Thin credit file- can't generate a credit score

[Anonymous]

Hi! I'm brand new to credit of any kind. My husband and I have been married 15 years now and aside from a few dumb mistakes with credit cards when we were newlyweds, we had sworn off buying anything we could not save up for and pay for up front, including cars. We decided it was time to buy a home and now I've saved $20,000 for a down payment and I'm trying to get our credit scores prior to applying for a mortgage (because, well, we'll be in our seventies by the time I save up the entire cost of a home for us, haha! Not really but we don't want to wait forever while paying rent!) but I can't get any credit report services to even generate a score for us. It says our credit files do not contain enough data to do so. After reading here all afternoon I just applied for a secured credit card with a limit of $300- what else should I do? I really had hoped with a 20% downpayment our credit scores wouldn't be much of an issue. Our monthly income before taxes is close to $7,000 and we're applying for a mortgage for $100,000 and have no debt at all. I just want to know how to proceed from here if anyone can help. Thanks in advance! 

[gdale6]

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@Anonymous wrote:

Hi! I'm brand new to credit of any kind. My husband and I have been married 15 years now and aside from a few dumb mistakes with credit cards when we were newlyweds, we had sworn off buying anything we could not save up for and pay for up front, including cars. We decided it was time to buy a home and now I've saved $20,000 for a down payment and I'm trying to get our credit scores prior to applying for a mortgage (because, well, we'll be in our seventies by the time I save up the entire cost of a home for us, haha! Not really but we don't want to wait forever while paying rent!) but I can't get any credit report services to even generate a score for us. It says our credit files do not contain enough data to do so. After reading here all afternoon I just applied for a secured credit card with a limit of $300- what else should I do? I really had hoped with a 20% downpayment our credit scores wouldn't be much of an issue. Our monthly income before taxes is close to $7,000 and we're applying for a mortgage for $100,000 and have no debt at all. I just want to know how to proceed from here if anyone can help. Thanks in advance! 

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Welcome to My FIco

You want at minimum 3 bankcards and 1 store card. I would apply for 2 more bankcards ASAP they can be secured or you can try for an unsecured card. You also want to end up with a store card in the mix too but it can wait till later. It will take 6 months to generate a FIco score once your first TL is reported.

[Anonymous]

Thank you! Do we each need three cards or should I try to figure out how to put both of our names on the same three cards? I am totally new to this- I didn't see an option to do so. A store card I will work on, I'm not sure what we have in this area that has store credit cards but I will do my research. I know the goal is to use them then pay them in full each month, that is not an issue. I'm confused about the 10% part- are you supposed to only use and pay off 10% of your available credit, or are you supposed to use them as much as you like and as long as you are not carrying over more than 10% of your credit limit in debt each month? I'm trying to rework our budegt to fit in these cards for building our credit and we are used to only spending what we have in the bank and using our debit cards!

[Anonymous]

You're doing exactly what you should be doing. I would also suggest getting a secured personal loan from a CU - I used SDFCU. It does not have to be much, $500 will work. Make it for the longest terms they will allow. Once your secured card starts reporting, you'll start seeing some score generated. At that point, get a second card from another place. You'll both need your own accounts to generate your own scores. After a few months of reporting your scores should start steadily rising. When they get around 600 or so, you'll be able to get some unsecured cards.

You each need to establish 3 bank cards for optimum scoring. Some say add a store card in as well.

[Anonymous]

When reworking your budget, just use the credit card(s) to pay what you normally use your debit cards for.

That's what I've been doing (thin file w/ no score here as well) and it works great for me. I use Excel to list income and bills for each paycheck in a month. I then desgnate which cards I'll use to pay each item and use the budgeted money to pay the credit cards when the charges post.

Good luck!

[Anonymous]

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@Anonymous wrote:

Hi! I'm brand new to credit of any kind. My husband and I have been married 15 years now and aside from a few dumb mistakes with credit cards when we were newlyweds, we had sworn off buying anything we could not save up for and pay for up front, including cars. We decided it was time to buy a home and now I've saved $20,000 for a down payment and I'm trying to get our credit scores prior to applying for a mortgage (because, well, we'll be in our seventies by the time I save up the entire cost of a home for us, haha! Not really but we don't want to wait forever while paying rent!) but I can't get any credit report services to even generate a score for us. It says our credit files do not contain enough data to do so. After reading here all afternoon I just applied for a secured credit card with a limit of $300- what else should I do? I really had hoped with a 20% downpayment our credit scores wouldn't be much of an issue. Our monthly income before taxes is close to $7,000 and we're applying for a mortgage for $100,000 and have no debt at all. I just want to know how to proceed from here if anyone can help. Thanks in advance! 

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You've already gotten good advice on building your credit, but I wanted to comment a little on your math. 

You said you have $20K and expect to get a mortgage for $100K. If that means the house you're buying is actually $120K then your $20K is not 20%. It's only 16.6%. And getting to 20% is a really big deal. It can get you a loan that you wouldn't qualify for at only 16.6%. It also means you won't have to pay PMI, saving you a lot of money every month. 

You also need to factor some money for all the other things like closing costs, appraiser fees, points to reduce the interest rates and lawyer costs. 

[Anonymous]

$120K for a house? Unless seeking to buy in a rural area or in a so-so neighboorhood, $120K won't buy much. Or are you seeking to purchase a condo?

With your gross income, after raising your credit score (more akin to a debt score, since it takes debt to acquire), you would likely qualify for a nice size mortgage providing far more options. While it may cost more in regards to payments, interest, PMI, etc (one can always pay more each month to reduce those expenses) consider the comfort of living in a nice home in a nice, safe neighborhood, and, if children will come into the picture, good schools verses something less.

As for credit cards, secured are a great start. However, before applying for lots of those, recall any pre-qualified / pre-approved credit card mailings you have received lately. That may give you an idea what unsecured cards to try applying for. After you get at least one credit card (secured or unsecured) showing on your credit reports for a couple months with payments, pull the trigger on applications, but go easy - don't get too many cards.

With all that said, there are lenders who will lend with little to no credit history, if the downpayment is large enough. However, that limits your options. On a related note, is the $20K most of your savings? If so, that's risky. And many lenders, especially for a hand review / lack of credit history, will desire the borrower to have a decent chunk of savings set aside for emergencies.

Regardless, you're on the right path building a credit file to have more borrowing options.

[Anonymous]

Check out cap one preapproval on their site. It will be a SP unless you actually find to apply for then it will be a HP. There are a lot info on here for the best cards with Cap One. Maybe you'll be qualified for something!! I'm still learning as well!! Good luck!

[Anonymous]

We are looking at houses in a rural part of Louisiana, so the price range of the houses we are looking at are fairly nice homes for ~ $100,000. Real Estate prices are not high here at all, and it's just us and our daughter so we don't need a huge house as we don't plan on having any more kids. As for my math on the 20% down- I misspoke, the total price of the homes we're looking at are $100,000, not the mortgage is $100,000, sorry! We are still saving for closing costs and associated fees, we haven't yet applied for our mortgage- I just wanted to build up some credit before we do. We not in a super rush to get a home and move in, I just saved up the 20% down and then kind of thought, now what's the next step? Hence my post here. Thank you all for your replies and advice, you've all been super helpful!

[StartingOver10]

Yes a mortgage lender will want to see a minimum of 3 tradelines paid on time for at least a year. A tradeline can be a cc or installment loan. So it makes is easier to obtain a mortgage if you do have 3 or more cc's reporting to your credit report.

Having said that, some small percentage of loan types will accept non-traditional tradelines such as utility payments and that sort of thing to use for your approval. FHA loans can accept non-traditional tradelines but then you have to pay mortgage insurance even if you put down 20%.

You are better off doing as you are doing - getting a few cc's and keeping them in good standing before you apply for a mortgage.

BTW, congrats on being a saver and a budgeter!