How do most young adults and immigrants to the USA enter the credit system?

I find it really odd you don’t really see any media attention paid to this, and there is seemingly no cultural knowledge on this even though almost everyone did it somehow.

So how do most people enter the credit bureau system?

As a young adult before I had I was turned down for straight savings accounts with no credit extended, some jobs, couldn’t rent from larger companies, couldn’t even get a prepaid debit card, utility companies etc it goes on and on. The application would all come to a halt when they would run my SS# for a credit check it came back no record, I was told as long as I had bad credit it would be fine but no credit they can’t work with. It is basically like you don’t exist and they cannot let you sign up and start a credit history.

I eventually signed up using someone elses SS# someone with credit history as a co signer, and this created a credit history in my own SS# and no longer use theirs for years now.

But when I ask people, even young people how they got into the system they shrug and say I dunno.:confused: I ask if they used my method and they say no, it was just never an issue.

How does the average person get into the credit system?

If I wouldn’t have gotten my first credit card at a baseball game in 1998 (MBNA was a sponsor of the Indians. The MLB has a line of credit cards still) I would have gotten one on my college campus. Around every corner was someone lurking trying to get you to sign up for a credit card in exchange for a Frisbee (I got an awesome sweatshirt that I still use today).

Did you not go to college? If not, you would not have run in to these offers that gave anyone with a pulse a credit card.

There has been legislation to stop this predatory credit-giving on campuses. In 2009 a bill passed called the Credit CARD act, and sign-ups have fallen dramatically. But accordingto this 2013 article, companies are offering a slew of other “financial products” to students still so they do get on the ropes.

Oh yeah, and student loans are on your credit report, yeah? So there’s that.

I don’t know how non-college-going young people get in the credit system.

If you have a bank account the institution bank/credit union or what ever will have some kind of credit card for people with accounts there.

When I was in college 30 years ago, the accepted method was to get a charge card (that needed to be paid off every month) from American Express. That would build your credit, and you would eventually be able to obtain a credit card. I still have an American Express card that I almost never use, although it was converted to a credit card several years ago. It looks like AmEx still offers the original green charge card as an option, although I’m not sure if a credit history is required to obtain one.

I got my first from my bank. They had a"student" credit card with a low limit, and high interest rate. That’s how most of the people I know got credit. (I’m 30, by the way).

Before I was in the system I’d try to sign up for straight savings accounts, no checking so they were taking no risk on me, and the no credit thing would stop it. The clerks would even agree it made no sense since I was not being extended credit.

Ditto for stuff like prepaid debit cards, you can only take out your own money put in. One time someone I was applying with said the reason was that the only way they can confirm you have a real SS# was by pulling a credit report.

I didn’t go to college, are these cards offered on campuses ok with you having no credit history? I tried at the time applying for some of those guaranteed credit cards with ridiculous credit rates and you have to put down hundreds of dollars first but nope even there no credit history is a no go.

I just always found it odd that everyone just seemed to take it for granted, there have to be immigrants entering the system all the time.

I’ve never heard of anyone being denied a savings account. That seems odd. Checking accounts, yeah. But a savings account?

I have a friend who owes a bank money for an overdrawn checking account, and the very same bank let him get a savings account. No questions asked.

As for the cards on campuses, yes they are ok with no credit history. They are geared for someone who has no history. The cards seem to have a high interest rate, and most banks probably assume that parents will fork over the 500 dollars when it gets maxed out, so Junior doesn’t have a charge off on his credit.

I was around a decade ago at multiple banks, and the specific reason was no credit history. They would get to the part where they do a credit check, go huh…um sorry we cannot complete the application. They told me if I had bad or terrible credit no problem, but none was not allowed.

Interesting. I got my first savings account when I was 7. Obviously no credit history. Maybe it was the bank you were using. I don’t think your experience is typical.

The “secret” may be that you need to go to one bank after another after another after another after another until you stumble upon one that is willing to work with you.

I had a bank account and/or checking account at one bank or another since I was a young child, but I never had a credit card until I was about 35.

But when I was about 30, I moved from Hawaii to California and tried to open checking and/or savings accounts in California. Having no credit history, it took me a long time to find a bank that would open an account for me. I simply asked at a whole lot of banks, and finally came upon a bank that would do that. Note, this was long before “9/11” – It must be even harder still now.

When I decided I needed a credit card, it was sort of the same. I had to ask a lot of banks before I found one that would give me one. The scheme was “secured credit” – I had to open a savings account there, and keep a certain amount in that account at all times (enough to cover the smallish credit limit they gave me). Maybe you can still find banks that will do this.

Eventually, some years later, I had some reason to get another credit card elsewhere. By this time, I had a credit history (and a good one), so I didn’t have a problem after that.

Yea same for me, I’m in the credit bureau system now and have good credit.

I just find it weird everyone else is like uh I never had the issue, and I have no clue how I got into the system when it was a pain for me and I assume others like yourself.

Like it is never addressed despite being the backbone of a lot of financial activity, even when there is no risk being taken. I wondered how the “average” person gets in.

Yes, that’s how many young people start. Wells Fargo right now is not only opening checking accounts for refugees, but offering them a credit card along with it. Of course, they are in the system, because the State Department loans them money for the flight to get here, but they are people who’ve been in the country for just a few months.

Other banks, however, won’t do that. Any given bank at any given time might loosen its terms in order get more business.

I had a savings account starting in middle school. When I started college, I didn’t have a credit card right away, but I had a checking account. When my roommate and I wanted to get a phone line in our dorm room (this was pre-cell phones), we had to put down a deposit first. As we showed we actually paid the phone bill, the phone company refunded the deposit.

Of course, there were also student loans. I imagine that’s a very common way for young people to build a credit history.

I migrated to a job in the US at the age of 54, and obviously started with zero credit history, even though I had a cheque account and a credit card in Australia. My first step was to get an account at a credit union recommended by my employer, so that my salary could be credited to it, and so that I could get a debit card linked to the account.

I had some cash from Australia which was enough to buy a car and make a down payment on a house. I bought a second-hand car for cash, which did nothing for my credit history, and then started looking for a house. I bought a house using a buyer’s agent, who was able to find somone who would lend to me: a person with limited credit history, but with cash of about 30% of the price of a house. It wasn’t that easy, but it could be done. Once I had a house and a mortgage, my credit history had filled out enough that the credit-card offers started coming in the mail.

My oldest daughter, who moved with us to Israel 8+ years ago, still occasionally gets mail sent to her in the U.S. at my in-laws’ address. Several of those pieces of mail were credit card solicitations. The last time she was in the states, she filled one out for fun and sent it in. They granted her a MasterCard with a 10K limit.

This was to a college age student with no real job experience other then being in the Israeli army for two years. She didn’t even have an American bank account; all she had was an Israeli bank account with a pretty low balance. And in case anyone’s wondering, no, she didn’t fabricate any answers on the application.

In the UK, we have ‘simple’ bank accounts, which seem pretty similar to your credit unions. (We have those too, but not quite the same). No overdraft or extra benefits, but no charges either. Sensible parents will get their children a bank account early on. They can’t write cheques until they are 18, but they can use a debit card as long as they have enough credit.

Once they are 18, they can apply for a credit card. So long as their bank account is OK, they will get one with a low limit (£500?) and a high interest rate. When my daughter got to this stage I got her to apply to the bank for a small loan, which she (I) paid back over 12 months. Now she had enough history that when she left to go to college she could get what credit she needed.

There are no rules because there is no one way to start accumulating credit. Many of them have been mentioned so far, but the most common ways to get a first trade line with a credit bureau are:

[ul]
[li]Student Credit Cards: As folks have said, most of these are specifically aimed at students with no credit history, so they do not require one. They generally have higher interest rates than non-student cards, and may have fees, but one of the large motivations for the banks is to snag future customers while they are just beginning[/li][li]“Emerging Credit” Credit Card: If you aren’t a student, there are still “starter” credit cards. The most common of these are secured cards (where your credit line is only equal to the amount you put in a special deposit account with the bank), but there are also partial secured cards (get a $1,500 line with a $500 deposit), or non-secured products with high interest rates or high fees (high interest rates aren’t a problem if you are paying it off every month)[/li][li]Authorized User on Credit Card: In the old days, the credit bureaus didn’t distinguish between the owner of an account and an authorized user, so it was common to become an authorized user on your parent’s card, and on the bureau it looked like your card. This loophole started to get exploited back in the 1990s, as people would offer to sell authorized user status on their card. You could pay someone some money, and they would add you as an authorized user. You wouldn’t use the card, but presto, now you had credit. This was the main thing that drove bureaus to distinguish between the owner of an account and AUs, and for credit score modelers like FICO to not include AU accounts in a credit score.[/li][li]Student Loans: Many student loans can be made with no credit history, either with or without a cosigner.[/li][li]Cosigned Loans: Very common in the past; I don’t know if it is as common anymore, with the advent of student and emerging credit cards (outside of student loans, where I believe it is still pretty common). You apply for a loan, and you get someone (usually parents) to guarantee it[/li][li]Auto Loan: There are auto loans out there that do not require a credit history. They are able to do it because of the secured nature of the loan (they can repo the car), and they will charge a high rate.[/li][li]Store Cards: Again, not as common now as 30 years ago. For a lot of people, their first “credit” card was a charge card from Sears, JC Penney, or Montgomery Ward. Many of these would offer you a low line card, that needed to be paid off every month, with no credit history required.[/li][li]Consumer Finance Companies: Another category that has become a little less prevalent due to government regulation (a good thing, in this case, IMO). There used to be a ton of places where you could go in and get a signature loan, with a 36% interest rate, usually for relatively small amounts ($200 to $2,000 generally). We used to call them “Mouse Houses” in the industry, and many of the big banks would have divisions that did this, as well as companies like Avco. They would generally have little offices, not part of the traditional branch network, if owned by a bank. With the new regulations, the companies that do this are less likely to report to credit bureaus (unless you don’t pay), so it isn’t something that is used to build credit as much.[/li][/ul]

I’m sure I am forgetting one or two things, but I would say that the vast majority of people get their first credit experience through one of these sources.

I had a “student” checking account at my mother’s bank, and then another (which I still have) in college. I didn’t get a credit card until I was 30, and by then has enough student loan history for it not to be a problem.

I’m fairly certain my credit started with my first credit card that I got shortly after I turned 18. I’d had a savings account with my bank for several years and I eventually got a pre-approved credit card from them, so I took it with the main intention of getting the account to start building credit. I still have it because it’s still boosting my credit by being my oldest credit line. Shortly thereafter, I bought a car and my dad cosigned for it. That had the benefit of getting my a lower interest rate on the loan, because his credit was better than mine, and getting me a second credit line that helped boost my credit. I’ve had great credit ever since.

I applied for my first credit card when I was 18, using my boss as a reference after first asking if she’d help me out. She got a call, verified my information, then gave me some shit about making more than she was.