. In the years between then and now (I'm 25) nobody will give me anything. Not even dept. stores.

I've never had a major credit card in my name alone. I have about 4k in student loans and $400 on the one card I did manage to get.

Why do they waste the paper? I imagine they just filter out unwanteds by credit score. Does that make too much sense?

Also, does the fact that I've changed addresses frequently come into play?

I would like to build credit. I pay my bills now. I know a lot of this info can be found online but I'm maybe somebody out there can offer more personal advice...throwaway email: [e-mail]

posted by anonymous to Work & Money (9 answers total)

I imagine they just filter out unwanteds by credit score.

It's "pre-approved" offers that are filtered by credit score. All sorts of people who are ineligible to have their own credit cards for all sorts of reasons are still sent the junk mail.
posted by grouse at 7:07 AM on March 18, 2008

I'm not sure exactly which question you want answered. If your credit score is really low, I don't know why you keep getting credit card offers. Maybe there are some offers that aren't filtered by score? I don't think your bad credit has anything to do with your changes of address though - I think it has more to do with your lack of paying your bills. You say "my credit is not so much bad" but then you go on to list many bills that you either paid late or didn't pay at all. That is pretty much the definition of bad credit.

If you want to build credit now, focus on using the one card you do have responsibly (e.g. pay off the balance you're carrying, then use it and pay it in full each month). That will raise your score enough that you should be able to qualify for a card on your own.
posted by boomchicka at 7:08 AM on March 18, 2008

You might qualify for a credit card, but not necessarily at the terms in the offer letter. Most of those offers will have small print that says that if you don't actually qualify that they'll send you a credit card with a much less impressive rate.
posted by drezdn at 7:32 AM on March 18, 2008

You're being offered cards by exploitative credit card companies who want you to miss payments and get behind. They make more money by jacking up fees and penalizing late payees.

I bet if you did respond to one of these offers you'd wind up with a 20% card with a $200 line of unsecured credit that comes in the mail with $75 "processing fee" already charged to it. These usually require "monthly payments" every 20 or 25 days, and they tend to move your due date around without telling you. They also tend to charge for "conveniences" like on-line bill pay. So even if you're very cautious with the card there is still a good chance you'll fall behind.

It's a TRAP!
posted by wfrgms at 8:03 AM on March 18, 2008

You're pre-approved to APPLY, not to actually receive the card. They'll still do a credit check and turn you down if you don't meet their requirements.
posted by blue_beetle at 8:07 AM on March 18, 2008

Yes, the pre-approved offers don't necessarily mean you'll get a card. When I was in a similar situation 10 years ago, I was able to get a Capital One card without any problems, so I recommend trying them. I think it only had a $500 limit, and it did have an annual fee, but it was a good place to start. Once I'd built up my credit I was able to get the annual fee waived, and the credit limit increased. I've never had any trouble with them doing something dumb on my bill or whatever.
posted by cabingirl at 8:26 AM on March 18, 2008

To answer the question you didn't ask, you're getting offers because you have not done what you should do, which is opt out of credit offers. You say you want to build credit - I'd suggest you avoid falling into that mindset, but I won't get into it here. I will say, however, that the offers you get unsolicited in the mail are inferior to the ones you can find out there at sites like Bankrate. Get off those lists - the offers are inferior and they're identity theft fodder.

As for why you're getting those offers, the credit bureaus sell lists of people to the credit card companies based on certain criteria. Age, location, if you have a certain kind of loan, etc. They probably - but not necessarily - set a minimum credit score for the list too.

Exactly how Fair Isaac creates the FICO number is a trade secret so we don't know exactly how it is calculated. We have some idea, however, and there's a lot of variables in it. Sometimes you can have a certain credit score despite a blemish that would preclude a lender from doing business with you. In your case it might be the late payments. Timeliness is only 35% of your score. A big portion, but if you met the magic formula in every other area but only managed 15% of that 35% that would still put you at 80% of 850, or 680 - only 43 points below the mean.

To expand on what others have said about the offers, you may be in a pool they're going to offer a card to... but not necessarily with the perks they advertise. Often they offer the sky but it's only to people with really high scores. Lower-ranking folk get a lesser deal, and if you look at find print in the offer you'll find language indicating that based on your score you might get a card that isn't 'gold' or has a higher interest rate or fewer perks.
posted by phearlez at 9:13 AM on March 18, 2008 [1 favorite]

I can't find it right now on my mobile, but there's a good set of wikipedia pages about credit, credit scores, apr, and how companies decide who to offer credit to, and with what credit line amount and apr. they calculate the risk of lending based on lots of factors, such as debt to income ratio, etc. they basically want to get a lot of late fees and other money from you, but they still want to make sure you will pay.
posted by white light at 11:01 AM on March 18, 2008

As a Brit immigrant to the US last year with no US credit record at all , it was recommended to me to get a Citibank Mastercard, one of the ones that you charge up with $200 credit by giving Citibank the cash. You then use it every month for grocery's and the like and pay off everything except $1 of the balance and keep doing this for a few months. Alledgedly the fact that you use it, and nearly pay it off every month but retain a tiny balancec so it's never completely clear makes your credit score good. It's the only US credit contact I've had and my credit score is now excellent so it worked for me. YMMV due to the ever changing voodoo equations used to prevent tricking the system.
posted by merocet at 12:13 PM on March 18, 2008