Zero credit score with all CRA's

[Anonymous]

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@Anonymous wrote:

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@Kforce wrote:

I would start at the Bank or CU she has a checking account with.

Ask if they have a secured or starter credit card.

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She does not have any sort of bank account.  I'll suggest a few CU's and going this route.  Thanks!

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My two cents: Apply with Discover. There's a small chance she'll get approved with a low SL straight away but more likely she'll be offered secured without taking a second HP. I started with Disco secured which has auto-CLI'd and SP CLI'd many times. (She could bank with Discover too, which would streamline things for her, though if she's completely unbanked now, not having a V/MC card could be a hindrance.)

The issue I have with CU's when starting to build is that those low SL's won't grow with an SP. Disco, Amex, BofA, CapOne, and some others will.

[KJinNC]

I listed Discover as step 2 or 3 in my prior comment because when I was starting from near-nothing (specifically, nothing on TU and EX, but a couple of old accounts on EQ), I was denied for Discover secured twice before finally getting it the third time. The first thing I was approved for was Citi secured. It may be profile-specific, but, my perception is that Citi is easier to get than Discover. Both graduate, though Discover usually graduates sooner than Citi.

The reason I suggested starting with Self Lender is that it doesn't involve a credit check. Though, since you mentioned the person in question has low income, you should be aware that Self Lender will require a monthly payment. At the end of the term, you get most of the money back. You do lose a little due to how the interest rates are set up. But, you have a positive secured installment loan, which (combined with a credit card) will trigger FICO's "good credit mix" reason. Self Lender also gives monthly Experian VantageScore updates. Combined with Credit Karma, this would give VS for all three credit bureaus for free (well, for no additional cost). VantageScore isn't much, but it's better than nothing, and you can't get FICO scores until your oldest account is six months old.

Probably any path suggested in this thread will work for her. I would avoid cards that require an annual fee unless there are no other options. And of course, the important thing is making every payment on time and not carrying balances to avoid interest.

[Anonymous]

Hasselfree, 

Given the low income, please dont recommend any ideas to her that have fees attached to them.  Self Lender fees & negative-carry are egregious.  

[KJinNC]

I disagree that Self Lender's fees and interest are "egregious" as they would affect someone's budget. They are bad in percentage terms, but the point of the loan isn't to make money, it's to build credit. By its nature, it makes you save some money while building credit, vs credit cards that encourage you to spend money while building credit. "Egregious" would be paying a $39 annual fee and carrying a balance at 25%. It depends on the person, but in any case, total cost when you sum it all up is less than $100. Horses for courses.