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Thread: Building up credit

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    Default Building up credit

    Hi,
    I was looking for some advice on how to build up my credit. My goal is to build up my credit and try to invest in a house this time next year solely in my name. My credit is pretty much non existent at this point. I am just turning 21 and have been living with my bf since I was 16, and he has had everything in his name. Also, My car was bought cash so I have never really shown having any bills and paying them off. (would a gym membership or tanning membership that is paid monthly on time show as anything for credit or dependability?) Sorry if that sounded silly but I have no clue as to what does and does not go on your report and what is looked at when you are trying to buy a house.
    I do not have any credit cards, besides my bank cards that can also be used a Visa/Mastercard. So I'm not sure if those will count as any kind of credit. I have not been able to get approved for any unsecured credit cards. Someone told me I should start with a secured credit card.
    I would appreciate any advice as I am clueless in this area. Where do I even go to get a copy of my credit report so I know where I stand? What are some good ideas to establish credit??
    Thanks everyone!

  2. #2
    God/dess Emily's Avatar
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    Default Re: Building up credit

    go to any of the credit reporting agencies and you can see your credit report. it'll give you a score called your FICO score that they will explain to you. It is your credit-worthiness score. exifax.com, experian.com, myfico.com...any of these are good.

    You can also buy a house with less-than-perfect credit....or buy it cash. But definitely start buildin credit if you can use it responsibily.

    As for your gym membership and tanning, i don't think that is reported, but your bank account is something (afterall, you may overdraw on your balance)

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    Default Re: Building up credit

    Thanks emily,
    I went to myfico.com and tried to order, but I guess apparently I do not have anything recent enough to even have a score it said? The notice said that you must have:

    "At least one account which has been open for six months or more.
    At least one account that has been updated in the past six months.
    No indication of deceased on the credit report"

    in order to receive a score. So I guess this just means I have nothing on my report? Thanks for all your help. I have been doing some research and it seems the only place to start is a secured card for now.

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    Veteran Member Sara's Avatar
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    Default Re: Building up credit

    A secured card doesn't look bad on your credit report.

    7 years ago I tried to buy a car (with 1/3 down in cash) and was told I couldn't qualify for a loan and had to give the car back. My credit was shot. I immediately applied for a secured Capital One credit card ($200 limit). Every month I charged it to max and paid it in full. After 6 months I got an offer that they would triple the amount of my next deposit, so I made a $1600 deposit and my new credit limit was $5000. Two years later I qualified to buy a house. At the time 100% of my income came from dancing.

    If you want to buy a house you need to file taxes. If you don't, you will eventually get in trouble with the IRS for tax evasion. Taxes on $40k/year equal out to about $12k, even less if you have kids. The easiest thing to do is make quarterly payments. I mail in postal money orders every time I have $700 worth of tax money so that I won't spend it.

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    Senior Member m's Avatar
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    Default Re: Building up credit

    Only words of advice I have from a completely different indusrty but be careful how many times you pull your credit as it lowers your score. Two best ways I seen to beef up credit is to have a few accounts that you max and then pay right off or buy things at the places that do the no interest/no financing for x months and pay right off. Good luck, no credit is takes a lot less time to overcome than bad credit.

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    God/dess Emily's Avatar
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    Default Re: Building up credit

    other routes besides a secured credit card is a specific store card, like Victoria's Secret or maybe a gas station card. Start small. Creditors don't like to see someone applying for too much credit at once (and they will know because anytime someone looks at your credit report, it shows)....which is why it lowers your score. This is only temporary though. it's not the worst thing in the world to pull your report.

    I've spent many years building up my credit and I've got pretty good credit because of it. it's not an overnight thing, but it's worth it in the end. Not only can you buy a house, but your loans will be cheaper since you show you are a lower risk,, and banks will compete with each other to lend you money. It will give you the opportunity to get a small business loan if you ever want to do that.

    Check out fool.com. There is a lot of personal finance advice on there that is easy to understand.

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    God/dess Lena's Avatar
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    Default Re: Building up credit


    As a dancer I think it's easier (or more possible) to get a no doc loan. This means that instead of looking at your pay stubs and taxes and credit report, they will only look at your credit report and taxes, or credit report and bank statements. What you need for this is some credit, declare taxes, and show regular monthly deposits into your bank account for a year.

    To get credit, start by putting your phone in your name, and making sure the bill is paid every month. Get a WalMart card (seriously, I think anyone could get one), and try for a gas card. Pay like 3/4 of those bills every month, and pay them completley off every three or four months. Soon you'll be bombarded with credit card offers, but only get one or two, and only charge what you can pay off every month.

    Lena



  8. #8
    Pamela
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    Default Re: Building up credit

    Get bills in your name, and pay them every month. Get a credit card or two, and use them carefully. pay your cc bills every month.
    get as much stuff as you can in your name. Car, utilities, cc cards etc. And pay them. And yes, hospital bills will be seen on a credit report. Pay any thing thats outstanding. Owning and paying is how i built up my credit.
    Good luck.

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    Default Re: Building up credit

    Thanks for the great advice everyone, I have somewhat of a plan for the next year. Pamela, what about medical bills from when you were under 18? I'm sure that would still be on there right? So the way I understand it is that if I pay them off it will still be on my record, but will be better as paid off. Or does it wipe it off when they are paid? Also, do things against your credit stay on for your whole life, or is there a time period to how long something will show up for?
    It is great to see all the financially secure women who are smart with their money on this board. I am planning for my future to be the same way, got to start somewhere!
    Thanks!

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    Default Re: Building up credit

    My fiance owned a credit repair company for 8 years and is an expert in this area.

    There are 3 credit reporting agencies, equifax, Trans Union and Experian,formerly TRW.

    He always advises a person to get a secured credit card first. Inside most Wal-marts as you walk in the door is a rack with promo cards on it. The should have apps for First consumers National Bank. Grab one.

    Next, get a mailing address at a mail drop, not a PO box, where you have a street address.

    Next, get a second phone line put in your home and list it as a business such as Vanity sales group. list that name with the people you rent your mail box from. if you have to, go to the county clerks office in your city and fill out a fictitious business statement in your business name. You can take this with you to the bank or anyone who wants to see that you have filed the proper papers to have a dba, or doing business as name in lieu of your own.

    You don't actually have to do any business under this dba, but give yourself a job title and a salary such as customer service rep. Since you are only 21, give yourself a salary that you will use on credit apps of about $1800 a month.

    Put down on the first consumers M/C app that you work for vanity sales group as a sales rep and under salary put $1800 per month. under length of employment put 2 years and in your files write down a hire date of lets say 4/01. At your age you don't need to list any otheer jobs but on EVERY credit app you fill out, use this info. NEVER deviate from it.



    Some potential creditors will call the phone company to verify your company listing so if you are listed in the directory and with directory assistance, you will fly. have a bank acct with payroll style checks with only vanity sales group and your mail drop address and business phone # on them.

    never tell anyone you own your own company. being self employed is a negative. You are a sales rep for vanity sales group,which is a good job title since if a potential credit grantor calls to verify employment, sales reps are never in. Always answer the phone vanity sales group during business hours and don't give this phone # to friends. Have voice mail attached to this phone saying we are out of the office or with a customer.

    this works very well. after you have had your M/c for 4 months, go to Nordstom and apply for instant crediit. You should get a $300 limit. After 6-7 months of credit history you can try 2 other stores, like Dillards, Mervyns, May Company. Do not try anywhere else until you have over 1 year to 1 and1/2 years credit history. Too many inquiries for credit will hurt you and each creditor has a certain requirement for granting credit. don't deviate from what I am telling you. NEVER pay a bill late.

    you may be able to finance a new car with about 6 months credit. Buy a NEW car form Ford as ford motor Credit is more flexible. Don't go anywhere else. Have 2 paystubs with perfect withholding figures on them. use a semimonthly pay period and get an employers tax guide form the Irs office and get a stat tax employers tax guide form their office. This way you have 2 checks per month one on the 15th and on on the last day of the month. Do the stubs on your computer with a gross pay of $900, and look up the fed tax on the semimonthly charts for that amount and the same for FICA, medicare and stte taxes. always show year to date earnings. DO JUST LIKE A NORMAL PAYSTUB. have $2000 or a little more down and once you get the car be prepared to answer your business phone the next day to verify your employment when Ford Motor Credit calls. once you do all of this your car loan is approved and PAY ON TIME. In 2 years trade the car in and you should be able to get any car you want.

    I have given you a gold mine worth of information that all the savy self employed people use to make getting credit easy.

    You can report some of your dancer income under your own company if you choose to report it.

    Follow this to thew letter and don't EVER make a late payment and you will have impeccable credit in several years time. don't try for th major bank cards for about 1 and1/2 to 2 years and no debit cards like you have now do not report to the credit bureau. make sure your credit cards are no more than 1/3 of the credit limit before you apply for credit.


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    Default Re: Building up credit

    This is what Ive been looking for!! I have no idea how to build credit myself. Im only 20 and I still dont know how.
    I have been applying for credit cards and being denied because I have no credit or at least thats what the letter said informing me why I had been turned down. These are mostly department stores.
    Also, I had lived on my own for almost two years with most bills in my name...ERrr payed most on time. Now I see the importance of paying bills on time. I also have a cell phone I got on my own (with a 150 deposit!) in which most of the time I pay on time. If it gets shut off if you dont pay your bill that month does that mean your score goes down?
    After reading this thread my idea of credit had changed alot. But, some extra advice would be appreciated

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    God/dess Zofia's Avatar
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    Default Re: Building up credit

    Every creditor that reports can make your credit score go up, or down, depending on your payments. Pay the minimum and your score goes up. Pay in full it goes up more. Most cell phone companies who do credit checks also report experience. Thus, if you do a prepaid cell plan, they won't report. Lots of landlords do not. Frequently, the power company does not report. That's not to say you shouldn't pay your electric bill on time. There is a move within the utility industry to adopt their own credit standards and credit scores. That will reduce the number of skips who move to the next service territory.

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    Banned Melonie's Avatar
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    Default Re: Building up credit

    With the original question in this thread being about buying a home, it should be pointed out that, unlike credit cards or car loans, mortgage loans involve granting credit over a very long period of time. This usually means that dancers have very little probability of ever being approved for a conventional home mortgage based solely on their dancing income even if they build up a good credit rating, simply because banks know that very few dancers will be able to keep working as dancers for the duration of a 30 year mortgage loan.

    As Lena pointed out, there IS alternative mortgage financing available such as Stated Income loans and No Doc loans. People in the alternative financing business want to see one thing - CASH FLOW ! This means typically three years worth of tax returns and bank statements showing that you have more than enough cash flow after paying income taxes to cover home mortgage payments plus property taxes, utilities and other costs of living. People in the alternative financing business also want to be holding one thing - EQUITY. This means saving up enough money to plunk down at least a 20% down payment plus closing costs at the time of the home purchase, such that the alternative financing people wind up holding a property deed as security worth at least 20% more than you owe them in mortgage principal.

    PS Tina has indeed provided some extremely valuable information in regard to how to set up a "business front" and thus obtain first time short term credit. However, this approach is of rather limited value in regard to conventional mortgage financing. Mortgage bankers and alternative financing companies will be much more impressed with someone making regular on-time car loan payments from beginning to end of the loan!

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    Senior Member Green Apple's Avatar
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    Default Re: Building up credit

    ack! I didn't realise the credit agencies did'nt' like it if you suddenly got alot of credit cards. Within the last 6 months, i've probably gotten 5 credit cards in my name. Before that i had none..yikes! Plus, i just canceled two of them becuase i never used them. I heard that's not a good move either.
    Never look down on anyone, unless you are helping them up!

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    Default Re: Building up credit

    a 'blast from the past' resurrecting this thread - but you have raised a very good question. Yes credit rating can suffer if you have too many credit card accounts ... based on the theory that if you have all of this unsecured credit available that you might use it all at once, thus making any potential mortgage/car loan lender nervous that you won't be able to carry the additional monthly payments.

    And yes activating a number of credit cards within a short time period is the equivalent of sounding an 'aah-oo-gah' horn on your credit rating, as this is a typical reaction by people who have hit a 'wall' in regard to making their existing monthly payments and also being able to pay their rent and buy groceries. In other words there is a strong statistical correlations between people who have activated and charged up new credit cards within a short time period, and those same people declaring bankruptcy a few months further down the road (as the new credit card monthly payments plus the monthly payments on pre-existing debts begin to eat them alive).

    To understand the negative effect of credit cards on your credit rating, remember that to a loan officer there is not a lot of difference between a cardholder with a $10,000 limit and a low balance versus a cardholder with a $10,000 limit and a $9,900 balance. The reason is that the loan officer has no control over the cardholder's future use of the credit card, such that they could run the credit card balance up to $9,900 the day after the mortgage/car loan they are applying for is approved. Thus both situations really present the same amount of worst case 'risk' to the loan officer. In the real world, obviously the low card balance case counts for something. However, in the real world, having fewer cards and lower credit limits count for even more - regardless of whether the balance gets paid down every month or not.

  16. #16
    Yekhefah
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    Default Re: Building up credit

    You have no credit whatsoever, which is a little better than bad credit, at least. Start small. Get a credit card and start using it - but PAY IT OFF every month. Don't carry a balance from month to month or you'll get in trouble. Keep track of what you spend, on groceries for example, and make sure you don't spend more than you can pay off when the bill comes. That's a decent way to start.

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    God/dess VenusGoddess's Avatar
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    Default Re: Building up credit

    Quote Originally Posted by Yekhefah
    You have no credit whatsoever, which is a little better than bad credit, at least.
    This is NOT true. No credit is WORSE than bad credit. With no credit, lenders cannot look at your history and see what your pattern of repayment is. They cannot look at your credit and say, "Well, these are all medical bills, but everything else is paid as agreed" or whatever.

    Get a secured card and use it in to purchase small items. Make payments on time and don't pay the full balance off every month. What builds credit is paying in increments.

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    Senior Member Green Apple's Avatar
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    Default Re: Building up credit

    Wow, thanks Melonie, you gave me some good info
    Never look down on anyone, unless you are helping them up!

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    Featured Member scorpio's Avatar
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    Default Re: Building up credit

    what Tina said is pretty much true, but you don't nearly have to do even half of it to build credit. I work in finance for a major lender, this is what you need to do:

    1; get a secured card, make sure your payments are on time. get several.
    2; apply for a utility (power, gas) in your name.
    3; always pay rent by check

    after 6 months, go apply for a non-secured card. keep your balance under 50%, and always pay on time.

    within 12 months, you should have great credit.

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