topic Re: best way to help out someone to build credit? in Credit Cards

best way to help out someone to build credit?

wilson382 — Sat, 29 Mar 2014 03:34:47 GMT

Hello Guys,

my uncle asked me to help build credit he never had credit ever So i was thinking

Option 1. Make him apply for a credit card of low limit like $500 where i co sign for him.

Option 2 .Add him as an authorized user on my old credit card.

Option 3. Geetting a secured credit card

which one will be faster or easier like I said he never had a credit no where.

I can co sign him with no risk we live together.

Re: best way to help out someone to build credit?

Santi78342 — Sat, 29 Mar 2014 04:11:38 GMT

I'm no expert myself but I would use Credit Karma to give a rough idea of his situation. If he's never had any credit it will at least show any baddies he has had (collections etc.)

After that I would check all the pre-qualifications sites. Capital One, Discover, Citi, Chase, BofA, US Bank, Barclays, & AmEx all have one.

App for one or two cards that hopefully pop up on those. If none, app for a Capital One and a Discover card.

Just my 2 cents

EDIT:

I would also add him as an AU on your oldest card but not give him a physical CC to actually use. Just because you live with him doesn't mean he won't go out and max it out! But it is definitely up to you!

I would also maybe check with a local Credit Union or whomever he banks with to see if they would give him a card if he has established a good banking relationship with them.

Re: best way to help out someone to build credit?

shane82388 — Sat, 29 Mar 2014 04:47:04 GMT

Yeah you can add him as an AU and just cut up the card. This should get him going in the direction of being approved for another card, and you can then take him off as an AU on your account...

Re: best way to help out someone to build credit?

compassion101 — Sat, 29 Mar 2014 05:02:01 GMT

@shane82388 wrote:
Yeah you can add him as an AU and just cut up the card. This should get him going in the direction of being approved for another card, and you can then take him off as an AU on your account...

This sounds like a great idea.

I wouldn't co-sign. I've co-signed for someone before who I knew would never screw me over. Except that they did

Re: best way to help out someone to build credit?

wilson382 — Sun, 30 Mar 2014 01:50:57 GMT

Thanks guys for head up. Really Appriciated. One question

when someone is an authorized user on my Credit Card, Can lenders/Creditor tell if that person owns the credit card or it just an au user?

Re: best way to help out someone to build credit?

traveler2005 — Sun, 30 Mar 2014 01:57:48 GMT

Yes they can tell, it will say authorized user on their report. You may also want to verify with the company you choose for him to be authorized user that they report authorized users. Some companies, such as some credit unions will allow authorized users but don't report.

Re: best way to help out someone to build credit?

TheGardner — Sun, 30 Mar 2014 02:06:02 GMT

I co-signed on a loan for my daughter (I actually paid) and made her an AU on a couple cards. Now she's well above 700 and getting approved for her own cards only took 6 months.

If you cosign make sure it is really for you and you make the payments. Don't trust others to not mess up your credit!

Re: best way to help out someone to build credit?

TheGardner — Sun, 30 Mar 2014 02:07:16 GMT

Paid the loan off 6 months early. Basically just a score grab cheap route to a credit score.

Re: best way to help out someone to build credit?

GenericUser — Sun, 30 Mar 2014 02:27:02 GMT

@wilson382 wrote:
my uncle asked me to help build credit he never had credit ever So i was thinking
Option 3. Geetting a secured credit card

I would never, ever, in a million years, co-sign on anyone other than children. And I'd never ever, in a million years put an AU on it other than a spouse (if things are good).

You are just asking for trouble with co-signing and AU, lots of potential trouble for yourself, stay away from all of that.

He should get a secured card or two for himself. If he doesn't have the cash to put down the deposit for secured cards then he should work for it, or you could loan him the money I suppose. Don't sign your credit rating away by doing co-sign or AU.

Re: best way to help out someone to build credit?

shane82388 — Sun, 30 Mar 2014 02:42:40 GMT

GenericUser I think you are missing what I just said...

By giving them no access or chance to in any way use the account, it's pretty hard for them to mess it up...

But yeah I'd probably be more likely to co-sign for someone younger than me...

Just have him get a secured card. Easy. Done.

Re: best way to help out someone to build credit?

bada_bing — Sun, 30 Mar 2014 03:43:32 GMT

@GenericUser wrote:
@wilson382 wrote:
my uncle asked me to help build credit he never had credit ever So i was thinking
Option 3. Geetting a secured credit card
I would never, ever, in a million years, co-sign on anyone other than children. And I'd never ever, in a million years put an AU on it other than a spouse (if things are good).

You are just asking for trouble with co-signing and AU, lots of potential trouble for yourself, stay away from all of that.

He should get a secured card or two for himself. If he doesn't have the cash to put down the deposit for secured cards then he should work for it, or you could loan him the money I suppose. Don't sign your credit rating away by doing co-sign or AU.

If you put someone on a card as an AU, but you take delivery of the card and

keep it, there is no way for the AU to access the account. Quite the contrary, you

can actually hurt an AU on your card, at least temporarily by not paying on time or

carrying a big balance utilization. That will ding the AU's FICO, at least until they drop

themselves off your card.

There is actually a scam going where a person who owns a premium credit card

account - one with a very long history of perfect payments and low utilization - rents

out AU status on the card to complete strangers. It is actually worth quite a bit of

money to some people to jump start their FICO score. Gaining AU status on a

a high limit card with > 8years perfect payment history and low utilization is a pretty

powerful score boost. I've read of severe AA against account holders who rent out

AU status but I've never read of anyone being taken by their paying AU. If you never

allow the AU to have possession on the card or know the account number, it isn't

possible to use the account.

Of course, If you give someone AU status on your card, but never allow them access to

use the account under any circumstances, you really aren't operating within the intention

of what AU is granted for. It isn't intended as a way to boost FICO scores, it is intended as

giving account access to family. The CCC's won't ding you for giving shadow AU status to

family members unless you get out of hand with it, but it isn't really ethical.

Re: best way to help out someone to build credit?

lg8302ch — Sun, 30 Mar 2014 09:38:30 GMT

@compassion101 wrote:
@shane82388 wrote:
Yeah you can add him as an AU and just cut up the card. This should get him going in the direction of being approved for another card, and you can then take him off as an AU on your account...
This sounds like a great idea.

I wouldn't co-sign. I've co-signed for someone before who I knew would never screw me over. Except that they did

AU yes - but do not hand out the card and definitely no co-sign. Rather let him get his own secured card. Better safe than sorry

Re: best way to help out someone to build credit?

Themanwhocan — Sun, 30 Mar 2014 13:56:47 GMT

I had ONE secured card, for 1 year. I didn't even know how to optimize my credit score, so the card reported zero when I then applied for an unsecured card 12 months later. And with that, US Bank gave me a $8500 Platinum card, and my FICO score was 732.

So, you don't need a large number of cards, or AU, or anything. Just get one secured card in your name, use it properly (ie, very lightly and pay off every month in full). You just need to realize WHY you have that secured card. Its not to make paying your bills easier or whatnot, its just something you use for a day or so at the beginning of each month and then pay in full and put the card away, because the whole purpose is to build 12 months of credit history, and 12 months of paying in full, and 12 months where you didn't let available credit tempt you into doing something bad.

Re: best way to help out someone to build credit?

NoAnchoviesPlease — Sun, 30 Mar 2014 17:49:46 GMT

@Themanwhocan wrote:
I had ONE secured card, for 1 year. I didn't even know how to optimize my credit score, so the card reported zero when I then applied for an unsecured card 12 months later. And with that, US Bank gave me a $8500 Platinum card, and my FICO score was 732.

So, you don't need a large number of cards, or AU, or anything. Just get one secured card in your name, use it properly (ie, very lightly and pay off every month in full). You just need to realize WHY you have that secured card. Its not to make paying your bills easier or whatnot, its just something you use for a day or so at the beginning of each month and then pay in full and put the card away, because the whole purpose is to build 12 months of credit history, and 12 months of paying in full, and 12 months where you didn't let available credit tempt you into doing something bad.

It can be hard, but kinda like when you learn to drive, focus on the horizon rather than the hood ornament. You stay in the lane better that way.

Re: best way to help out someone to build credit?

wilson382 — Mon, 31 Mar 2014 00:09:31 GMT

So I went online And Applied for 2 cards patinuin from capital One and discover it. Discover it did not approve and capital one approved him limit line $300. So i think he is all set and a very lucky guide with no credit and a collection on his report lol

Re: best way to help out someone to build credit?

Santi78342 — Mon, 31 Mar 2014 02:08:02 GMT

@wilson382 wrote:
So I went online And Applied for 2 cards patinuin from capital One and discover it. Discover it did not approve and capital one approved him limit line $300. So i think he is all set and a very lucky guide with no credit and a collection on his report lol

Great job! He will get enrolled in the "credit steps" program with the approval. That means if he makes his first 5 payments (6 months) on time he will be eligible for a credit limit increase.

You can also call the backdoor number for Discover for a recon and see if you guys can get them to change their minds. I believe the number is (888) 676-3695. It may not happen but it never hurts to try.

Congrats again

Re: best way to help out someone to build credit?

wilson382 — Mon, 31 Mar 2014 05:27:15 GMT

@Santi78342 wrote:
@wilson382 wrote:
So I went online And Applied for 2 cards patinuin from capital One and discover it. Discover it did not approve and capital one approved him limit line $300. So i think he is all set and a very lucky guide with no credit and a collection on his report lol
Great job! He will get enrolled in the "credit steps" program with the approval. That means if he makes his first 5 payments (6 months) on time he will be eligible for a credit limit increase.

You can also call the backdoor number for Discover for a recon and see if you guys can get them to change their minds. I believe the number is (888) 676-3695. It may not happen but it never hurts to try.

Congrats again

the reason discover declined was because of 1 company report ed collection for the amount of $76. Should I still call for a recon? never hurt to try.

Re: best way to help out someone to build credit?

Santi78342 — Mon, 31 Mar 2014 05:56:31 GMT

@wilson382 wrote:
@Santi78342 wrote:
@wilson382 wrote:
So I went online And Applied for 2 cards patinuin from capital One and discover it. Discover it did not approve and capital one approved him limit line $300. So i think he is all set and a very lucky guide with no credit and a collection on his report lol
Great job! He will get enrolled in the "credit steps" program with the approval. That means if he makes his first 5 payments (6 months) on time he will be eligible for a credit limit increase.

You can also call the backdoor number for Discover for a recon and see if you guys can get them to change their minds. I believe the number is (888) 676-3695. It may not happen but it never hurts to try.

Congrats again
the reason discover declined was because of 1 company report ed collection for the amount of $76. Should I still call for a recon? never hurt to try.

Exactly, never hurts to try. I would go ahead and call if I were you.

Re: best way to help out someone to build credit?

Santi78342 — Mon, 31 Mar 2014 06:00:42 GMT

Oh and make sure you go and check out the Rebulding board and read about getting that collection removed. Try sending them a "pay for delete" agreement or contacting the company you orginally owed the debt to, to see if they will recall the debt from the collection agency if you pay them the money owed. Lots of things to learn on that board.