When I was in my 20s (in the 90s/early 00s), I got bitten by the credit bug. I had huge balances and defaults and horrible crap like that. I went through so much misery getting it cleared up that for the past 8 or 9 years I’ve completely steered away from credit. No cards, no mortgages, no car loans, no store cards…nothing. I thought I was doing really well by keeping away from the demon.
HA!
My bad cards are all taken care of. I have a couple of very small ($20/$30) incidents on my credit report from things like co-pays that I had completely forgotten about and thus failed to pay. My credit score is in the high 600s. BUT…
I’m trying to buy a (used) car. This will be the first car that I have ever bought from a dealer. I just talked to the loan guy this morning. I’m being turned down. The reason? “Your credit looks like an 18-year-old college kid’s…there’s NOTHING in this report after 2002. We can’t risk a loan this size ($6000) on someone with basically no credit history in the last 8 years.”
Cautious is not always good. I now have an application in with my credit union for a credit card (deliberately picked a low credit limit) so I can start rebuilding my credit. I have no idea what’s going to happen with this car, though…
Hopefully the credit union will let you get a small credit card (secured if necessary); use it carefully and you’ll look a lot more attractive credit-wise in the future.
In the meantime obviously the car is a tough situation. The dealer might be able to arrange some usurious credit rate somewhere (in which case, if you HAVE to have a vehicle, do your best to pay it off extra fast and / or refinance it once better credit choices are available to you).
It is so weird trying to understand the factors used in these decisions. As soon as I moved to the United States I purchased a new car. Five days into the country, with no SSN and only a temporary work permit and drivers license to my name, I walked out of the dealership with a new car and a $15000 loan over three years. Horrible interest rate, but I never understood why they approved it - it would have been so easy just to have disappeared back home, and I would have completely zero credit history - I basically didn’t exist. Of course, I guess it worked out for them, since I paid it off in full ages ago.
Mostly anecdotal, but we put together a list of people’s experiences about moving from abroad and buying a car and if you do it quickly it seems to go easier than if you wait 5 years. I think this is what the original poster’s problem is, they can understand having no credit rating/history at 18 or 22 or just arrived from another country, but if you have been living in the U.S. and do not have a credit history there is something fishy and you must be hiding something or not have a clue, so it is best not to give you the loan.
In high school economics class, our teacher helped, or really more like made, us all take a $1000 one year loan from the bank (he explained it to our parents who had to co-sign for most of us). We then put most in varying length CDs 3 month, 6 month, 12 month, some in savings and some into checking. We had to pay back the bank every month for the loan and were hugely forbidden to do anything else with the money, but the exercise was excellent (I knew all of it beforehand, but it was a new experience for most):
It gave everyone a (very positive) credit history
It showed us how powerful interest was
It taught the different ways banks and financial agencies can help you
It only cost us like $20 all together
The bank basically didn’t charge any fees as they got 30 new customers every year so they tried to appear as simple and easy and free as possible.
My first house was purchased in large part due to that $1000 loan simply because it started a good history.