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Knowing Your Credit History?

MikeyPHA
New Member

Knowing Your Credit History?

Hey, I'm new to the forum and also new in the life of credit. 

 

I was wondering what people mean when they are not approved for a particular credit card because their credit history is too short. Can someone dumb it down for me so a college student can understand?

 

- Mike

Message 1 of 7
6 REPLIES 6
VinnyVee
Contributor

Re: Knowing Your Credit History?

It means you have little to no credit history. It means you haven't had enough time showing any form of credit for the lender to provide you a loan or card.

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Message 2 of 7
MikeyPHA
New Member

Re: Knowing Your Credit History?

So do I have a credit history? I just got  my credit report from Experian (didn't request my credit score however) and I have one account in good standing, which is the 48 months car loan I co-signed with my mom.

 

Got that car loan in like May 2012 so does that mean my credit history is like 2 years?

 

- Mike

Message 3 of 7
coldnmn
Mega Contributor

Re: Knowing Your Credit History?


@MikeyPHA wrote:

So do I have a credit history? I just got  my credit report from Experian (didn't request my credit score however) and I have one account in good standing, which is the 48 months car loan I co-signed with my mom.

 

Got that car loan in like May 2012 so does that mean my credit history is like 2 years?

 

- Mike


Yes. The only true credit score is through here so you didn't waste any money getting it from Experian. 

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Message 4 of 7
Revelate
Moderator Emeritus

Re: Knowing Your Credit History?


@MikeyPHA wrote:

So do I have a credit history? I just got  my credit report from Experian (didn't request my credit score however) and I have one account in good standing, which is the 48 months car loan I co-signed with my mom.

 

Got that car loan in like May 2012 so does that mean my credit history is like 2 years?

 

- Mike


2 years installment history; however, you're missing the revolving side of the house altogether.

 

You need some credit cards to round out your portfolio: see if you can grab some student cards from Discover, BOFA, Citi or a local credit union, etc.  3 would be ideal but 2 would be fine, you don't care about limits even $200 is fine, just get the cards to establish history and then use them sparingly.  If that doesn't work I'd look into some small secured cards if you can swing the deposit.

 

Welcome to the forums!

 




        
Message 5 of 7
takeshi74
Senior Contributor

Re: Knowing Your Credit History?


@MikeyPHA wrote:

 

I was wondering what people mean when they are not approved for a particular credit card because their credit history is too short. Can someone dumb it down for me so a college student can understand?


Start here:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

 

As you can see from the chart Payment History is the biggest slice and it includes the history of payments on your accounts.

 

The other factor that falls under history is Length of Credit History or AAoA.  AAoA is just the average of the age of your accounts.

 

A creditor has to rely on your track record in assessing your ability to repay your debts since they can't see into the future.  Payment History is indicative of your track record of making on time payments.  AAoA is indicative of the length of your credit history as well as how often you've been seeking new credit.  Having accounts open for more time generally is generally positive (assuming positive payment history).  Opening a new account will lower your AAoA.  Opening many new accounts will significantly drop your AAoA.  Both of these factors are just a couple of the items (along with the rest of the slices of the pie) that creditors use to assess risk.  Keep in mind that it's not just length of history but all these factors together that matter.  Also keep in mind that different creditors use different criteria.  What might be sufficient credit history for one may be insufficient for the next.  The criteria can even vary from product to product even with a given creditor.

 

Back to AAoA -- to use your credit as an example you have 1 account with an age of 2 years (technically a bit more but we'll call it 2 years to keep it simple) so your AAoA is currently 2 years.  If you open a credit card account you'd have 2 accounts with a total of 2 years and 1 month of history which would basically put your AAoA at 1 year.  Open 2 new accounts and your AAoA would drop to just over 8 months.

 


@Revelate wrote:

2 years installment history; however, you're missing the revolving side of the house altogether. 


Yup.  Note that Types of Credit Used is also a slice of the pie.

 


@coldnmn wrote:

Yes. The only true credit score is through here so you didn't waste any money getting it from Experian. 


The Understanding FICO Scoring subforum has more info on this but even with FICO there isn't just one scoring model in use so there isn't an "only true score".  Some creditors use the scoring model used to generate the scores that consumers can purchase from myFICO.  Some do not.

Message 6 of 7
MikeyPHA
New Member

Re: Knowing Your Credit History?

Hey, thanks for the info! I'm looking more into the student cards right now from Discover and BofA. I really like the Discover It Student benefits. 

 

One question I have however is when I'm out of school (2 more years), does the Discover It Student graduate to a Discover It? If not, what happens to it?

 

As a 21 years old college guy who is employed (22K a year) with just a auto loan, do you think I have a shot for Chase Freedom (just love the card's rewards and benefits) or should I just apply for a Discover/BofA Students card and build or my score for a year or 2?

 

- Mike

Message 7 of 7
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