Getting Credit

[koima]

So I'm a 30 year old married mom and I have no credit. I had a credit card right out of high school, maxed it out, paid it off, and have never gotten a credit card since. My car was paid in full, we rent our house from a family member, and I have no recurring bills that show on my credit report.

I'm thinking it would be a good thing to have SOME credit, but I really don't know where to start to establish good credit!

 

[kathie859]

Most banks have a "secured" credit card. It's a credit card that is linked to a savings account. i.e., a low limit like $300 linked to an account that has $300in it. Make sure that the account will report to the credit bureaus (the bank that I work for does report it as a regular account). Use this account and payoff the balance every month (no interest to pay!) and that's one way to start building credit.

Some store cards (think Sears, Macy's, Lowes, etc) are easier to get than others so I'd apply for a few of those. The point isn't to build a lot of debt, but to demonstrate that you can use credit wisely.

Good luck!

 

[cglaura]

Also to consider...do you need credit? I mean, it seems as if you've been doing just fine paying cash, why would you need to apply for anything? I'm guessing at 30 you already have your insurances set, so there is a history there for future insurance.

If it is only for a possible future mortgage, I'd suggest talking to a mortgage expert to see what kind of credit history they like to see.

You don't really need a credit history unless you are going to be applying for credit or loans. Does that make sense what I'm trying to say?

If not, just keep paying cash and sock away as much as you can for a rainy day.

Congrats to you on staying away from that slippery slope alot of early 20s have and getting out of it. I totally made that mistake with all those tables set up in the college lounge, took a good bit of time and hard work to dig myself out of that!

 

[FeFeMJ]

I agree with the kathie859. I work for a credit union and when just attempting to build credit a secured credit card/ loan is usually the way to go. However if you are a member of a credit union you could also just apply for a normal credit card as most credit unions will lend to people with short credit histories or first time borrowers. If you do not have a long credit history your interest rate will probably be towards the top (18% at my credit union). However, most cards have a 25 day grace period and if paid off in full by due date, no interest is charged. So you could use the card, but pay it in full each month without having to really worry about what your interest rate is. And most credit unions will review your card each year to see if you qualify for a higher limit/lower rate. (If yours does not, wait atleast 6 months from getting the card and call to request a lower limit. They will review credit to see if possible)

 

[DisTwix]

Hey there -

Having been thru a bankruptcy, I had to take deliberate steps to rebuild my credit.

I found a credit card that was non-secured, allowed me a small $500 balance, and knew that they reported to two different credit agencies every three months. So, I'd use the card every month, leave a small balance for one month, then pay it off the next. Basically, showing that I was worthy.

Since then, I've gotten car loans and two mortgages (one a refi), and even store credit with a couple places. I credit (pun intended) that first card with the foundation of my better than average credit now.

Good luck!!

Also.... you may want to consider, if you are trying to buy a house at some point, financing a car on zero interest if it's still available when you are ready for new wheels... you can pay it off whenever you want, but the act of taking the loan and paying it for a few months will definitely improve your situation!

 

[JerJan]

Also to consider...do you need credit? I mean, it seems as if you've been doing just fine paying cash, why would you need to apply for anything? I'm guessing at 30 you already have your insurances set, so there is a history there for future insurance.

If it is only for a possible future mortgage, I'd suggest talking to a mortgage expert to see what kind of credit history they like to see.

You don't really need a credit history unless you are going to be applying for credit or loans. Does that make sense what I'm trying to say?

If not, just keep paying cash and sock away as much as you can for a rainy day.

Congrats to you on staying away from that slippery slope alot of early 20s have and getting out of it. I totally made that mistake with all those tables set up in the college lounge, took a good bit of time and hard work to dig myself out of that!

You should ABSOLUTELY establish your own credit ASAP! My husband passed away at the age of 49 (you NEVER know....) last July and I would have been TOTALLY SCREWED if I had no credit at the time. In the last year I have had to refinance our home and buy a car for our daughter if I didn't have credit those things couldn't have happened as smoothly as they did.

 

[cglaura]

You should ABSOLUTELY establish your own credit ASAP! My husband passed away at the age of 49 (you NEVER know....) last July and I would have been TOTALLY SCREWED if I had no credit at the time. In the last year I have had to refinance our home and buy a car for our daughter if I didn't have credit those things couldn't have happened as smoothly as they did.

I totally agree in that type of circumstance (and I'm sorry for your loss). I didn't know her financial situation. My point was if you have enough in savings, you didn't need credit....as if she has been and continues to put away savings she could buy a car outright or even a home (I know this is not possible for everyone, but it is not unheard of either).

I was just giving her something else to consider. That is why I was wondering if she planned to always rent from relatives (some people do), or if there would be a mortgage in the future.

 

[LKHomemail]

You MUST re establish your credit rating. You never know when you might need or want to have it. It takes time to build it , so it's not like you will be able to do it on the spur of the moment.
I would get a copy of your credit report and see what information it contains.
I suggest that you ask that your cell phone provider, utility companies report your payment history to the credit bureaus.
As others have suggested begin applying for credit (secured and non secured) and start using them responsibly. Use only for things you would pay cash for and pay them off monthly so you do not have any fees.

CREDITBOARDS.com is a great forum of boards where you can watch and learn about all this stuff. They have lots of valuable information for you. Folks will help you sort it out. You can find out what banks will extend what credit cards to your credit score and compare rates / perks for cards.

good luck to you. VERY IMPORTANT, you really NEED to have a good credit rating . be careful to use it wisely. take care.

 

[JerJan]

I totally agree in that type of circumstance (and I'm sorry for your loss). I didn't know her financial situation. My point was if you have enough in savings, you didn't need credit....as if she has been and continues to put away savings she could buy a car outright or even a home (I know this is not possible for everyone, but it is not unheard of either).

I was just giving her something else to consider. That is why I was wondering if she planned to always rent from relatives (some people do), or if there would be a mortgage in the future.

Thank you for you condoloences.

You should always have a good credit history established....it takes a while to do that. I do have savings and my husband had life insurance (you should have that too, but that's another story) as well. However, I didn't have an extra $230,000.00 in savings to pay-off the mortgage. YOU NEVER KNOW what tomorrow can/will bring....PREPARE for your future NOW!

 

[LKHomemail]

Yes, if she saves she will be able to buy a home or car outright. Something to consider though is that even if she can afford to buy the home outright , it is probably not a good idea. She should take out a small mortgage just for the reason she probably needs something to write off against her taxes. For the average joe, a home mortgage is about the only thing you can use to help you out w/ income tax. She may also want to buy another house for investment purposes or buy a small business that might help her build wealth for her future. She will need a credit history for this . It will not hurt her to have a good history established and might really help her. I don't see any reasons why she should not re establish it and get it top teir again. IMO, nothing to lose and all to gain. She should talk to a finance / tax advisor / accountant or attorney for proper advice and tax planning guidance.

 

[P.I. Squirrel]

Some of these secured credit cards have very high startup costs. For instance, they will charge an application fee, an annual fee, a card issuance fee, and a monthly maintenance fee. Then, they will charge you high interest on top of that. With some of these cards, with a $200 credit limit, you'll pay $150 in fees up front, which will leave you with only $50 usable credit on the card.

The absolute best bet is to get a 'secured loan' from your local bank. You give them, for instance, $200 to put in a CD earning interest. Then they loan you $200, secured by that CD, but at a lower interest rate and no fees compared to the secured card. Then, when you pay off the short term loan, say after 6 months, they release the CD funds to you, with whatever interest it earned.

But, since credit is based on stability over time, do not pay the loan off early.