Saturday, November 29th, 2008

How can someone with no known credit history improve their credit rating?

I've never used a credit card before, are there any resources online or techniques that are recommended [apart from obviously getting a card and paying it off in full at the end of each month right?]

I was told when looking for a mortgage that having a land line telephone number and being on the electoral role help with credit rating.

I guess also, getting a contract mobile phone and paying it off in full each month would help!

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6 Responses to “How can someone with no known credit history improve their credit rating?”

Sophie B Says:
November 29th, 2008 at 7:34 pm

I was told when looking for a mortgage that having a land line telephone number and being on the electoral role help with credit rating.

I guess also, getting a contract mobile phone and paying it off in full each month would help!
References :

Huntersmom Says:
November 29th, 2008 at 7:50 pm

If you are looking to get a loan in the future (a year or more) get a secure credit card a make say you fuel purchases on that card a pay it off monthy. This shows that you can put a balance on credit and responibly pay it off in a timely manner. If you are looking to get a mortgage now most mortgage offices will use alternate verification (ie. utility bills)
References :
Worked in banking for seven years. Most banks will not use alternate verification. They will only offer secure cards or guarenteed loans (with a co-signer).

Mister Mister Says:
November 29th, 2008 at 8:31 pm

Here is a short list of places that DO NOT report to the credit bureaus favorably. They more than likely will report you negatively if you default on the terms:

Credit Unions
Utilities
Tradesmen
Doctors
Hospitals
Local finance companies
Landlords
Insurance companies

Every time a creditor sends data to a credit bureau, it costs money. Some lenders don't think this is worth the expense.

You can send copies of statements and bills along with proof of payments to the credit bureaus and ask that they be added to your file. The bureaus don't have to do this, but they may, for a fee.

In the meantime, you could get a 'secured' credit card. You put $$ on the card, and the card issuer reports favorably to the credit bureaus. This is a good way to start building credit, without worrying about getting up to your eyeballs in debt, with your first card. I would check out the Bank Of America secured credit card.
References :

E2M69 Says:
November 29th, 2008 at 8:37 pm

One thing that will start to work for you is to get a card for your local gas station, or something like say Old Navy and again charging a couple of items on the card. Yes pay it off by the due date but that creates a line on a credit report at one of the 3 agencies. Perhaps the next month you might even pay more than the minimum but not in full. Then the next month pay it off. That creates two more lines in the credit report. You've got to start someplace, without that report your life can become a nightmare as your life moves on. Try and but a new car, house, etc. without the report and you're in trouble without it.
References :
Didn't say I liked the system but as in anything in life learn how to work within the system but be aware and don't get carried away.

jpocia03 Says:
November 29th, 2008 at 8:54 pm

You can start by obtaining a secure credit card. But prior to applying ask them if they report on the credit bureaus. These types of cards work like a debit. You can only use the amount that you have in your account.

Otherwise you will need to apply for a card. Paying them off each and every month doesn't build credit, you must roll a small amount over to the next month. Think about it. Credit companies borrow money. If you pay off each and every month, they aren't necessarily borrowing you anything.

For the poster that mentioned mortgage companies use phone lines, they are mistaken. You must have a certain number of active tradelines, including a total tradeline amount. Let's say 4.

You will also need a tradeline that is reporting with a high credit limit of $3,500.00. You don't need it as a balance.

Also, make sure that you speak with the creditors and find out which bureaus they report too. It won't help if all the credit cards and other tradelines only report to one bureau. You will only be pulling one score which doesn't help.

I would suggest going to myfico.com, and read the free pdf. This pdf explains the FICO reporting system. After that then start trying obtain your credit through creditors.

If you don't start trying to build your credit now, you will have difficulties in the future. That much I can guarantee.

Good luck, and let me know if you have any additional questions.
References :

Emanon Says:
November 29th, 2008 at 9:15 pm

I've never had any personal credit history either and my husband and I want to buy a house next year so I decided I needed to get a credit card and begin establishing credit. I went to my bank and got a secured credit card. In six months (as long as I pay on time) they will upgrade me to an unsecured card and up my limit. This is how I am beginning to establish credit.
References :

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