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Trying to help girlfriend build credit

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Anonymous
Not applicable

Trying to help girlfriend build credit

First off, I think this girlfriend will be sticking around for a while Smiley Wink so I want to use my recent interest in figuring out credit to help her out so that we both have good credit when making large future purchases. Smiley WinkSmiley Wink

 

Background info on her:

Credit score 575 on ck. She has no credit cards but about 4 inquiries.

She has a 10k student loan that she will start paying off when she graduates at the end of 2015 and has a job lined up. The loan seems to be what's hurting her... Idk anything about loans though... When she graduates, should she work on paying it off as fast as possible?

 

What made us look into her getting a credit card was the tempting referral rewards offer if she signed up for Discover It through me (Smiley Surprised), but since she has has a 575 I'm worried Discover won't accept her and will just be another inquiry on her account that didn't have to be there... Does Discover ever accept people in her situation? The referral reward is my last concern when actually trying to build her report, but it's still something to think about, ha.

 

Hopefully you guys deliver good news on getting accepted for an unsecured card. But if she needs to build credit before applying for unsecured cards, I searched and found these options... I'm looking for any input/advice because I don't know much about any of this! (Ha!):

 

Warning: I'm over-analytic and try to be very thorough with everything I do.

I realize I may be too worried or too picky, but feel free to tell me again anyway. lol

Option1, Secured Card:

These seem like a good option, but if you think she would get accepted somewhere else then she would like to skip this step (preferably Discover or Amex)

Her dad is former military (I think...) so she should be able to get a USAA secured card... Those offer a CD with the initial deposit which seems like a good idea.

 

Option2, Co-sign:

Could I (or her dad) co-sign with her? How does that work? If I co-sign on a Discover It card with her I'm assuming that voids the nifty referral bonus (oh well). If we co-sign with her, can we ever be removed without canceling her account? Won't that lower my AAoA in the long run? She is good with saving and budgeting; she just has no credit history, so I'm not worried about her habits hurting my report.

 

Option3, Authorized User:

I can add her as an authorized user to my Discover or Amex, but I see there is a controversy over if that actually helps a report at all... Again, I'm sure we would lose the referral bonus when the time comes for her to get her own Discover or Amex account - too bad.

 

Option4, Small Loan?:

I know nothing about loans... But I'm about to make a small $500 purchase. Maybe she can apply for a loan and use it for my purchase then I pay the loan off? Will that help?

 

 

With all of these options I'm worried about the AAoA. If she starts any of these options, then cancels the co-signed account/gets removed as an authorized user/completes the loan, will that count as a short lived account on her report (and mine if she cancels the co-signed account). Basic mathematics would imply that when trying to make a higher average age of accounts, you would want very few short accounts weighing it down. So when looking at options I don't want to create an account that will bring down the AAoA. I guess that there would never be a reason to remove her as an authorized user or close a co-signed account though...

 

Thanks for the help! Any advice on any part of my post is appreciated!

-Sanders

Message 1 of 13
12 REPLIES 12
JSS3
Valued Contributor

Re: Trying to help girlfriend build credit

Check Cap1 pre-qual.

Message 2 of 13
Anonymous
Not applicable

Re: Trying to help girlfriend build credit


@JSS3 wrote:
Check Cap1 pre-qual.


I will tonight when I see her, and thanks for the quick response! I know it says that prequalify checks don't hurt your credit score, so does that mean we can check any and all prequalify links with no risk? I will check them all tonight if it doesn't harm anything lol. 

Message 3 of 13
Countingpennies
Established Contributor

Re: Trying to help girlfriend build credit

Not a good idea to co-sign anything with anyone.

 

She's in a good position to to build credit on her own.

 

Yes, start with the prequals. They are soft pulls, but an affirmative prequal is no guarantee she will be approved after apping. She will have to risk a few HPs before being approved for anything. A few isn't going to make much of a dent, they do go away, and so worth it if it results in an approval. I'd start with Cap1. If she's approved for 1, she might want to app for a second one the same day, this often results in only 3 HPs instead of 6.

 

Does she have income now?

Message 4 of 13
Anonymous
Not applicable

Re: Trying to help girlfriend build credit

One of the most important lessons you have to learn is never co-sign anything for anybody.  In terms of AU helping people build or improve their credit, there's no controversy. It does help tremendously. Make her an AU (you don't even need to give her the cards) and in 6 months if you have low UTIL and excellent payment history, she will be able to apoly for her own credit card. 

Message 5 of 13
JSS3
Valued Contributor

Re: Trying to help girlfriend build credit

Pre-quals are soft inquiries so no risk.

Cap1 and Chase are the most accurate. Discover is the least.

I've referred many builders and rebuilders to Cap1 and 8/10 got cards.
Message 6 of 13
Dw4250
Valued Contributor

Re: Trying to help girlfriend build credit

Agree with what all above have said.  Many on here (including myself) have learned through bitter tears that it is not a good idea to mingle finances with your SO, particularly when you are not married.

 

Her best bet is to establish her own credit.  Shouldn't be that difficult as she does have bad credit; just no credit.  When/if the two of you are ready to settle down and say buy a house, you will be in a much stronger position if both of you have good credit.

 

Good luck!

Message 7 of 13
jamesdwi
Valued Contributor

Re: Trying to help girlfriend build credit

add her as an AU on one or more of your cards,  I have had great luck doing this with Cap1 cards.. don't give them the card, cap1 has an option not to send the card, wait 2-3 months, have her apply for a cap1... 

 

my Son followed tihs process, no other cards or baddies or TL's... just 2 AU's...

did the same with a good family friend, only some old collections on her report. AP'd approved for a $500 QS card.. 

 

 

Cards: Chase Southwest 20k & CSR 17k & CSP 10k & FNBO 30k Oregon Duck 5k, & AMEX BCP 32.5k & Amex Magnet 15k&amg; Hilton Surpass 7.5k & Delta Gold 12k & Zync NPSL, Fidelity AMEX 17k Commerce5.9k & Cash Forward 7.5k & Sams Club MC 20k, Paypal Extras MC 10k, Paypal Credit 7.25k CapOne Venture 15k, QS 2.5k, QS 750, Amazon 10k, Walmart 10k, Citi Simplicity 18k, Discover IT 23k and a nice stack of store cards.
Landmarkcu Personal Loan 10k
Message 8 of 13
bandlp08
New Contributor

Re: Trying to help girlfriend build credit

I have built about 6 of my family members credit by letting them be AU on my Capital One card without giving them a card and within 4 months time all were able to apply for cards of their own. My cousin was one of them and she had  about 10  medical bills  and 2 charge offs and was still able to get a QS with Capital One. I believe her starting limit was $500 and was raised to $2300 in 3 months just by calling in.

Message 9 of 13
Anonymous
Not applicable

Re: Trying to help girlfriend build credit

The best way to build credit is through a secured loan through your credit union. what you do is put about 300 hundred in your savings account. Then you borrow the 300 dollars and the 300 dollars is held in your savings and the other is deposited into your checking. As you make your monthly paymentS, the secured funds in your savings become available to use.
Message 10 of 13
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