General Question

lbwhite89's avatar

How can we get credit?

Asked by lbwhite89 (1208 points ) December 13th, 2010

I’m a 21 year old female and my boyfriend is also 21 years old. Niether of us have any credit at all. Never had a car financed, never owned a credit card, nothing. I’m in college and working and he’s working. I’ll be in school for another three years before I graduate and we would like to buy our first house shortly after. So, therefore, we need credit.

We both applied for a credit card with First Premium Bank and we both got denied. I then tried for a Capital One Card and also got denied. I did some research online and found the Discover Student Credit Card and applied for that. They said I’ll hear back from them in 30 days.

First question: If I find a credit card that I get approved for and I end up getting approved by Discover, do I still have to take the Discover card or can I decline getting it?

Second question: What are some good first credit card for those with no credit at all (not just students)? Rewards would be good, no annual fee or hidden fees, etc.

Third question: I heard another way to build credit is to finance something. If my boyfriend wanted to finance an engagement ring and make monthly payments, how can he go about doing that?

Fourth question: How long does it take to build good credit? If we keep everything paid off, will be be able to buy a home in two or three years?

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28 Answers

Response moderated (Off-Topic)
Taciturnu's avatar

Start with store credit cards. The best bet if you’re looking to buy a house is to have revolving credit and installment credit- meaning you should have a payment every month on a car, or something else as well as a credit card. Make sure you have utilities in your name, too, and keep all your rental receipts showing you pay on time.

MyNewtBoobs's avatar

2 or 3 years? No. 10 or 15 years? Yes. It takes a long time to build credit.

mrlaconic's avatar

In this economy people who have stellar credit rating are having a hard time getting loans.

What I am going to say is that since you have now been denied three times in a row – STOP APPLYING. every time a bank inquires into your credit your score goes DOWN.

The banks that you applied for are legally required to send you a letter in the mail stating why they are declining you credit. Wait for those letters and investigate what they say. This may require you to look at your credit report and make sure you are free a clear… cause you never know.

lbwhite89's avatar

I’ve only gotten denied twice, and waiting for the third. I had no clue my score went down every time they looked at my credit. Thank you for that info. The letter I got from First Premier said I got denied because of “too few revolving accounts never delinquent in the last 6 months” OR “total number of bankruptcy trade-lines ever is low”. I wasn’t too sure what that meant.

I was planning on only using the card for gas each month, then pay it off at the end of each month. I wasn’t going to purchase anything big on it. I only want decent credit so I might be able to get a first homebuyers loan in a few years.

lbwhite89's avatar

Oh, and how would I ever be able to buy a house with cash? Chances are I’ll need credit eventually. And I live at home, so no bills or anything are in my name. My boyfriend has bills in his name though.

wundayatta's avatar

Question 1: You can cancel a credit card at any time; even if you have never used it.

Question 2: If you plan to pay off in full (and you should never do otherwise), get a cash back credit card. Almost every bank has them. There are sites online that give you all the info on various cards.

Question 3: If you want to finance an engagement ring, you could ask the store to finance it, or a bank.

Question 4: You should be able to buy your home. Do you rent? Do you pay utility bills? Those things count in building your credit history. You might try a local bank to get your credit card. They will know the local situation better, and might take into account your rental or utility paying habits more fully.

Carly's avatar

Bank of America gave me a credit card before I turned 18, and I only had a 20 hr/week job making 7.25/hr. My sister got denied by a whole bunch of credit card companies, but when she applied at BofA they gave her one.

MyNewtBoobs's avatar

You work up slowly. You get a couple bills in your name, and you pay them off on time. Then you’ll be allowed to get a credit card, and you pay that off. Then after a few years of that, you do a small loan.
Why do you want to buy a house so soon anyway? Your needs will change so much in the next few years – so many have bought young, and then not been able to get a bigger place when their family expanded or wanted to move or whatever.

YARNLADY's avatar

We keep our credit score high with one rule, only buy on the card what you already have the money for, and pay it off at the end of every month. The exceptions are the house and the cars, but that comes later.

Start low, with gas cards and department store cards. When you get a Visa or Master Card, use it for groceries, but as before, put the exact amount of cash in the savings account as you buy, and when the bill comes in, pay it off in full and keep the interest your money has earned – never pay interest.

Carly's avatar

I just remembered! My sister got her first credit card for shell or chevron gas. It was perfect because she used it when she truly needed it (unlike department store credit cards) and then she paid the balance off every month. I would highly suggest doing that if you can.

CaptainHarley's avatar

Save your money and pay cash instead of going into debt. It’s a lot safer and you’ll wind up saving lots of money in the process. : )

Or is there something wrong with this suggestion too? One never knows on here, since apparently Fluther has something against advising people to avoid debt!

lbwhite89's avatar

@CaptainHarley No, there’s nothing wrong with suggesting that people don’t get into debt, but as I mentioned in a previous comment, my plan was to buy my gas on this card each week and then pay off the balance each month. I wasn’t going to purchase anything else on it. I don’t want a credit card so I can buy things without having the money to do it, I just want to establish the credit necessary to one day get a loan to buy a home with. I can’t exactly buy a home out of pocket.

YARNLADY's avatar

@CaptainHarley Explain exactly how advice to keep out of debt answers the question

CaptainHarley's avatar

@YARNLADY

It’s what is known as an alternative answer. How to get credit is about going into debt… period! It’s excellent advice to tell someone to pay cash instead of borrowing.

YARNLADY's avatar

@CaptainHarley Thanks for the clarification, so it falls into the helpful category. I get it now.

CaptainHarley's avatar

@YARNLADY

Well, I THOUGHT it did. Heh!

lbwhite89's avatar

@CaptainHarley I’m still confused as to why people think you don’t NEED credit. Without credit, I’d be turned down when trying to purchase a house or a car. Anyone care to clarify?

If I had $160,000 to pay for a house in my savings account, then I’d do so. Unfortunately, I do not.

CaptainHarley's avatar

At the risk of getting myself modded again…

If you’re just starting out, you don’t NEED a new car and a detached house in a middle class suburb. What you need is a servicable car and a warm, dry place to sleep and keep your clothes. Those entail significantly less expense, and can be paid off in cash, enabling you to save for those things you WANT, as opposed to need.

lbwhite89's avatar

@CaptainHarley I’m not planning to buy a house or car NOW. But one day, I’ll want to stop renting. In the future, I’ll need that credit built up. If I don’t start now, I won’t ever have any.

I’m having a hard time understanding why this is so hard to understand. In order to ONE DAY buy a home or car, you need credit. Years into the future.

CaptainHarley's avatar

@lbwhite89

No, you don’t, but I won’t argue with you. In my lifetime, I have bought four places to live, two of them detached homes, one of those in a very upscale neighborhood in North Carolina. Two of those I bought on credit, two I paid cash for. If you’re serious, you can buy a starter home with cash, especially these days, without waiting half a lifetime to save up enough to afford it.

People need to realize that, if you can pay the principle plus interest on a home for 30 years, you can also buy a home with CASH if you save your money for 15 years or so. Homes are places to live, not investments… not any longer.

lbwhite89's avatar

@CaptainHarley What I’m saying is that how would I ever have $160,000 CASH to pay for a house. Maybe you have enough money to do that, but I unfortunately don’t have that luxury and never will. I’m not going into a career where I’ll make money like that or be able to save that much money in the next few years. If I could pay for a house in cash, I gladly would.

lbwhite89's avatar

@CaptainHarley Oh, and if you ask me, renting a home for 15 years is wasted money that could go toward the principle for a home to one day own. Yeah, it’ll take years to pay it off, but 15 years of rent that means nothing once you’re done…seems like a complete waste of time and money.

CaptainHarley's avatar

@lbwhite89

I’ve never paid more than about $64,000 for a home, and that was one that I DID take out a mortguage on. It sounds to me as if you live in a rather high-rent area, and that homes for sale there are kind of unreasonable as well. There are areas of the Country where you can buy the same sort of home for a lot less.

Or you can do what I did… buy a used mobile home, strip it, and rebuild it the way you want it. The home cost $2,500 when I bought it, and I spent about $10,000 getting it fixed up, doing all the work myself ( it’s not as difficult as you might suppose ). Now we have a very nice place to live, complete with new kitchen cabinets, a walk-in shower, a large storage room, our own home office, a decent living area, and a large bedroom into which we put a queen size bed and a walkin closet. The interior walls are wallboard, not that awful panelling. And we have NO mortguage!! We are now saving up to pay cash for a really nice pickup truck, which probably won’t take a full two years because we owe on nothing except my wife’s car and my motorcycle.

The US is going to go through some very hard times over the next decade or so. If I were you, I’d rethink things a bit.

lbwhite89's avatar

I live in South Carolina, so the cost of living here isn’t very high. However, the average price of a house is around $170,000. I’m looking in the range of $120,000, because anything less would be in a less than stellar neighborhood in a less than stellar house.

I think that’s great about your situation, but I think it all comes down to how different people like to live differently. I’m not arguing or saying you’re wrong, but I just don’t see myself taking that same road. To each his own. :)

CaptainHarley's avatar

You’re missing the point. Yes, you should go with the sort of place you can live with, but committing oneself to a huge mortguage in today’s economy is like leaning into a left hook. Good luck to you guys!

Response moderated (Spam)
chewhorse's avatar

You want AAA credit in the least amount of time then you must get imaginative.. When I was offering information through mailorder (before internet) I suggested you set aside about a five hundred dollars then go out and open three savings accounts at three banks (make sure their not affiliated) then after a few weeks apply for a secured loan of what you put in the savings.. When the first bill comes due pay the minimum (to each loan) then two weeks later pay another minimum then the second bill pay double, then two weeks later another double.. Now just after the third bill (minimum) apply for a non-secured loan (up to their limit) and pay off the secured loans then follow the above payments on the unsecured loans (buying some small item occassionally then after it goes through, take the item back unopened and return for charge credit).. After the third payment, apply for a couple store cards (do the same as the return for charge credit).. Finally apply at the bank for credit cards and your AAA credit will be assured.. You would have paid approx one-hundred dollars in all for the interest payments of the initial $500.00 you started out with but a hundred dollars for AAA credit? Priceless.. Always remember though, until you receive these credit cards, your not there to spend but to manipulate.. Once you’ve received a visa, mastercard and whatever else, charge to pay back fully at the end of the month else you’ll fall into their web (so easy to fall into that pit, believe me).

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