How to build credit?

J

JaCkaL829

it was my first time...
As my title states I'm looking to build some credit for myself. I'm 23 and apparently don't have any credit. I think it's because I don't have any credit cards, except for one under my mother's name, and I never took out any loans for school or anything. I'm looking to build my credit up since I got denied from the Discover cashback rewards card a couple months ago; and just a couple days ago from the Express card. I remember always getting letters from credit card companies saying I was approved, yada yada back a couple years ago.



Anyway any help? I've always had a savings account and just opened up my checking account a couple months ago.



I'm not really in a rush since I don't have any huge purchases (car, house) in the nearby future, but I would like to get my credit up since I don't pay bills late and never had any financial/debt problems.



Any help would be appreciated.



Thanks!
 
easy ways to build credit (i'm sure you'll get tons of responses on this):



1. use a credit card



--i use a credit card for nearly every purchase i make. not only it is convenient, but i only have to do one transaction online a month to pay most of my bills. i also get cash back at the end of the year, so it's nice. DO NOT carry a balance...only use it for convenience. pay it off every month. this will build a track record for your credit.



2. car payment



--a car payment will definitely show your history for credit reliability.





i'll let others fill in more. :)
 
paradigm said:
easy ways to build credit (i'm sure you'll get tons of responses on this):



1. use a credit card



--i use a credit card for nearly every purchase i make. not only it is convenient, but i only have to do one transaction online a month to pay most of my bills. i also get cash back at the end of the year, so it's nice. DO NOT carry a balance...only use it for convenience. pay it off every month. this will build a track record for your credit.



2. car payment



--a car payment will definitely show your history for credit reliability.





i'll let others fill in more. :)
Click to expand...



I think you missed the entire point here:



He has no credit card so how can he use it?

How could he get a car loan with no credit history?

His is asking how to begin to establish a credit history.
 
RTexasF said:
He has no credit card so how can he use it?
Click to expand...

He can go to his bank and see if what they have available. They will probably be able to help especially if he's had a savings account and now a checking acct. It may only be a couple hundred dollar limit at first, but it is something to start with.



RTexasF said:
How could he get a car loan with no credit history?
Click to expand...

He would probably have to get a parent or guardian to co-sign the loan.



Those are definitely 2 ways to build credit.



One little know way to hurt your credit is to actually close credit cards. You wind up lowering your debt/credit ratio.
 
If you're a college student it used to be fairly easy to get credit cards. You didn't even need to have a job or any income. College students are most likely to use their card unwisely but still pay for it eventually, so they practically hand it out on college campuses.



I don't know who you're banking with, but some financial institutions like Wells Fargo offers a secured credit card. Basically you give them money as a deposit (something like $200-$500, I don't know the required deposit amount) and they open up a credit card for you that gets reported to all 3 of the major bureaus every month. At first you'll have to pay the card every month to get the balance down and then you'll be able to "spend" on it. You can't get too crazy with it (it is your own money after all) and it builds up your credit.



You don't want to pay the balance off every month. Credit card companies are in the business of making money. They make money when you borrow their money and pay back interest. So when starting to build your credit, you don't want to pay the balance off every month. Make small monthly payments. Once you've established your credit, then it becomes wise to not have debt. Also, if your credit is new, don't keep opening and closing accounts. You have to show that you're a reliable customer so the longer your account is open, the better. It's called credit history afterall, not credit "future".
 
BlackElantraGT said:
You don't want to pay the balance off every month. Credit card companies are in the business of making money. They make money when you borrow their money and pay back interest. So when starting to build your credit, you don't want to pay the balance off every month.
Click to expand...



Credit card companies also make money from the retailers also (usually 3%) off the top of every transaction.



I dont think carrying a balance on your credit card effects your credit in a positive way at all. Usually quite the opposite.



If you think your credit score is way off from what it should be, you need to get a new credit report and check for fraud...
 
I'm not sure if what I have is a secured credit card or not. I have a Visa check card which is linked to my checking account. If it isn't maybe I'll look into getting one.



I also agree with the two posters above me, I have no intention of carrying a balance and making payments for something when I have the money to pay everything off.



I just applied for a MC reward card so I'll see what happens with that. I do remember receiving a pre-approval for american express maybe a month ago, so if the MC doesn't work out I can always try the american express.



Thanks for the suggestions thus far.
 
I suggest just applying for a credit card. Easiest way to build credit besides school loans.



I have 3 credit cards. 2 that have a limit $1,000+ and one that has $1,500 limit. I only have a total of $500 together on all three.



I've had them all for about 1.5 years. I am 19.5 years old. My credit score is 640. All you do is pay on time and ALWAYS pay more than the minimum payment.



Once you get going, a way to raise your credit score is be added to a parent that has good credit. And to be added as an authorized user. It will not lower their score.
 
I've only had a credit card for less than a year (20 years old), but have had a car payment for the last 3 years and my credit score is 715. It won't take long to build good credit if you use it wisely, pay on time, and pay off as much as you can.
 
JohnnyDaJackal said:
I'm not sure if what I have is a secured credit card or not. I have a Visa check card which is linked to my checking account. If it isn't maybe I'll look into getting one.



I also agree with the two posters above me, I have no intention of carrying a balance and making payments for something when I have the money to pay everything off.



I just applied for a MC reward card so I'll see what happens with that. I do remember receiving a pre-approval for american express maybe a month ago, so if the MC doesn't work out I can always try the american express.



Thanks for the suggestions thus far.
Click to expand...



That's just a debit card. It does not get reported to any bureau so it will not improve your credit whatsoever.



Let me be clear on my previous statement about carrying a balance. Let's say you open a secured credit card with a $500 deposit. First and foremost, ALWAYS make sure your payment is on time and more than the minimum. What you don't want to do is pay that $500 back the next month, and then never charge anything on it anymore and expect your credit will go up because you carry a zero balance.



Carrying a $0 balance is a good thing, but you can't just pay it off once and then expect to build credit from that. If you want to pay off your balance every month, that's good but you need to establish a history to show your financial responsibility. Having a zero balance doesn't mean you're financially responsible. It just means you don't use credit and have no debt. Charging and paying for your items in a timely manner shows responsibility.



I'm not telling people to go buy a stereo and pay for it on credit. That CAN build credit, but it's not the smart way. Use your credit card to pay for things you would normally pay for with cash, such as food and gas, etc. And if you don't like paying interest, just pay that balance off at the end of the month. But you have to keep building your credit.



It's like a detailing. Some detailers on Autopia achieve "celebrity" status on here because they consistently prove they are pros and not hacks with their Click & Brags. Does it mean they are better than your average weekend warrior? Not necessarily, but people will put more trust in their work and in their opinions because they've shown in the past the quality of their work.



Building credit is much the same way, you're trying to prove to the credit companies that they can trust you with their money.
 
i was in the same situation



tried applying for a couple cards and was told no



but was finally able to get one through my credit union, i pay it off every month and they keep raising the limit on the card, so i must be doing something right
 
BlackElantraGT said:
You don't want to pay the balance off every month. Credit card companies are in the business of making money. They make money when you borrow their money and pay back interest. So when starting to build your credit, you don't want to pay the balance off every month. Make small monthly payments. Once you've established your credit, then it becomes wise to not have debt. Also, if your credit is new, don't keep opening and closing accounts. You have to show that you're a reliable customer so the longer your account is open, the better. It's called credit history afterall, not credit "future".
Click to expand...



You do not have to carry a balance on a credit card to build credit, just show the ability to pay off a balance. When I bought my house when I was 26, the only credit I had ever had since then was one single credit card I had since I was 18. I never once carried a balance. When the bank pulled my credit, all three credit agencies rated my credit as above 800. The highest possible is 850. The loan officer said he had never seen someone under 30 with a credit score as high as mine.
 
i got my first credit card when i was sixteen (iirc) and i was very responsible with it and treated it like money in the pocket. i would buy a few things each month, which would be around $25 or so (amount doesn't matter), and then get the bill and pay it off. i did this for many, many years and would get all these offers from different credit card companies wanting me to open up with them. if it wasn't for me doing this, i wouldn't of got my 03' civic for the 2.9 APR (the deal at the time) and NO money down at the honda dealership. since then, i keep getting approved credit card applications, but they go right into the paper shredder as i have 3 credit cards already (all have pretty good percentage rates and i called a few years ago to see if they would lower it even more, and may do it again) and really don't plan on getting anymore. well, maybe a discover or american express, but that's it...
 
bert31 said:
You do not have to carry a balance on a credit card to build credit, just show the ability to pay off a balance. When I bought my house when I was 26, the only credit I had ever had since then was one single credit card I had since I was 18. I never once carried a balance. When the bank pulled my credit, all three credit agencies rated my credit as above 800. The highest possible is 850. The loan officer said he had never seen someone under 30 with a credit score as high as mine.
Click to expand...



Read my clarification after my original post.



I don't want someone to get the idea that they can charge $500, pay it off the next month, and then just leave that account open with no activity and expect that to build up their credit.
 
BlackElantraGT said:
Read my clarification after my original post.

I don't want someone to get the idea that they can charge $500, pay it off the next month, and then just leave that account open with no activity and expect that to build up their credit.
Click to expand...



I see now. I just didn't want him thinking he had to carry a balance month after month and get himself in trouble like too many people I know have done.
 
evenflow said:
What kind of cards give cash back at the end of the year?



I just have your typical run of the mill Sovereign CC.
Click to expand...



My JPMorgan Chase card gives me reward points. I get 1 point for each dollar spent.
 
You must log in or register to reply here.
Back
Top