Establishing Credit
 

OK, soooo.... any help on this???

This is probably bad but I am 21 and do not have credit.

Problem is, how do I even start?! I applied thru my bank once and was denied. I tried to apply to CareCredit yesterday to help me with Jackson's upcoming dental medical bills but was denied due to lack of credit history. When I tried to get on my own cell phone plan, the same thing happened, so I am under my grandma's, but pay her monthly. How am I supposed to ever start credit, w/o credit history?

I have a new car but my dad had to get it for me. Again, there was something about me having no credit history, etc, and for some reason when trying to put my name on the car (under my dads name), I forget why exactly but the dealership couldn't do it. I pay my insurance but again, it's under my dads name with me just listed as a driver.

It's just kind of frustrating. I make payments and pay bills but am not getting any 'credit' for it. Both my parents aren't the smartest when it comes to financial stuff, so they don't help me too much in that regard. Oh and I get paid in cash basically under the table... usually it's less than $500/month - but sometimes it's a lot more, it depends. I am a pet sitter weekly but also do babysitting, other side jobs such as websites, working at moms salon, dad owns an alarm company I do stuff for, etc. I kept a good amount in my account from my birthday and such where I have a nice cushion to sit on in my bank now.

What is a good starting point? What about a CapitalOne credit card... I have heard those are easy enough to apply for?

We started establishing credit for our kids when they got their first cars. We co-signed loans for them. Why wouldn't your dad be a co-signer rather than putting the loan entirely in his name. If your bank won't do that, check with other banks. My kids also got credit cards with 300.00 limit. They charge small things on them, then pay them off every month. Now they both have each had 2 separate car loans that they've paid off early and our bank wouldn't have any problems working with them in the future. That's how we started establishing some credit for them.

I feel you! My credit was null then not so good even though I've paid things on time and so on...Still don't have the perfect credit I want but I'm even closer now.

The only way I got the credit needed was to buy a house.

But I agree with Cha Cha...get yourself a low limit credit card and don't use it for a whole lot but keep the balance low enough so you can pay the little 10 dollar a month due.

We helped our daughter do this when she was 18 so I don't remember all the details exactly bcuz she's 25 now - lol! Anyway, I think you'll have to go with a "secured" card because you lack credit history and the majority of your income is unverifiable.

If I remember correctly, hubby & I added or co-signed a $500 limit on a card for our daughter. She would purchase something each month if it was cheap but at least once we had her buy something that she had to make 2-3 payments on --- because they want to see that you can manage your money. I don't recall how long before she got her own but it was probably 6-12 months later.

Also, we co-signed on her car with her so that she could build more credit that way.

I don't think anyone is giving out credit cards like they used to - too many people filed bankruptcy. They're really being cautious now. You wouldn't believe what we just went through to buy a house and we have excellant credit.

Good Luck - I hope this helps.

Try places like Victorias Secret, most dept stores (Sears) and gas credit cards (like Chevron etc) to get started. Like others have said it's a sign of the times but it CAN be done. At first it may cost you a little extra but eventually the credit offers will start rolling in & then you'll be asking "How do I get them to stop sending this stuff?"! LOL

I would check out a secure credit card. Also, the insurance must be in your name-- you may have to pay a bit more at first.

Do some research on how to build credit. I know my daughter does not have credit and I had to co sign her lease, but next time I shouldn't. I also know they did get small credit cards to build credit. The more credit you have the more you can get. You want a card to keep so you can show long term credit.

I did start my girls out when in High School, they abused it and now have to start over. But they are young and learned the lessons early.

Good luck

I agree, department stores are the easiest way to get credit, but I think I would start with your cell phone, have it put in your name with your Grandma as cosigner, and make sure you pay the bill in full each month. After a few months, you will have your own credit history, and your bank might even give you a card. I think it's a real mistake to use credit to buy things you don't really need immediately, I use a credit card for almost everything, it's easier than carrying cash, but I pay at the end of the month. You actually have better credit if you use a card a lot, but pay it off immediately, than if you seldom use it.

(Unless you have a trust fund that can be verified....)This is your biggest obstacle. You have no legitimate, verifiable source of income. You would be an extremely high risk borrower as (on paper) you have no income to pay back any loan. Even for those that do have a job, length of employment and earning stability are key componments of loan verification.

I agree with the others that said a secured credit card is probably your best start. Local credit unions are great for young credit builders as their lending rules are often more lenient. Basically you put $500 in a savings account that secures your credit card, and you in turn get a credit card that you can charge up to $500 on. The idea is that you still pay monthly payments for anything you buy and charge, but the $500 savings account is a security for the bank incase you default on your charges. That way, they don't have hardly any risk and you build credit through monthyly payments.

Brit, are you a college student? If you are, working with a bank that works with college students is a another option. Around here, it is Commerce Bank. Under the employment history of the application identify yourself as a "student" and they often overlook the employment history and will start you off with a low limit card. Also, establish a checking/savings account with a bank. Once you've established a checking/savings account some banks will offer debit/credit cards that way too.

We start with our kids when they get a their first job. The apply for a sml cd load,the money goes into a savings acct in the bank where it was accquired,payments are made, the savings acct is NOT touched. This takes approx 18 months. We have been with the same bank for 18yrs. Go to the bank if you have a debit card,ask to speak with a loan officer and tell them your delima. This is usually a small loan of about $1000. Because we did this with our son,he was able at the age of 19 to qualify for a car loan. We do NOT cosign for anything for our children. We love them but if they default it becomes our problem and effects our credit.

That's how I started. I got a Victorias Secret card, and as long as I paid a cash deposit, I had my cell phone under my name until a few years ago. I was a college student living off financial aid and managed to start my credit. Technically, I had no income since financial doesn't really count.

You've received some really good advice. I got my first credit card at Macy's the day after I turned 18 ha. Just don't get too caught up with department stores bc a year later I had a Victoria's Secret card, American Eagle, Gap and a bunch of other stores :eek: My credit card I got through my bank 2 months after turning 18. It was a student card. I would highly suggest trying to get one of these. Who do you have your car insurance with? I used to work for State Farm and I know they have a Student credit card that's really good.

These days it is harder to get credit. Your parents could put you on one of their credit cards and that will show on your credit report as well. That is what I did for my kids and now they have their own credit but it was tough for them to get started.

Boy it must be tough getting credit these days.

Back when I was younger I had to establish my own credit, unfortunately I did not have parents to help with co-signing (lost both when I was very young).

The two most important things I did was get a Checking and Saving account through my Credit Union. By keeping those accounts current for a few years I was able to get a credit card through them also and to this day I still use that Credit Union and have gotten/paid off many loans.

I was able to join my Credit Union because the Uncle who raised me was a member, he gave me the advice to join- which I did.

Brit, good credit is really important in life - it can effect everything from loan rates, to utility deposit and even your car insurance rate (I was shocked to learn the last one).

I would like to suggest that you Google the name Clark Howard, he is consumer reporter who give some of the best advice on credit, lending and spending. I also like Suze Orman and Dave Ramsey a lot, I guess I am a little freaky about finances.

Did you apply for all these credit cards recently? When you apply for credit cards one after the other within a 6 month span your credit score goes down and it increases the probability that you will get rejected for every card after that.

Good luck, little one!
 

Brit, you have gotten some fantastic advice. Adding my :twocents:, be sure that when you apply for credit at a retailer they report customers with good payment records to the credit agencies. Not all of them do - some only report bad customer payment records. Also if you decide to repay a credit card/loan ahead of schedule, be sure what their repayment policies are. My daughter bought a car and wanted the transaction to help her credit history the most. She thought if she repaid the loan quickly it would help her more..... WRONG! In order for the loan and her payment history to be reported, she had to have the loan for one year and one day. Otherwise, her good payment record would not be reported. :rolleyes:

I started with a credit card through my bank, I think because I'm in the military (guaranteed income) my credit limit was pretty high, $1500 to start off with, and they offered a low interest rate. I used it for small things, gas, groceries, but paid off the balance at the end of the month every month. When I applied for a loan for my car 4 years later I got a really really great rate, which is really shocking considering I was only 21 at the time. Even the dealership guys were surprised at the rate I got considering the times we're in right now.
I think you should get on a real payroll, it'll show that you do bring in some actual cash. Banks wont want to loan you money if they don't see any money coming in, i.e. would you loan cash to someone you barely know who doesn't have a job, or any source of real income? Maybe, you do seem like a good person, lol, but at the same time you wouldn't really expect to get your money back.
Good luck, the financial times we're in suck...

I'm 22 and applied for several credit cards, department store cards, etc and got rejected for them all. I finally had to get one through my bank. I would check and make sure that you are getting paid "under the table" legally (you are allowed to make up to a certain amount tax free) and if so, you should be able to report the amount you earn to your bank even though you don't have a real paycheck. Of course, do NOT do this if you are getting paid illegally!

Also, I would see about getting the car changed to be in your name. If it is under your father's name, you need his permission to do anything with it. Mine is under my mother's name, and when I got locked out of my car and the police opened it for me, they had to call my mom to prove I wasn't stealing the car from her. Also, if your father ever got into financial trouble, your car could be taken from you to pay his debts because it is technically his car. My friend got into serious trouble when she bought a car and it got put under her grandmother's name. Ended up losing the car.

No. Did Care Credit yesterday and applied for the credit card thru my bank over a year ago.

How can my credit score go down if I have zero credit? :confused:

Yes, I am in college. I'll have to look into this.

Thanks for everyone's advice and help!

i had no credit when i got married so everything we had was done in my husband's name or before him my parent's. i have paid off two loans from local bank that didn't report so that didn't build anything for me either. my parents never planned for me to have credit either so i was stuck like you were and denied all cell phones, denied on our home loan, and denied my own credit cards from stores.

the fix?? my husband got another credit card on his account that i now use for gas and groceries and the bills are on the same account as him but the card was in my name. that way i'm building my own line of credit but we're together paying the bills on his existing account.

wonder if you can jump onto an account with ur grandma or dad and use it for gas or something just to build numbers up for the next few years?

when i have my kids i'm going to open cards in their names when they turn 18 and use them myself for our family needs just to build them up a credit line. when they go to college I may/may not give them their cards as emergency funds as long as i can trust them to be responsible with them. either way they'll have a credit line built up before they are completely on their own.

I didn't read all the replies but I am 21 too! I have had one credit card it was a $600 limit. I tossed it when I got married. Now my husband has a credit card with a $4000 limit. We use it for plane tickets and vacations, then pay it all off right away.

This is a good way to start building credit, apply for a small credit line 400-600 dollars to start. Then just buy gas, food with it and pay it off right away. I suggest getting one through your bank, and read ALL the details and info on interest rates! Most cards don't charge interest until 30 days after the purchase.

We have NO debt. No mortgage, no car loans, no school loans. We got married last summer and paid cash for EVERYTHING in our wedding, and took a year to save the mondey before hand. So whatever you do, don't go into to debt building your credit. Do it wisely!

Also, you're credit score can go low if you apply for too many cards, and if any applications get declined! I had someone applying and getting denied for credit cards in my name... and it wasn't me! FRAUD. Nothing I could do at the time to figure out what was going on so that's when I actually shut down my current card at the time.

Hey Brit, I went through the same thing. I ended up having to pretty much pay cash for my degree cause the banks wouldn't loan me any money for tuition.

First I would get a credit report, I got mine and realized there was an error in it, once I fixed that it helped.

Also get a credit card, usually banks have student visa cards, it doesn't need a big limit, but that will help. When you get a credit card make sure that the companies DO NOT increase your limit without your permission. Each time you "apply" for credit it takes a hit on your score, and makes it harder for you apply for other stuff.
There are some mixed opinions on the best way to get your credit actually building. Some say you need to continually pay it back immediately, some say that you should make your minimum payment then wait until a day after the due date so that it comes up on their records, and then you pay it off the day after. Personally I like the pay it off immediately method. I don't really think it makes a difference. The other type of credit you could apply for is simple overdraft on your bank accounts, use it once or twice and pay it back, that'll help get you on the map.

What I did was just go around to all the banks until I found one that didn't require a co-signer and had a small limit. These banks are likely to approve you.

Good luck... building credit sucks. It took me 4 years of only having credit cards before the banks would allow me to get a line of credit.