advice on establishing credit

[yosemite]

I don't know how it works where you are but just something to think about.

My husband and I recently moved (1 year ago) for a period of 6 weeks we actually owned 2 houses, the one we sold but which hadn't closed yet and the one we bought which had closed. We needed "bridge" financing but found out they offered what is a blended mortage. No problem.

What I found out when I went to the bank to get the papers completed is this. I had credit cards for Sears, The Bay, and a couple other department type stores but none had any balance and I hadn't used them in years - BUT, the bank considers the LIMIT on each of these cards as debt! As in, although I didn't owe any money on any of them, I could possibly have gone out the day after I got my mortgage and ran each card up to it's limit, thus the limit on each one was considered to be debt on my part.

My personal account rep told me that I would be best off to close all those accounts and carry only one credit card.

So, in summary, if I have 6 credit cards with a maximum allowable of $1500 each and nothing owing on any of them - the bank considers me to have $9,000 debt.

Just something to think about!

 

[captiva]

This is my area of expertise. You can send me a pm if you like, and I would be more than happy to help.

 

[katl8e]

Due to my ex-husband's profligacy, I've been working on cleaning up my credit, for the past 4 years. In that time, I've been able to buy 2 new cars and last week, I was approved for a MasterCard.

As for the mortgage, there are programs for first-time buyers: the FannieMae is a Federal government program and you may want to look into HUD (Housing and Urban Development). Some of those HUD houses are pretty rough but, if they're structurally sound and you don't mind some fixer-upper work, they aren't bad starter homes. Some home loan programs will let you borrow extra $$ for renovations.

 

[peppersmommy]

Thanks for all of the advice. How long would it take me to establish good credit if I did have a sears credit card?

 

[mferr84]

Originally Posted by Peppersmommy

Thanks for all of the advice. How long would it take me to establish good credit if I did have a sears credit card?

when we went to the bank for a loan, they told us we didnt have any kind of credit background, and i told her we had recently gotten a card and spent and paid off like $100... she said it would be about a month after the payment was received before it showed up on our credit report....

i dont know the exact amount of time it would take to establish 'good credit' but if you charge something and every month afterwards make your payments on time (you could even pay a little extra- that never hurts) within a few months it should start showing up... it took us 7-8 months before we started getting approved for EVERYthing(with a limited maximun of course)... no questions asked... but the first couple months after we had our first card, we still wernt able to do much...

GOOD LUCK!

 

[gailc]

This is also an area of expertise for me as I've worked in auto finance for 19 plus yrs.
Some good tips. The best thing is to be honest on any credit application. We see so many with inflated income. If you work less than a couple of yrs on your job we are going to contact your employer for job and income verification. Too many credit cards is a bad thing. They will "count" as available debt. Best to borrow a small We consider time on job/time at address. Looking for stable customers. But most likely if you applied for financing with us we would have for a co-signer on the note. Just remember though that if you don't pay your loan most lenders will look to the cosigner for payment. If they refuse to pay and for instance its an auto that gets repo'd. All signers on the loan will have there credit affected negatively. That is why it is not a good idea for a girlfriend/boyfriend to sign together for a loan. Or good friends either. Many times the relationships break apart. PM me if you have any other questions.

 

[annabelle33]

I got my first credit card with my mom when I was in highschool. It had a 300 limit or something and it was for emergencies and to build credit. But my REAL credit came when I was in college and applied for a student credit card. They expect students not to have any credit so no one is really ever turned down. I never carried a balance on it, I charged everything I bought and then paid it off every month. I was really careful about spending. When I went to get my first apartment they ran a credit check (and at that point I just had the card with my mom and my student card) and the woman said I had really great credit. I started getting store credit cards for the discounts but never used them after, which was bad I guess but at the time made sense to me. I never took out a loan in my life but I ran my credit at work and it's still great.

One of my friends is going through kinda the same thing though. She's 26 and never had any credit, and she thought she was doing a good thing but now can't even get a cell phone in her name and can't get an apartment. It's like you're damned if you do and damned if you don't. You are forced to get a credit card to live in society but then you are condemned when you overuse it.

I don't really have much advice but don't just get anything you can find. I would never take a card that has an annual fee but if that's the route you need to go I guess there's no choice.. But you don't have to carry a balance for it to count.

 

[valanhb]

One thing to watch out for too...don't take just any offer for a credit card. There are a lot of predatory companies who are quite willing to take a chance on people with no credit....but it costs you a lot! Look at the interest rate. (BTW, the store credit cards are fine, but they do usually have an interest rate of 20-25%, which is terribly high. As long as you plan to pay it off every month, no biggie, but keep that in mind.) Look especially at the yearly fees, setup fees, additional fees that they have to disclose by law on an application.

And for goodness sake - if a company calls you randomly and offers you credit just hang up! Even if the company is big, there is a price to pay when they offer credit to anyone. Unfortunately, hubby fell for one of these when he was trying to establish credit. He accepted the card over the phone. It had a low limit of just $300. What they didn't tell him was that before he even got the card he owed them $150 for the setup fee. Oh yeah, and they didn't tell him that the yearly fees, inclusive, were $225. And that was on top of the 25% interest that was accruing from the time he said yes. Being new to the credit game, he didn't bother checking any of that either, so while he thought he wasn't spending too much, within a month he was over-limit. It was a downward spiral from there. We just couldn't get caught up fast enough to pay it off. That $150 that he actually spent on goods ended up costing about $1200.

Just because you're a risk doesn't mean they should take you for everything you have. Be careful!