How do I establish credit history?
Staci D asked:
I just turned 18 a few months ago, and have been working at JC Penney for a month. I have not over drawn my bank account. I have direct deposit. I have a house in my name, but it’s paid off. I also have a Netflix account, but I’m not sure if they report to the credit bureau or not. Putting utilities in my name is not an option, and I have a cell phone in my gramma’s name, but I can’t change it into mine until my contract is up in 2010. I have applied for 3 credit cards, Chase Freedom Rewards, Citibank No-Hassle, and JC Penney, and I was denied for all three because of having an insufficient credit history, so I’m stoping there with credit cards. So with all this being said, how can I establish my credit history?
Karen
I just turned 18 a few months ago, and have been working at JC Penney for a month. I have not over drawn my bank account. I have direct deposit. I have a house in my name, but it’s paid off. I also have a Netflix account, but I’m not sure if they report to the credit bureau or not. Putting utilities in my name is not an option, and I have a cell phone in my gramma’s name, but I can’t change it into mine until my contract is up in 2010. I have applied for 3 credit cards, Chase Freedom Rewards, Citibank No-Hassle, and JC Penney, and I was denied for all three because of having an insufficient credit history, so I’m stoping there with credit cards. So with all this being said, how can I establish my credit history?
Karen
Danielle
prepaid credit cards
Dora
start with gas credit cards…….. they will almost always issue them……. put some on each card each month….. and pay total of each bill……
if you have three cards…. it will not take long for other credit card companys to start bugging you to death…. and you will wish that you never asked this question……… lol
Frank
You can always start with a secured credit card. This is a card that is tied to an underlying asset (usually money that you pay). Check with you bank about this option. Also, check with you bank about a credit card. Given that you have an account with them they may use your activity and current account value as history. Or, you could work with you bank to take out a very small loan. Something like a few hundred dollars. You can then put this money into an interest baring account and use it to pay the loan back. This option is the last resort option as you will likely not have the greatest loan interest rate and this is a method of paying to build your credit history. Another option would be to have someone co-sign for the credit options mentioned above. Yet this would be someone you ABSOLUTELY TRUST!!! As they could end up killing your credit or vise verse.
Beverly
True credit is only established by borrowing and paying off. The last thing you want to do is finance a bunch of crap you don’t need to finance, just to build credit.
Instead, borrow funds just to hold them on deposit. Make interest payments while you have the money outstanding, then return the deposited loan proceeds to the lender to pay off the loan. This lets you build credit without killing your balance sheet, or risking a bunch of credit inquiries.
If you agree to only hold the funds on deposit, you can borrow this kind of loan without any credit check, at a rate under 5% at creditloader dot com. You can also do more than one loan at a time with them. You won’t need a co-signer and you won’t have to tie up assets. Just be sure you can afford the interest on their lowest loan amount of $25,000.
Kim
For starters, I totally disagree with Credit Guys idea….the numbers never work.
You own a home? Have you considered a home equity line of credit?
The problem with credit cards is those people are brainless! You can show them tons if proof you are in sound financial shape, but their narrow-minded insistence of using credit scores will kill you every time.
What you need to do is go directly to a bank (credit unions are best) and apply there. I’ve helped many people with credit problems, and this route will generally land you a card with a low credit limit ($200-$500), but that’s exactly what you need to get established.
Keep an eye on the large stores line Lowes, Best Buy, etc…many times the will run specials for zero interest purchases. Just pay them off within 6 month and you have just established another line of credit.