Just curious, no pun intended: Why is it so difficult to get a credit card in the U.S., the land of credit cards itself and, for what I've read, where credit card applications seem to virtually pour in all the time among junk mail?
Credit cards in Finland are the third payment option: debit cards and cash are the two most important ways to pay. But you can get a credit card quite easily, and you will definitely get one if you have regular income.
I got my first credit card when I was maybe 20 or 21. The reason was that I was going to a vacation abroad and didn't want to carry loads of cash with me. I just walked into my bank and asked for one; as soon as I told them I was permanently employed and had regular income, it was no big deal. It didn't matter I had only started at this job a few months earlier and I had no existing credit record whatsoever (no loans, no credit cards, no other credit). I didn't have to proove it, just tell them my income and some other facts and sign below.
If I had been a Swedish citizen living in Finland, I think it wouldn't have been no different. You have income, a bank account and an address: that's probably it. I can easily understand if you had bad credit record but not having one at all being a showstopper really puzzles me. Most people pay their credit card bills anyway so any random newcomer to the business is probably a safe bet.
The problem, I think, is that the US credit rating system is formalised. As far as I know, in most countries your creditworthiness is secret information which the banks may or may not pass among themselves. In the US it's all wrapped up in a three-digit number which anyone can access -- this means that other indications of creditworthiness tend not to be taken into account.
Come to think of it, the overreliance on the number could be another consequence of the US's obsession with race: if your bank takes anything into account except the magical number then you leave yourself open to a racial discimination lawsuit.
Oh yeah, and the third problem is that most adults without credit histories seem to be illegal immigrants, who make very little money and can vanish at any time. There are so many illegal immigrants in the legal immigrants are a tiny afterthought.
So, just guessing, if you have no credit record, then even if you have a successful business up and running and you can prove that you do, and how much money you make, and that you have an established life with no intentions to take a hike to Mexico next week, the banks may be forced to ignore all that and rely on the credit rating only?
And the illegal immigrant who is planning to scam the banks could do this money deposit thing mentioned to build up credit rating out of nowhere, wait a little, then apply for credit cards, max them out, and leave?
> Why is it so difficult to get a credit card in the U.S., the land of credit cards itself and, for what I've read, where credit card applications seem to virtually pour in all the time among junk mail?
It's not hard for most people - it's only a problem if you don't have a credit history at all, aren't in college, and can't prove a stable salary. But for those people, it's really the suck - and that's a lot of our demographic. Freelancers, business owners, and self employed people often have a very hard time getting their credit started.
> I can easily understand if you had bad credit record but not having one at all being a showstopper really puzzles me. Most people pay their credit card bills anyway so any random newcomer to the business is probably a safe bet.
I thought about that too. The credit card companies have very sophisticated metrics and algorithms though, and they seem to think lending to someone with no credit is a very bad idea because they're incredibly hesitant to do it. My best guess is it's a defense against fraud.
Are there prepaid credit cards yet? I've heard about them but I'm not sure if it's still vaporware for the vast majority of people.
That would solve those problems where paying with a credit card is almost a required practice. Actually getting credit is another issue but I would guess most people use credit cards as the medium for transactions and not for getting credit itself?
Credit cards in Finland are the third payment option: debit cards and cash are the two most important ways to pay. But you can get a credit card quite easily, and you will definitely get one if you have regular income.
I got my first credit card when I was maybe 20 or 21. The reason was that I was going to a vacation abroad and didn't want to carry loads of cash with me. I just walked into my bank and asked for one; as soon as I told them I was permanently employed and had regular income, it was no big deal. It didn't matter I had only started at this job a few months earlier and I had no existing credit record whatsoever (no loans, no credit cards, no other credit). I didn't have to proove it, just tell them my income and some other facts and sign below.
If I had been a Swedish citizen living in Finland, I think it wouldn't have been no different. You have income, a bank account and an address: that's probably it. I can easily understand if you had bad credit record but not having one at all being a showstopper really puzzles me. Most people pay their credit card bills anyway so any random newcomer to the business is probably a safe bet.