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If you are starting from scratch, I recommend this step-by-step program. It is an edited for correction and differing scenerios version of how I built up my credit as soon as I turned 18 and could apply for my own things, and I'm sure it'll be helpful to you
1.) Check all three of your credit reports. If you have nothing on it, then you are fine, don't worry! It's good to start with a clean slate. If you have accounts on your credit reports, make sure that:
2.) *sergi0wned Recommended Tip* Sign up for free credit monitoring/scoring services. Though the scores are "FAKOs" (essentially, not a real FICO), they can help you monitor your reports weekly/monthly/every 6 months, depending on the service. Especially helpful if you can't access a report through the 3 bureaus, or lost a report # for them! The top four ones are:
Also important to note that if you currently have accounts with the following banks, CU, and lenders, they will offer a FICO scoring service with paperless statements and/or other qualifications:
If you have money to kill, or an important loan coming up, also feel free to pull one or more scores from myFico.com! However, just starting out may result in no FICO score or a "disappointing" or "inflated" FICO score, so it's important to stress what's IN your report as opposed to what your score is.
3.) Assuming you have perfectly clean, but little-to-no history reports (as a builder should have), do some research on credit cards BEFORE applying for anything and everything that is offered to you. What are your credit card goals? What about loan goals? Make a plan, and map it out. When starting out, you have to be a bit strategetic before you can just waltz into a store and sign up for a CC for that 20%, or that wonderful sign up bonus you see in the ads. Now, you have a few different paths, so pick according to your situation, or feel free to use a combination if you fall into more than one category!
4a.) Student - 0-6 month credit history: Have nothing on your file? Just had a student or auto loan post onto your credit report for going away to college? Had a parent add you as an AU on their card less than 6 months ago? Chances are, you can't get approved for anything. Here are my recommendations:
4b.) Student - 6+ months of credit history: Has that student loan been reporting for a while? Already an authorized user on a few cards, or maybe had a car loan going since you got your license? You're doing great so far on your credit building, but that pre-degree income may not land you with the top credit cards easily. Here are my recommendations:
4c.) Non-Student, 0-6 months of credit history: Decided not to pursue a degree and working hard? Already in the work force after getting your degree(s) and never gave a thought to credit before? No worries! There is still an option!
4d) Non-student, 6+ months of credit history: Already had a car loan or two (or three, or four, or...you get the point). Are you an authorized user or joint account holder on a family member's or significant other's cards? Cosigned for a mortgage? Your good, (hopefully!) steady income could help you "jump the line".
4e.) New to the Country - Never experienced the credit world before? Or if you have, moving to the United States means whatever you had before, practically does not exist in the US credit files! Here are your options!
Don't think you have to get a million cards to start out with!! One card in your own name is perfectly fine to start out with for at least 6 months. You will build positive history and a score, and make it easier to score other cards (Discover IT, Wells Fargo, BoA, etc.), or that favorite store card you've been eyeing! By 6 months-1+ years, you should have 1-3 cards in your arsenal. By the 1+ year mark, you may apply for the "better" cards. Again, be sure to research. Having a $500 Cap One and a $500 store card at one year may not guarantee you that Chase Sapphire Preferred at a $5k limit...you still need to work up to it! Try for a Chase Freedom instead, or maybe a BoA Better Balance! Something with great rewards for the average credit profile will get you into those higher tier cards and limits! Don't waste inquiries if you can help it! Trust me, it won't be fun applying for everything under the sun in the beginning stages and by the time your credit is built up enough, you have all these inquiries to explain away that will lead to FURTHER denials for better cards!
And, if possible, try to receive soft pull credit limit increases every 4-12 months (depending on the company). This will help you grow your limits and obtain a better profile.
Again, don't rush!! It took me about 2 and a half years to get the collection I have. This "slow and steady wins the race" paid off, as you can see my credit limits and approval of better cards trended upwards!
Though it is an option I don't fully recommend, many people on the forum have had success with applying for as many cards as possible in the beginning stages (6 months-2 years). This can result in:
To close, I just want to note: YMMV. There are plenty of exceptions to the rules of building credit, and one method may not work as smoothly as another. Ultimately, you decide your own fate and how you'd like to approach things. Want to follow this checklist to a T? Great! Have some modifications based on the research you did? Fantastic! Prefer to follow your own path? No problem! This is merely a guide, or a reference, depending how you look at it. It is not the "end all, be all" of how to build credit!
In conclusion, I'd like to give a personal thank-you to all the members of this forum who work so hard to keeping the Credit Card forum active! I have learned much from all you "credit gurus", and you are all the inspiration for this post! From mods, to community leaders, to active posters, although I may not be able to thank you all by name, the obvious roots you have in this community is absolute proof of how important you are to everybody! Thank you myjourney, 09lexie, SSA_2013, youngandcreditwrthy, creditaddict, enharu, revelate, tinuviel, Ron1, and so many others that I cannot recall off the top of my head!
***MODS***
Many members of the forum have either recommended or taken much needed advice from this post I made in the garden club forum, and even have gone as far as to recommended it as a "stickied" thread. Is it possible to do this?
Feel free to make any edits/corrections you feel would be needed for this to be appropriate as a stickied thread. Through the course of the week I plan on editing it, providing more recommended credit cards and putting it into a checklist format.
Thank you
+2
Excellent advise
Thank you! I will be printing this advice for my daughters, 17 and 19.
As a 19 year old student who has been working to build credit, this is fantastic advice! This definitely deserves to be stickied, because it provides a good overview of the process as well as a realistic timetable in which goals can be fulfilled.
I would also recommend adding some information about credit monitoring services, such as Credit Karma, Credit Sesame, and Quizzle. Although the scores are FAKOs, they are valuable for credit monitoring and having a rough approximation of my FICO score helps me to see what affects my credit.
Also, to add some personal experiences that may be helpful for some:
1. My first card was a 1st Financial Bank USA Student Visa. They sent me a mailing shortly after I turned 18, and I decided to go for it. They're exactly what you'd expect from a predatory lender (29.9% APR), but if you are responsible and pay in full every month you can build credit just as good as you can with any card. They also fall all over themselves to give you high limits; I got a $1,000 auto-CLI at 6 months.
2. I got denied for the Capital One Journey for insufficient credit history when I applied for it. I had no student loans yet, no AU accounts, no car loans or anything, so I had absolutely no credit history. I think the denial may have had to do with having too low of an income ($6,000 reported, I believe), but it definitely stung since you get a HP with all 3 bureaus from Capital One.
I'm looking forward to seeing how you expand this!
@sergi0wned wrote:As a 19 year old student who has been working to build credit, this is fantastic advice! This definitely deserves to be stickied, because it provides a good overview of the process as well as a realistic timetable in which goals can be fulfilled.
I would also recommend adding some information about credit monitoring services, such as Credit Karma, Credit Sesame, and Quizzle. Although the scores are FAKOs, they are valuable for credit monitoring and having a rough approximation of my FICO score helps me to see what affects my credit.
Also, to add some personal experiences that may be helpful for some:
1. My first card was a 1st Financial Bank USA Student Visa. They sent me a mailing shortly after I turned 18, and I decided to go for it. They're exactly what you'd expect from a predatory lender (29.9% APR), but if you are responsible and pay in full every month you can build credit just as good as you can with any card. They also fall all over themselves to give you high limits; I got a $1,000 auto-CLI at 6 months.
2. I got denied for the Capital One Journey for insufficient credit history when I applied for it. I had no student loans yet, no AU accounts, no car loans or anything, so I had absolutely no credit history. I think the denial may have had to do with having too low of an income ($6,000 reported, I believe), but it definitely stung since you get a HP with all 3 bureaus from Capital One.
I'm looking forward to seeing how you expand this!
Thanks, sergi! Great idea about the credit monitoring...I'm surprised I didn't put this in in the first place, considering I tried to pull any free score and sign up for any free monitoring service when I turned 18!
I have CK, CS, credit.com, and Quizzle. Those are the top 4 free monitoring services, will definitely add that now and work on editing throughout the week!
Congrats on successfully building your credit at such a young age as well!
@daybreakgonesXe wrote:
@sergi0wned wrote:As a 19 year old student who has been working to build credit, this is fantastic advice! This definitely deserves to be stickied, because it provides a good overview of the process as well as a realistic timetable in which goals can be fulfilled.
I would also recommend adding some information about credit monitoring services, such as Credit Karma, Credit Sesame, and Quizzle. Although the scores are FAKOs, they are valuable for credit monitoring and having a rough approximation of my FICO score helps me to see what affects my credit.
Also, to add some personal experiences that may be helpful for some:
1. My first card was a 1st Financial Bank USA Student Visa. They sent me a mailing shortly after I turned 18, and I decided to go for it. They're exactly what you'd expect from a predatory lender (29.9% APR), but if you are responsible and pay in full every month you can build credit just as good as you can with any card. They also fall all over themselves to give you high limits; I got a $1,000 auto-CLI at 6 months.
2. I got denied for the Capital One Journey for insufficient credit history when I applied for it. I had no student loans yet, no AU accounts, no car loans or anything, so I had absolutely no credit history. I think the denial may have had to do with having too low of an income ($6,000 reported, I believe), but it definitely stung since you get a HP with all 3 bureaus from Capital One.
I'm looking forward to seeing how you expand this!
Thanks, sergi! Great idea about the credit monitoring...I'm surprised I didn't put this in in the first place, considering I tried to pull any free score and sign up for any free monitoring service when I turned 18!
I have CK, CS, credit.com, and Quizzle. Those are the top 4 free monitoring services, will definitely add that now and work on editing throughout the week!
Congrats on successfully building your credit at such a young age as well!
Great edit! Nice thorough explanations of what they are and how to use them together.
Let me know if you need any help editing stuff. I'm working on a similar guide for a seprate forum that I frequent, and there's definitely some overlap. I'd be happy to help if you want some, but for how solid this guide is it doesn't look like you need much
Thank you! I'm very fortunate that I found this forum and put in the work when I did!
Solid Post! This a great read
As I have said elsewhere, a fantastic writeup that really deserves to be stickied.
In the new to the US section I would consider adding a line about establishing a bank relationship (this worked for a friend of mine who deposited a large amount (>10k) with a bank, and appears to have worked for me), something to the effect of:
- Try establishing a relationship with a local bank or credit union that you would like a card with. While not as instaneous as some of the options, if you open a checking account with one of the banks or a credit union and make a large deposit or regularly input your salary into it, it may assist in getting a card. The limit may be small, but its a foot in the door.