ZERO Credit History?

JFox418 · ‎06-17-2022

Hey everyone, not sure the best place to make this post. My brother in law is looking to buy a car. Nothing too pricey but wants to finance it. He's in his mid 20s and come to find out he has ZERO credit. He wanted me to co-sign (I told him I wouldn't be able to but would like to help him otherwise if possible).

I had him sign up for the free experian to check and it says not enough history. Had him try a pre-qual at cap one auto and same, not enough history.

I'm assuming a car dealership can still get him qualified? I told him he will have a high interest rate for sure but that after 6months or a year he may have a credit file and look into refinancing?

FireMedic1 · ‎06-17-2022

If theres no rush. Why not try Cap1 and/or a couple graduating credit cards to get the ball rolling. Score goes up and interest goes down. Gotta start somewhere. No cards and refinance down the road may be a bit tight. Get the revolving credit rolling and the rest will fall in place. Good decision not co-signing. Too many come on here that got taken for. Worst part usually family members that does it. Of course JMO. Revolving credit does more for a score than installment loans.

BK Free Aug25

Anonymalous · ‎06-17-2022

Getting an auto loan without any credit history may be tough. Your brother in law might have to refactor his expectations, and either put it off or buy something outright (if there's anything cheap left on the market).

But it might be a good idea to get your brother in law hooked in with a credit union. They generally have the lowest rates, and they're friendlier than big banks to people with less than ideal credit. And it's much better to have a financing option in your pocket, before you walk into a dealer. Navy Federal is a good national one, if there's any military history in his family at all (a dead grandfather who was a vet counts for membership). Otherwise, look local. Credit unions tend to be relationship-oriented, so setting up things like saving, checking, and direct deposit can help.

One good option might be to have him added as an authorized card on someone else's card. This works best if the card is old, has a perfect payment history, and has low or no regular utilization. And he doesn't even need to hold the card -- you could make an him AU on one of your cards, and the card will be mailed to your address. At that point you can shred it, and it will still be reported on his file. And if the card is at least 6 months old, he'll become immediately scoreable.

But because AUs have been abused, sometimes the credit bureaus don't count them. The odds are best if a spouse is added as an AU, or at least someone with the same address and last name. Also, avoid American Express AU cards (they don't add any age)

Beyond that, just have him get a credit card. Use it, religiously pay it off every month (set up autopay for at least the minimum), and in 6 months your brother in law will become scoreable. I was in the same situation a year ago. I got my first card from Capital One (the Platinum), though the Discover It is probably a better choice. Both are prime banks, those cards have no annual fee, and they'll give them to people with no credit.

Iusedtolurk · ‎06-18-2022

@JFox418 Agree that co-signing is more problematic than it is rewarding (unless you are fully willing and able to take over payments if defaulted on).

I just got my niece and a nephew Cap1 cards and a Self SSL. Both just turned 18 last month and had absolutely no credit.

Had them do pre-qual first after I referred them.

Last year started my daughter off with a Self SSL and Cap1 and after she paid perfectly for 6 months got her a pre-qualified with Cap1 Navigator for a 2021 Jeep Cherokee on her signature alone. (she has 6 positive tradelines now).

Some things you just have to wait a little time for so if he can adjust his expectations out about 6-8 months he should be good to go.

JFox418 · ‎06-23-2022

Thanks everyone. Adding him as an AU might be an option. I have a 20 year old Cap1 with my wife as an AU already and no balance on it.

His dad did serve so I'm going to talk to him about Navy Federal but yeh it sounds like getting a starter CC and starting to build up credit is his best option at this point.