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No credit history. What should I do?

Kenata 7 10 December 27, 2015 at 05:17 PM
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Hello all, looking to pick the brains of the fiance savvy sders out there. I've skimmed the forum for any potential similar topics, didn't see any, so I'm going to post.

Basically, I have no credit history. I currently work as an independent contractor. I see a lot of different options. Opening store credit cards, opening a secured card with my bank (but mine is Not, so I'm not inclined to pick that option)... But I'm not sure which is the best option. For example, I know secured cards require a deposit, but most of them do not mention a return on your deposit.

It there any particular store card that would be good to apply for?


Thank you for your help.

14 Comments

1

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Joined Jul 2008
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#2
Store credit cards do not have a big positive effect on your credit report. My first line of credit was a store credit card from Best Buy and after having that for about a year with no negative marks I was still initially denied for a real rewards credit card from my bank due to lack of credit history. I was able to bring the denied application to my bank and they were able to push it through based on my positive history with the bank itself.

A secured card is probably the best way to begin building credit. The deposit is always your money. You would get any remaining deposit back if you closed the card or "product changed" to another card which did not require a deposit.

NerdWallet's Best Secured Credit Cards 2015 [nerdwallet.com] looks useful.
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#3
Just apply for a credit card. Call them up and tell them your situation.
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#4
A store credit card should affect your credit score the same way any other card (with the same credit limit) would. It is probably safe to assume that store credit cards will have much higher interest rates and more unforgiving terms.
My boyfriend was approved for a discover it card with no credit history besides a student loan that he hadn't started paying on yet and being an authorized user on one of my cards.
My first credit card was a US bank student visa which I got with no credit history at 18.

I think it is possible for you to get an unsecured credit card through a bank if you want to look and do a bit of research on local banks in your area. Depending upon your income, you will probably only be approved for a small amount (500-1500) but as you establish your credit history, your limit will continue to increase.

The most important thing about any credit card is that you pay the full balance each month so that you don't have to pay interest. It is a myth that you should carry a small balance and accrue a small amount of interest in order to raise your credit score faster.
If you know someone you trust/who trusts you, you can ask to be added as an authorized user to one of their existing accounts. In most cases AU accounts won't have much weight in credit decisions, but it can turn the odds in your favor if you are hosting starting out. Be very careful if you go this route because bad history on an AU account will reflect negatively on your own application.
Check out the website Credit Karma or the forums myfico to get an idea of what cards you would qualify for. Credit Karma can also give you an estimate of what your current credit score is which gives you a better idea of what cards you will qualify for.
Finally, don't go crazy applying for a bunch of cards. Limit it to 3 or so in the first year and then one every six months thereafter. Especially if you are getting ready to apply for a mortgage.
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#5
When I was ~17 and had no credit history, I just applied for Citi Forward, Discover More, and Chase Freedom and now I have a score of 750+
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#6
Just apply for any credit card, if one doesn't accept you, then apply for the next one until you get one and then start building your credit from there.
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#7
TLDR version at bottom.

First you really need to see if you have "basically no credit history" or if you do have some things on your credit report. Things like student loan/car late payments or bills that didn't get paid could be negatively affecting your score. Or you could have a history of perfect payments on a student loan or car payments and it could be helping give you some positive history.

Credit Karma will give you an idea of what's on your report (the scores are not real FICO scores though so ignore them) but you really should get your real credit reports by mail (there's information in the mailed versions that might not be in the online report) the free ones are fine, you can get them once a year at (annual credit report dot com):
https://www.annualcreditreport.com/index.action

And if you have any problems on there you should look into fixing them. Go to (credit boards dot com) Credit Forum, that's the most knowledgeable place I've found about everything credit, and they know the best way to help with credit problems.
www.creditboards.com

Now you know where you stand and you're ready to apply for some credit that you have a good shot of getting approved for.

You might get a unsecured card if your income is high enough and you don't have a negative credit history look into: Chase Freedom, Discover It, Capital One Platinum, any student credit card if you are eligible.

Get a secured card over a store card because on manual review no creditor is going to say "oh look at that limit on that store card". But they are going to look at your credit report and see you have a card with Major Bank X (or credit union) and based upon that say "well my bank (Major Bank Y) needs to match Major Bank X" in terms of lending you credit. Basically creditors act like lemmings in some regards and they are quite willing to match what other creditors have already given to you.

Getting a secured card for $300-500 is fine to start but like I said in the previous paragraph if you put more money in you are going to get higher unsecured cards when you start getting unsecured credit, NFCU, Capital One, Citi, , USAA, BoA or Discover (apply for a regular card and they will counteroffer you) would be fine for secured cards.

USE YOUR CARDS LIKE CASH if you don't have the money in the bank don't buy it, and you will never get into trouble. Of course if it's a real emergency then use the card like you need $2,000 repair to your car and your car is necessary for your job/life then use the card.

And SET UP ONLINE AUTOPAY in case you forget to pay something on time just as a backup. Go ahead and pay your bills manually so you are seeing how much money you are spending and where the money is going, basic personal finance.

You actually want to have less than 10% utilization of your available credit, and DON'T PAY INTEREST if you can avoid it. The utilization is based on when your statement closes usually, so if you have say a $1,000 card pay it down before the statement cuts so you have less than $100 dollars on your statement. Then pay the rest of the statement before the due date. This is especially valuable when you want to apply for more credit and maximize your scores for the best rates/limits.

Then after 6 months of paying your card on time you can apply for 2-3 unsecured credit cards. Get cards with SIGN UP BONUSES or REWARDS YOU CAN USE while making sure that any fees for the cards themselves are worth it (ie do you pay a $95 yearly fee but get much more than $95 of value out of that fee versus a plan 2% back card).

Repeat this 1 or 2 or 50 times until you have between 3-100 cards depending on how many you are comfortable managing. You need to have 3 cards on your report at minimum for the best credit scores. You can close the secured card after it's 2 years old. And yes most secured cards don't give you any interest return on your deposit but you can close it and get your deposit back at any time.

UNSECURED CARDS, look into: Capital One Platinum, Chase Freedom, Discover It, Any Student Credit Card, BarclayCard Rewards?

SECURED CARDS, look into: NFCU, Capital One, Citi, USAA, BoA

If you decide to apply for a store card make sure its for a store you actually shop at, expect a small limit to start with since you are starting out but use it responsibly and it will grow over time. Walmart or Amazon would probably be 2 of the most useful to most people and you would have a solid chance of approval.

TLDR version of credit:
1) Find out what's on your credit report
2) Fix problems on report
3) Apply for a credit card
4) Use credit card and pay in full monthly
5) Apply for 1-3 more credit cards in 6 months
6) Continue using credit cards responsibly and pay in full monthly
7) Repeat Step 5 if desired

And if anyone reads this whole thing you get a cookie. Wink
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#8
+1 on the secured cc route, but make sure you look for one that will convert to a regular one after a period of time. there's more good info about what to look out for with them here: http://www.bankrate.com/finance/c...ard-1.aspx
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Last edited by acesmuzic January 6, 2016 at 08:22 PM

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#9
Quote from thisjustin View Post :
TLDR version at bottom.

First you really need to see if you have "basically no credit history" or if you do have some things on your credit report. Things like student loan/car late payments or bills that didn't get paid could be negatively affecting your score. Or you could have a history of perfect payments on a student loan or car payments and it could be helping give you some positive history.

Credit Karma will give you an idea of what's on your report (the scores are not real FICO scores though so ignore them) but you really should get your real credit reports by mail (there's information in the mailed versions that might not be in the online report) the free ones are fine, you can get them once a year at (annual credit report dot com):
https://www.annualcreditreport.com/index.action

And if you have any problems on there you should look into fixing them. Go to (credit boards dot com) Credit Forum, that's the most knowledgeable place I've found about everything credit, and they know the best way to help with credit problems.
www.creditboards.com [creditboards.com]

Now you know where you stand and you're ready to apply for some credit that you have a good shot of getting approved for.

You might get a unsecured card if your income is high enough and you don't have a negative credit history look into: Chase Freedom, Discover It, Capital One Platinum, any student credit card if you are eligible.

Get a secured card over a store card because on manual review no creditor is going to say "oh look at that limit on that store card". But they are going to look at your credit report and see you have a card with Major Bank X (or credit union) and based upon that say "well my bank (Major Bank Y) needs to match Major Bank X" in terms of lending you credit. Basically creditors act like lemmings in some regards and they are quite willing to match what other creditors have already given to you.

Getting a secured card for $300-500 is fine to start but like I said in the previous paragraph if you put more money in you are going to get higher unsecured cards when you start getting unsecured credit, NFCU, Capital One, Citi, , USAA, BoA or Discover (apply for a regular card and they will counteroffer you) would be fine for secured cards.

USE YOUR CARDS LIKE CASH if you don't have the money in the bank don't buy it, and you will never get into trouble. Of course if it's a real emergency then use the card like you need $2,000 repair to your car and your car is necessary for your job/life then use the card.

And SET UP ONLINE AUTOPAY in case you forget to pay something on time just as a backup. Go ahead and pay your bills manually so you are seeing how much money you are spending and where the money is going, basic personal finance.

You actually want to have less than 10% utilization of your available credit, and DON'T PAY INTEREST if you can avoid it. The utilization is based on when your statement closes usually, so if you have say a $1,000 card pay it down before the statement cuts so you have less than $100 dollars on your statement. Then pay the rest of the statement before the due date. This is especially valuable when you want to apply for more credit and maximize your scores for the best rates/limits.

Then after 6 months of paying your card on time you can apply for 2-3 unsecured credit cards. Get cards with SIGN UP BONUSES or REWARDS YOU CAN USE while making sure that any fees for the cards themselves are worth it (ie do you pay a $95 yearly fee but get much more than $95 of value out of that fee versus a plan 2% back card).

Repeat this 1 or 2 or 50 times until you have between 3-100 cards depending on how many you are comfortable managing. You need to have 3 cards on your report at minimum for the best credit scores. You can close the secured card after it's 2 years old. And yes most secured cards don't give you any interest return on your deposit but you can close it and get your deposit back at any time.

UNSECURED CARDS, look into: Capital One Platinum, Chase Freedom, Discover It, Any Student Credit Card, BarclayCard Rewards?

SECURED CARDS, look into: NFCU, Capital One, Citi, USAA, BoA

If you decide to apply for a store card make sure its for a store you actually shop at, expect a small limit to start with since you are starting out but use it responsibly and it will grow over time. Walmart or Amazon would probably be 2 of the most useful to most people and you would have a solid chance of approval.

TLDR version of credit:
1) Find out what's on your credit report
2) Fix problems on report
3) Apply for a credit card
4) Use credit card and pay in full monthly
5) Apply for 1-3 more credit cards in 6 months
6) Continue using credit cards responsibly and pay in full monthly
7) Repeat Step 5 if desired

And if anyone reads this whole thing you get a cookie.
what kind of cookie sir?

Quote from thisjustin View Post :
TLDR version at bottom.

First you really need to see if you have "basically no credit history" or if you do have some things on your credit report. Things like student loan/car late payments or bills that didn't get paid could be negatively affecting your score. Or you could have a history of perfect payments on a student loan or car payments and it could be helping give you some positive history.

Credit Karma will give you an idea of what's on your report (the scores are not real FICO scores though so ignore them) but you really should get your real credit reports by mail (there's information in the mailed versions that might not be in the online report) the free ones are fine, you can get them once a year at (annual credit report dot com):
https://www.annualcreditreport.com/index.action

And if you have any problems on there you should look into fixing them. Go to (credit boards dot com) Credit Forum, that's the most knowledgeable place I've found about everything credit, and they know the best way to help with credit problems.
www.creditboards.com [creditboards.com]

Now you know where you stand and you're ready to apply for some credit that you have a good shot of getting approved for.

You might get a unsecured card if your income is high enough and you don't have a negative credit history look into: Chase Freedom, Discover It, Capital One Platinum, any student credit card if you are eligible.

Get a secured card over a store card because on manual review no creditor is going to say "oh look at that limit on that store card". But they are going to look at your credit report and see you have a card with Major Bank X (or credit union) and based upon that say "well my bank (Major Bank Y) needs to match Major Bank X" in terms of lending you credit. Basically creditors act like lemmings in some regards and they are quite willing to match what other creditors have already given to you.

Getting a secured card for $300-500 is fine to start but like I said in the previous paragraph if you put more money in you are going to get higher unsecured cards when you start getting unsecured credit, NFCU, Capital One, Citi, , USAA, BoA or Discover (apply for a regular card and they will counteroffer you) would be fine for secured cards.

USE YOUR CARDS LIKE CASH if you don't have the money in the bank don't buy it, and you will never get into trouble. Of course if it's a real emergency then use the card like you need $2,000 repair to your car and your car is necessary for your job/life then use the card.

And SET UP ONLINE AUTOPAY in case you forget to pay something on time just as a backup. Go ahead and pay your bills manually so you are seeing how much money you are spending and where the money is going, basic personal finance.

You actually want to have less than 10% utilization of your available credit, and DON'T PAY INTEREST if you can avoid it. The utilization is based on when your statement closes usually, so if you have say a $1,000 card pay it down before the statement cuts so you have less than $100 dollars on your statement. Then pay the rest of the statement before the due date. This is especially valuable when you want to apply for more credit and maximize your scores for the best rates/limits.

Then after 6 months of paying your card on time you can apply for 2-3 unsecured credit cards. Get cards with SIGN UP BONUSES or REWARDS YOU CAN USE while making sure that any fees for the cards themselves are worth it (ie do you pay a $95 yearly fee but get much more than $95 of value out of that fee versus a plan 2% back card).

Repeat this 1 or 2 or 50 times until you have between 3-100 cards depending on how many you are comfortable managing. You need to have 3 cards on your report at minimum for the best credit scores. You can close the secured card after it's 2 years old. And yes most secured cards don't give you any interest return on your deposit but you can close it and get your deposit back at any time.

UNSECURED CARDS, look into: Capital One Platinum, Chase Freedom, Discover It, Any Student Credit Card, BarclayCard Rewards?

SECURED CARDS, look into: NFCU, Capital One, Citi, USAA, BoA

If you decide to apply for a store card make sure its for a store you actually shop at, expect a small limit to start with since you are starting out but use it responsibly and it will grow over time. Walmart or Amazon would probably be 2 of the most useful to most people and you would have a solid chance of approval.

TLDR version of credit:
1) Find out what's on your credit report
2) Fix problems on report
3) Apply for a credit card
4) Use credit card and pay in full monthly
5) Apply for 1-3 more credit cards in 6 months
6) Continue using credit cards responsibly and pay in full monthly
7) Repeat Step 5 if desired

And if anyone reads this whole thing you get a cookie.
what kind of cookie?
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Last edited by SamuelT9578 January 2, 2016 at 09:39 AM
#10
I got my first credit card at age 17 a decade now and I have 800+ credit score it just the matter of using it and it building up on the long run. People always said you need to buy a car to truly build credit but that isnt truth just takes time to build and improve with a simple credit card.
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#11
Quote from Kenata View Post :
Hello all, looking to pick the brains of the fiance savvy sders out there. I've skimmed the forum for any potential similar topics, didn't see any, so I'm going to post.

Basically, I have no credit history. I currently work as an independent contractor. I see a lot of different options. Opening store credit cards, opening a secured card with my bank (but mine is Not, so I'm not inclined to pick that option)... But I'm not sure which is the best option. For example, I know secured cards require a deposit, but most of them do not mention a return on your deposit.

It there any particular store card that would be good to apply for?


Thank you for your help.
what acesmuzicsaid.
secured card that converts to regular one.
My first card was with 5/3 bank
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for those that hate spelling mistakes www.walmarts.comCool

bulb save money by checking your insurance every 2 years (and not every 20)
#12
If you need to, get a secured credit card. Use it a couple of times per month and pay the balance in full before the due date. Show a credible and responsible history with it and they will continue to raise your limit. This is going to make it easier for you to get an unsecured credit card later on.
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#13
Quote from SamuelT9578 View Post :
what kind of cookie sir?


what kind of cookie?
Your homemade chocolate chip cookie is in the mail yummy
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Joined Nov 2005
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#14
Quote from gpister View Post :
I got my first credit card at age 17 a decade now and I have 800+ credit score it just the matter of using it and it building up on the long run. People always said you need to buy a car to truly build credit but that isnt truth just takes time to build and improve with a simple credit card.

Indeed. got my first card (which I still have) at ~ 17 and many cards, a couple car loans and mortgages later, last I checked my score was 820 something. the most important part? Always pay it (CC) off on time in full every month, period. Oh yeah, and get a card and KEEP it - credit history (length) plays a large role in the FICO too.
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#15
I remember 20 years ago or so while going to school CC company's would set up and give out free stuff if you filled out an application. I know a bunch that put income as zero and they still go a CC. Probably not done anymore.
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