I am 21 and it’s probably long past due that I began to try to build up some credit. Some people in my family have had bad experiences with credit cards so I have shied away from them.
I have had a checking account for more than 5 years with only one slight overdraft which was promptly taken care of 3 or so years ago. Long story short I went to get a cell phone with a monthly plan and they want a $400 deposit due to lack of credit. It’s not that easy for me to just fork over 400 bucks in addition to my monthly expenses. I decided it would be a good time to get a credit card and build up some credit and then go back to them.
I first tried American Express and then Capital One Student (since I am a college student). I received denial letters in the mail shortly after saying that they couldn’t currently offer me a card in short due to lack of credit. My problem as far as I can tell isn’t bad credit; it’s simply a lack of credit. I have been told this can be just as bad as having bad credit.
Do any of you have any suggestions as to what I can do to help me get better credit? Are there any credit cards which might be easier for me to get than these? Thanks for the help.
What I did was get a secured credit card from Bank of America. Basically, you open a checking account with at least a $99 deposit, and you get a credit card (Visa) with $500 credit limit. After doing this, I was soon able to qualify for a Capitol One card. Start there, pay off your balances each month, and soon your credit rating will build, your credit limits will rise, and you will be eligible for more cards (keep them to a minimum!!) And I cannot stress enough how important it is to minimize or eliminate the balance you carry from month to month!
Thanks for the advice guys. I am going to check to see if the bank I am using now offers a secured credit card and if they do I am going to make sure they report it to the Credit Report things.
I actually got free copies of my credit report and there was almost nothing there. The only thing was a student loan which I have not began to pay back yet since I am still in school and something else which I don’t believe even belongs to me. Two of my brothers had some bad checks and stuff at my bank and I think it accidentally got turned over to collections on my behalf and it was on my credit report. I did the investigation thing because it was most definately not mine. Think that one thing could make that big of a difference with these credit cards? It was turned over to collections but apparently was eventually paid by one of my brothers.
Another thing to keep in mind is that every time you apply for credit or check your credit score, your credit rating drops. Something like 4 points each time. So be judicious in applying willy-nilly for cards in the hopes of getting one.
I was in the same boat. Even though I had a good, well-paying job and no credit crimes against me, and even though I kept getting bombarded by credit card appliications, no one would give me one.
What killed me was that I already had a Sears credit card, and had used it and never let charges run up. Yet I couldn’t erven get a Discover card (which Sears owns)!
Finally, American Express gave me a card. After which other companies took me seriously. I’ve kept the Amex card ever since.
Some stores such as Sears used to give you the option of three months to pay off a furniture item. You paid some interest, but it established a credit history and you weren’t sucked in for the long haul. You might check into it.
One other thing: try applying for a signature loan at your bank. This is a loan that requires no particular reason for applying for it (usually limited to a few thousand dollars). Rather than spending the money, use it to pay back the loan over a short period.
Does your bank offer a credit card? My first credit card was a card issued by the bank I was doing business with at the time. It was not a secured card but did have a pretty low limit, something like around $500, AIR but that was waaaaaay back when, so I’d bet something like a $1000 limit is more the norm now. It was a great start for me to build credit.
I worked for Sears until just recently. Sears no longer owns Discover; they were sold years ago. And the rest of their credit was sold to Citibank last year. They are one of the most difficult cards to get. I had a customer who was denied a card because of a bankruptcy that was eight years old (I only know this because he asked to call the 800 number given on the refusal slip from my phone and then complained to me afterward). I would recommend to the OP to get a personal loan from the bank to buy something, and try not to get too much into revolving credit. Credit cards are the devil, I tells ya!
I once bought a computer with my credit card ¡and paid it within half an hour, from a drive-in ATM and with the 'puter in the trunk.
That drove my credit limit in that card from 1K to 3K and my credit rating went up by 50 points or so…
It’s SO much nicer to live in a country where people are supposed to be “good” credit risks until proven guilty. Wonder if the US will ever get around to that way of thinking.
General rule of thumb on bankruptcy is ten years. If you manage to buy a house during that period, your credit will be helped immensely. Otherwise, most lenders won’t even talk to you, even at double the lowest interest rates. I just had a guy trying to buy a small pop-up trailer for about $10K. Has a BK two years old and has $3K down. Nobody will loan him the other $7K despite having good credit since.
Yes, I know that bankruptcy stays on your credit report for 10 years. However, many places will give you an unsecured card within a short time of discharge. This guy had other major cards, and had no problem writing me a check for the entire amount of his purchase (several hundred dollars). Of course, I have no idea what the rest of his credit is like.
The way that I built up my credit (and I just got approved for a vehicle loan, despite a TAs salary and no co-signer) was using my bank’s debit card. Of course, you have to make sure that the money is in there for your purchases, but that seems to be a really good way to make sure that you make some purchases through a Visa system.
Just use the credit purchase option and not debits when you get the chance (which doesn’t automatically happen as much as it used to).
I’ve had my Visa check card for a couple of years and I just checked my credit report today through www.annualcreditreport.com and it’s not listed as one of my accounts. So how can it influence my credit score? (I do use the credit option most of the time.) Maybe it depends on what agency you get your information from?
I was wondering why some of my stuff wasn’t listed as well. Like my checking account of 5 years (should be positive credit, but it’s not listed). Also I owe a company a substantial amount of money ($1700) and I have been making my payments on time and everything yet it’s not on my credit report.
