Building credit when I have none

Victor15b

Im 25, have worked for the state government for the past 6 years, and have absolutely zero credit to my name.

I was finally able to get approved for a secure credit card recently, (after giving them $1000 up front!!)

So yeah, this is new territory for me.
Eventually Id like to get approved for loans to buy a house and a new kit car.

Anyone have any advice or helpful hints on this?

And how long will it take to establish a good credit score?

Djeet

There's no quick way to build good credit. I'm surprised the credit market is so shitty that you couldn't get a $200-300 unsecured credit card. Do you have any outstanding debts, or have you had a late payment history with regards to paying bills (cable, electric, gas, rent, etc.)? That hits your credit score, and it's just time and consistently making ontime payments that slowly builds up your credit score.

I don't know if having an secured credit card really provides any positive credit benefit (since there's no risk of default, i don't even understand how it's a credit card, more like a debit card). If I were you I'd see if I could get my deposit back from the secured credit card company and try to get a gas card and start building credit off of that. That was $1K out of pocket to secure the credit card right?

edit: if the secured credit card is indeed a part of your credit profile, then closing it will ding your credit.

Also, if you've been denied credit you should be able to get free credit reports from all the credit reporting agencies. You should do that and check that there is not incorrect info on your credit profile (or maybe you've been the victim of identity theft). You can clear that up but it takes awhile, and a lot of correspondence.

Kyougu

Just open a credit card (Unless you have debt, you should be getting plenty of offers), and use that card to pay for gas, food, and other purchases that you already have budgetted for the month. Then pay off said credit card in full at the end of the month.
Also, do you have a cell phone under your name? I'm pretty sure that builds up credit too.

ihmmy

buy a little with the CC, never spend more than your bank account has
pay that off regularly
repeat ad nauseum
Make sure to not overuse it. Never ever ever spend more than you have in your regular account, so you can always pay it off in full and not have to worry about being in debt

Thanatos

Start getting bills put in your name.

Hlubocky

Right after I graduated, I applied for a credit card, typed in my starting salary (from my offer) along with all of the other info, and two days later got declined. WTF, I thought... I was making good money and they wouldn't give me a credit card. Finally I just applied for their student card, despite being out of college a few months, and was approved. Go figure. I guess they really will give anyone a credit card, as long as they are a student.

urahonky

If you get your CC bill TOO high and you're unable to pay it all off, pay at least a few dollars more than the minimum payment. I heard that it actually makes your credit look better if you pay more than the minimum.

I'm not sure if that's true or not, but everything else I'd recommend has already been said here. So good luck!

Szechuanosaurus

Thanatos wrote: »

Start getting bills put in your name.

I'd imagine being the named tenant if you are renting an apartment or whatever would help with credit history as well? I don't know, does that information get centralised anywhere? Having a mortgage obviously helps enormously but then you can't always get one without a decent credit rating already.

Totally Boner

I'm 21 and I have lots of credit. I got all of it from paying bills and student loans. That would be your first step in getting credit. Another little trick you can try if you have some spare cash is this:

You need roughly 1000$ but could do it with less, probably not worth it for less than 500$ though. You take 1G to a bank. Open an account and put the 1G in it. Now take a personal loan from the same bank for 1G. They will give it to you because you have the money in an account to back it up. Go to another bank. Open an account and put the 1G in it. Take out another loan for 1G. Repeat the steps a third time and take out a 1G loan from the last bank. Now you will be left with 1G in hand, in debt 3G at 3 separate banks, and have 3 bank account with 1G in them. From there you just make withdrawals from the account to pay the payments on the loans. This way you are simultaneously paying off 3 loans at once.

Silvertree

Find a bank you will be able to stick with for a while, and establish a relationship there. This doesn't mean running to each branch, but the same branch for everything. Find something to take a loan out on, something small. When you talk to the loan officer, say what you said here, that you are looking to build credit so that when the time comes to buy a car and a home, you are able to do that. Despite the shitty market, banks are interested in long term customers. Establishing a relationship like this is mutually beneficial to everyone involved.

Totally Boner

credit unions will also almost always give you a loan. You could buy a cheap car and then sell it on craigs list and pay the loan off... Kind of a pain in the ass, but it works.

Theungry

Totally Boner wrote: »

I'm 21 and I have lots of credit. I got all of it from paying bills and student loans. That would be your first step in getting credit. Another little trick you can try if you have some spare cash is this:

You need roughly 1000$ but could do it with less, probably not worth it for less than 500$ though. You take 1G to a bank. Open an account and put the 1G in it. Now take a personal loan from the same bank for 1G. They will give it to you because you have the money in an account to back it up. Go to another bank. Open an account and put the 1G in it. Take out another loan for 1G. Repeat the steps a third time and take out a 1G loan from the last bank. Now you will be left with 1G in hand, in debt 3G at 3 separate banks, and have 3 bank account with 1G in them. From there you just make withdrawals from the account to pay the payments on the loans. This way you are simultaneously paying off 3 loans at once.

This works like a charm, but it doesn't need to be so complicated. You can just go to one bank with a co-signer (someone else with good credit) take out that same 1g loan, put it in another bank and pay it back to the first. Of course if you did the above you'd have 3 times as many banks reporting good credit. Just make sure you do either over a relatively short time so the interest doesn't build up on you. 3 Months is probably ideal.

Edit: the best reason to do this is that banks report credit MUCH faster than credit cards.