How do build credit?

[RedDog]

I was denied a lease on an apartment today, for having too little of a credit score. Thing is, I'm 19 and haven't had a really long time to build any credit. Should I apply for a secured credit card to build at least some credit? I have no idea how this shit works, and it seems fucking retarded and the biggest joke of a catch-22 I have ever seen.

 

[Damian B]

Get a credit card and use it, but pay it off every month. You build credit by proving to lenders that you're responsible with money, and are not a liability for them.

 

[Habsburgs]

buy low, sell high

 

[JeffTD]

Get a credit card (I'd recommend AMEX since you're more or less required to pay it off in full at the end of the month) and start using it for everyday purchases like groceries, gas, etc while simultaneously setting aside the actual money to pay the bill off with. At the end of the billing cycle, pay the balance on-time and in-full, every single time.

 

[MKS]

Actually paying in full is not the best option if you're trying to build your credit score fast. It helps but it's more beneficial to keep a small balance. Sign-up for no interest credit card for 6 months (or more) and maintain a small manageable balance. Use that card for everything possible.

 

[JeffTD]

Actually paying in full is not the best option if you're trying to build your credit score fast. It helps but it's more beneficial to keep a small balance. Sign-up for no interest credit card for 6 months (or more) and maintain a small manageable balance. Use that card for everything possible.

Good point, although I will say it can be a very thin line to walk as a 19 year old with a new (false) sense of wealth. Tebow knows I wracked up stupid debt in my first few months with a card at 18.

 

[NoSoup4you22]

Cut your hair.

Oh wait...

 

[Zack Uidl]

Yeah, like MKS mentioned, not always the best way to go.

I HATE credit. I have always paid things off not even on the end of the month, but as soon as possible. It totally bit me in the ass when I was buying my house. I had the money, make more than enough to pay the mortgage, but my credit was not good enough due to paying everything off immediately. Totally lame in my opinion, but the way it goes I guess.

 

[Loren Littlejohn]

Credit is one of the dumbest things people hold in value.

Mine is well established and pretty high, but I still fucking LOATH the system that is your Fico score dictating what kind of interest rate you get.

HORSE SHIT.

 

[roy22341]

Credit cards aren't necessarily the best way to go. From what I understand a manageable auto loan might be your best bet. More than likely you were rejected not so much for having poor credit but for having a "thin" file - meaning they don't have much to judge you on. Credit cards will help you build credit, but I'm personally not a fan (made it 25 years without one and still going strong with a 780+ credit score). Building credit is a tricky business - you have to be patient with it because it is so easy to find yourself treading water or worse very quickly.

 

[RedDog]

Oh wow, so that pretty much shows how little I know about all this mess. I don't have a car, but I do want to acquire one in the coming year, should I apply for a loan?

 

[roy22341]

First thing would be open a bank account (if you don't already have one). Checking and savings. If you're unemployed your chances of getting any loan or credit card are slim to none. After that maybe a department store card if you can/want?

When it comes to getting an auto loan - if you can find a co-signer with decent credit that is the way to go. After 6 months or a year switch it over completely into your name and keep making regular timely payments.

 

[Terminus]

Get a co-signer on the apartment.

 

[RedDog]

My dad co-signed.... Apparently his score wasn't so great either.

 

[bryan_kilco]

I have a Capital One (Visa) card and only a $300 limit on it. I've had it for quite some time now. Last I checked, which was probably at least 3 or 4 years ago, I had a "Good" score of like 640 or so. It struck me as odd - since I did have a few late payments and overdrew the account a few times.

But yeah - credit card and buy small stuff with it and pay it off.

 

[grywolf627]

As said before by a few others...no...do NOT pay off things if you're trying to build your credit. Maintain a small balance that you can easily afford to manage (while saving up that cash on the side to eventually pay it). Credit card companies do not like people that consistently pay off their charges and don't carry a balance. They don't make money off of these people. Carry a small balance, make your payments for a few months, then pay it off. Repeat.

As far as not checking your credit in 3 or 4 years...highly ill-advised. You should be checking your credit at least once a year. You're able to check your credit for free from the 3 big agencies for free once per year. Don't throw this away. Use the opportunity. You may not like it, but in this world today...your credit is everything, and you NEED to stay on top of things.

 

[ChrisTanakaCanwell]

Take out a secured loan from your bank, buy some shit (or don't), and pay it back on time

 

[SimonSez]

Did they give you a print-out of your credit information? I think they're legally required to if you ask for it. Otherwise get a free copy of your credit report online. If it checks out fine (700+ and no negatives in the past two years) then I would think it wasn't your credit but something else that caused them to deny you rent. I worked as a maintenance guy for an apartment complex for a short while and there was a lot of discrimination going on just judging on how people looked. The applications said that your credit would be checked but often times they wouldn't do that because it costs $40.

 

[RedDog]

I would love to get on top of these things. I don't know how to, as I'm still really new to all this.

 

[Loren Littlejohn]

Hey man start by getting your free credit report. You can do this once a year, it doesn't give your number but it does give you an idea of what's going on with it. IIRC I did this through www.annualcreditreport.com

I personally started with a car loan and that worked out. It's a fucking pain in the ass to get one though and the amount they let you have when your first starting out isn't much...

It's also a shitty loan (fucking more than 20% if they even say yes) so stick with it for no more than a 1.5-2 years and then ditch it for something better (re finance if you can or pay it off early, don't go the full term of the loan or you will be paying almost double what you financed). Try your bank first if you can, they will probably say no or only give you like $5k but it's better than nothing.

Or get a co signer with decent credit and don't fuck up the loan (never pay late), because if you do it fucks over the co signer (credit score) as well and they start bugging them for the money since you turned out to be a bad gamble.

The credit card idea can work as well, but in my experience it doesn't work as fast. A good year with a car loan worked for me, YMMV though. Also keep in mind credit cards have really shitty interest rates for those who have little/shitty credit. I've never heard of anyone without credit getting 0% apr.