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New to the world of Credit.

Hypnagogia
New Contributor

New to the world of Credit.

Hello, I am 28 years old, employed full time and have virtually zero credit history. I was raised to believe that credit card companies are evil and that I should never take out a loan or open a line of credit. Little did I know at the time, this entire world runs on credit and debt... and without it, you're pretty much screwed. Unless of course you make 300k a year.

 

Anyway, I recently went to finance a used car and got a rude awakening. Literally NO ONE will finance me without a co-signer because I have no credit history. So here I am, about to start a rigorous journey building and establishing good credit from scratch. I signed up for a free 30 day trial at Experian.com. According to Experian I don't have enough credit history for them to generate me a score. I also just applied for a Discover It Secured Credit Card and am currently going through the approval process.

 

With all that said, my current goals are to establish enough credit to be able to finance a car on my own without a co-signer. So for those of you who have been in my position, what would you recommend I do? What was your first credit score? And last but not least, how long did it take you to establish good credit? 

 

Any help would be greatly appreciated. 

Message 1 of 23
22 REPLIES 22
SouthJamaica
Super Contributor

Re: New to the world of Credit.


@Hypnagogia wrote:

Hello, I am 28 years old, employed full time and have virtually zero credit history. I was raised to believe that credit card companies are evil and that I should never take out a loan or open a line of credit. Little did I know at the time, this entire world runs on credit and debt... and without it, you're pretty much screwed. Unless of course you make 300k a year.

 

Anyway, I recently went to finance a used car and got a rude awakening. Literally NO ONE will finance me without a co-signer because I have no credit history. So here I am, about to start a rigorous journey building and establishing good credit from scratch. I signed up for a free 30 day trial at Experian.com. According to Experian I don't have enough credit history for them to generate me a score. I also just applied for a Discover It Secured Credit Card and am currently going through the approval process.

 

With all that said, my current goals are to establish enough credit to be able to finance a car on my own without a co-signer. So for those of you who have been in my position, what would you recommend I do? What was your first credit score? And last but not least, how long did it take you to establish good credit? 

 

Any help would be greatly appreciated. 


1. I would recommend doing exactly what you are doing: starting out with a secured card and building a credit history with that.

 

2. I would recommend your joining a good credit union. After a while you will probably find the credit union offering you an auto loan, at a very low rate Smiley Happy

 

3. Once you have some FICO scores, think about whether you would want any credit beyond the auto loan. If not, then you're good. If so, come back to us with your scores, and a thought as to what you would like, and we'll be able to make recommendations.

 

I don't know what my credit scores were initially; I didn't learn about that kind of thing until about the time I joined this forum. But I can tell you from reading here that (a) your initial scores probably won't be far from 700 and (b) you'll be able to have good scores quickly.

 

 


Total revolving limits 677500 (584500 reporting) FICO 8: EQ 758 TU 777 EX 749

Message 2 of 23
MaizeandBlue
Senior Contributor

Re: New to the world of Credit.

Excellent advice from @SouthJamaica.

 

I'd also second the recommendation to join a credit union and also suggest that you open a small "credit builder" loan.  They are sometimes called different names but the function is the same...to help you establish credit.  Plus a loan will help your credit mix and add points to your FICO score.

 

It usually takes 6 months of at least one account reporting to the credit bureaus before a FICO score can be generated although I've seen several instances where TransUnion was able to to calculate a score before six months. 

 

No one starts out with a bad credit score; the average score for someone new to credit usually ranges between 670 and 700.  That range is affected by whether you're an authorized user on an established account, the number of installment/revolving credit accounts you initially open, etc.  But your first score shouldn't be below 670 which puts you in the "Good" credit rating category.  Its what you do after obtaining that first score that determines whether you remain in the Good category, fall into the Fair/sub-prime range, or see an increase in your scores over time.

 

 





Message 3 of 23
Hypnagogia
New Contributor

Re: New to the world of Credit.

First, Thank you for the replies.

 

Second, what exactly is a credit union and how exactly would joining one help me?

 

Third, the only credit union near me is Valley First Credit Union. Do you know if this is a good credit union? Would you join it if you were me?

 

Once again, Thank you for the replies. 

 

 

Message 4 of 23
ChargedUp
Valued Contributor

Re: New to the world of Credit.


@Hypnagogia wrote:

First, Thank you for the replies.

 

Second, what exactly is a credit union and how exactly would joining one help me?

 

Third, the only credit union near me is Valley First Credit Union. Do you know if this is a good credit union? Would you join it if you were me?

 

Once again, Thank you for the replies. 

 

 


A credit union is kind of like a banking co-operative. Banks have share holders that they must provide a profit for. Credit unions are essentially funded by their membership and sometimes co-op with other credit unions for financial solidity. Credit unions are in it to provide services to their members vs. stockholders, so they typically can provide better interest rates when borrowing and sometimes investing. 

 

I don't personally have any experience with Valley First, but go in and talk to a banker there and find out if their offerings suit your financial lifestyle. If not, I have several family members that use Golden 1 Credit Union, and they share roughly the same geographic footprint. They've always been happy banking with them.

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Message 5 of 23
SouthJamaica
Super Contributor

Re: New to the world of Credit.


@Hypnagogia wrote:

First, Thank you for the replies.

 

Second, what exactly is a credit union and how exactly would joining one help me?

 

Third, the only credit union near me is Valley First Credit Union. Do you know if this is a good credit union? Would you join it if you were me?

 

Once again, Thank you for the replies. 

 

 


@ChargedUp    gave you a good definition of a credit union. They are usually more friendly and have better customer service than banks. And they usually have better rates. I don't know Valley Credit Union but it looks like the typical, friendly, down home type of credit union. There are lots of good credit unions in California.


Total revolving limits 677500 (584500 reporting) FICO 8: EQ 758 TU 777 EX 749

Message 6 of 23
CYBERSAM
Valued Contributor

Re: New to the world of Credit.

If you direct deposit to your Credit Union, is very likely they may approve you for unsecured CC in short time. Low limit but its a start.

I know handful of young people that have done that with DCU.

You may also request it while your opening an account with them.







Message 7 of 23
pinkandgrey
Community Leader
Senior Contributor

Re: New to the world of Credit.

SouthJamaica said it. Start with a secured card. Is it possible to have a cosigner for the car loan? An installment loan will be an excellent addition to your credit. If you can’t though, don’t worry about it. What I said above is how I did it. I had a cosigner for a car loan, and I started with the Cap One Platinum card. Mine was unsecured, which you MAY be able to get. The SL will be small either way, but it’s a great start. Within 6-8 months you’ll probably have made great progress.

Good luck! 

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Message 8 of 23
Hypnagogia
New Contributor

Re: New to the world of Credit.


@pinkandgrey wrote:

SouthJamaica said it. Start with a secured card. Is it possible to have a cosigner for the car loan? An installment loan will be an excellent addition to your credit. If you can’t though, don’t worry about it. What I said above is how I did it. I had a cosigner for a car loan, and I started with the Cap One Platinum card. Mine was unsecured, which you MAY be able to get. The SL will be small either way, but it’s a great start. Within 6-8 months you’ll probably have made great progress.

Good luck! 



Unfortunately a co-signer is not possible. As for the Capital One Platinum card, I went onto their website and the only card I pre-qualified for was their secured card.

 

Anyway, Discover just took my deposit out yesterday and I should be getting my card in a few days. With that said, would it be a good idea to get the Capital One secured card to go along with the Disco Secured card, or should I wait a little while before I apply for a new card?

Message 9 of 23
Hypnagogia
New Contributor

Re: New to the world of Credit.

One more thing, what is a credit builder loan, how do I apply for one and who would you reccomend I go through for this loan?


Message 10 of 23
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