Building Credit

[chorb]

Didnt get my first credit card until I was 20, now three years later, I apparently have very little credit (my own bank wont give me a loan). Yet I make pretty decent money, is there someway to build credit quickly; my bank suggested I get 2 more credit cards and wait 3 years and come back and talk to them (screw you Bank of America). I dont currently have a balance on my 1 credit card, I pay it off monthly.

This seems stupid to me, loans help build credit, yet I cant get a loan. So the only way to build better credit is to get credit cards and wait?

This is for an auto loan, I was quoted 8% APR from a dealer which there is no way in hell I am agreeing to. Are credit unions more lax about loans or should I expect the same response?

 

[spidey07]

With poor credit you're not going to get good rates. So build your credit by taking out an installment loan (car) and more revolving credit (credit cards) and pay on time.

 

[kranky]

Try a credit union, but 8% on a car loan is decent. What interest rate are you expecting to pay? How much down payment?

Go to annualcreditreport.com and get your free credit reports, just to make sure there is no derogatory information on your report.

And how long have you been a customer of your bank?

 

[Ns1]

Originally posted by: chorb
Didnt get my first credit card until I was 20, now three years later, I apparently have very little credit (my own bank wont give me a loan). Yet I make pretty decent money, is there someway to build credit quickly; my bank suggested I get 2 more credit cards and wait 3 years and come back and talk to them (screw you BoA).

This seems stupid to me, loans help build credit, yet I cant get a loan. So the only way to build better credit is to get credit cards and wait?

This is for an auto loan, I was quoted 8% APR from a dealer which there is no way in hell I am agreeing to. Are credit unions more lax about loans or should I expect the same response?

In response to the second questions, credit unions are generally not for profit enterprises, so you may get a lower rate since they don't have to factor in large amounts of profit

in response to the first...

The common variables in your credit score (forgive me if I miss a few) are average balance, utilization, age of cards, number of inquiries, number of new accounts

IMHO, if you need the car RIGHT NOW you might as well go for it. If you don't need it right now, then pay off all your cards, that should bump your score by ALOT (note it can take 3weeks - 2 months depending on how active you are in this process)

If you don't need it and can wait about a year or two, I'd apply for as many cards as you can (on the same day), after paying off your cards. Don't spend any money on the cards. Keep these cards FOREVER. NEVER CANCEL YOUR OLD CARDS. This brings up the age on your accounts. It also decreases your utilization % since you have more credit then your'e using.

After a year (or less, if you search on other boards for credit strategies...), you can apply for your car. Afterwards apply for MORE cc's. Reallocate the new credit lines with your old cards. You keep the age in your cards while increasing available credit. Don't do this if you need your credit for something though as you will have a decrease in your score from all the new inquiries.

Sorry, there's entirely too much info to post in 3 paragraphs.

I would recommend

creditboards.com (goal is to get as much credit as possible)
or falletwallet finance (sorry no link, goal is to use credit to make money)

As noted above, you should pull your credit score somewhere
www.myfico.com is the only place I know of to get real fico's (which everybody uses)
Everybody else (truecredit is what I use) gives you a FAKO, which I use for a rough estimate and so I can peek at my credit report.

 

[BrownTown]

From all I can tell credit ratings are pretty retarded, I mean punishing people for being idiots makes sense, but punishing somoene for not having bunches of credit cards in college makes no sense to me.

 

[Q]

/Sends out the Rossman symbol over Gotham

 

[Viper GTS]

Definitely try a credit union. Also having no auto loan history is a major detriment in getting your first car loan. 8% is a little rough for a new car, but not terrible. If it's used expect to pay in that range (I have 7.24% on my current loan, and I had lots of credit card history @ the age of 25 when I got the loan).

Also, I second the "check creditboards" - It's a great place. If you're not already obsessive about your credit you will be after spending a little time there.

Viper GTS

 

[spidey07]

Originally posted by: Quintox
/Sends out the Rossman symbol over Gotham

*REBATES*
*REBATES*
*REBATES*

 

[RossMAN]

Damn that foggy Portland weather.

 

[chorb]

Originally posted by: kranky
Try a credit union, but 8% on a car loan is decent. What interest rate are you expecting to pay?

I was hoping around 6.5%, the difference over 4 years is close to $800

How much down payment?

5k down, ~20k financed over 4 years

Go to annualcreditreport.com and get your free credit reports, just to make sure there is no derogatory information on your report.

I did, it looks clean

And how long have you been a customer of your bank?

since '99


EDIT
jeez lot of responses in teh time it took me to to write this, thanks for all the info guys

 

[Ns1]

Originally posted by: chorb

Originally posted by: kranky
Try a credit union, but 8% on a car loan is decent. What interest rate are you expecting to pay?

I was hoping around 6.5%, the difference over 4 years is close to $800

How much down payment?

5k down, ~20k financed over 4 years

Go to annualcreditreport.com and get your free credit reports, just to make sure there is no derogatory information on your report.

I did, it looks clean

And how long have you been a customer of your bank?

since '99


EDIT
jeez lot of responses in teh time it took me to to write this, thanks for all the info guys

What you're really going to need is your score. Your credit report isn't really going to tell you shit

www.myfico.com. Search for a 20% off code. I'd pull all 3 bureau's if you never have. Some 40 bucks.

 

[Casawi]

8% is pretty good, you can refinance in 6 months. The problem with that is ur gap insurance will terminate immediately.

 

[kranky]

If you've been a customer of your bank since 1999, I would ask a manager what the problem is. If you have a clean report (even if it is thin), a steady job, and have been a customer for 8+ years, I think you are entitled to an explanation.

You can use this approach. Ask politely what the issue is, since you will be looking to expand your relationship with the bank as your income is growing. You will be looking for a money market account, perhaps an investment account, and if you're not the right type of customer for XYZ bank you would just like to know now.

You might be surprised at the manager's response.

Is this some huge megabank like Bank of America?

 

[chorb]

What you're really going to need is your score. Your credit report isn't really going to tell you shit

www.myfico.com. Search for a 20% off code. I'd pull all 3 bureau's if you never have. Some 40 bucks.

I went ahead and got my fico score, it ranges from 713 - 768, with all of them saying credit history being a problem. Plus I didnt know that companies checking my credit actually hurts my score, which seems kind odd to me as I would assume people shop around for the best rates on large loans. Thats got me kind of worried as I wanted to get a rate at another dealership and also try out the credit union on top the few I've already gotten. So in trying to improve my credit score I've so far only hurt it. Awesome.

Anywho, thanks for all the suggestions. I'll probably end up taking a 8% loan plus getting a few more CCs.

 

[chorb]

Originally posted by: kranky

Is this some huge megabank like Bank of America?

yup exactly

 

[Viper GTS]

Originally posted by: chorb
I went ahead and got my fico score, it ranges from 713 - 768, with all of them saying credit history being a problem. Plus I didnt know that companies checking my credit actually hurts my score, which seems kind odd to me as I would assume people shop around for the best rates on large loans. Thats got me kind of worried as I wanted to get a rate at another dealership and also try out the credit union on top the few I've already gotten. So in trying to improve my credit score I've so far only hurt it. Awesome.

A few things:

1) Those scores should be able to get you better than 8%. Keep shopping around and see #2.

2) FICO is smart enough to recognize shopping for big purchases, for scoring purposes all those auto inquiries will be lumped together. Applying for a credit card every month is what hurts you, mortgage or car shopping is OK. Also, even if they weren't the biggest impact of inquiries is over after 6 months or so. Yes they hang around for two years but old ones don't matter nearly so much for scoring purposes.

3) They always list SOMETHING negative. Doesn't matter how perfect your credit is they always have something that you could do to "improve." For someone who is young and has no negatives on their report this is usually going to be length of credit history.

Viper GTS

 

[kranky]

Don't worry that you hurt your credit by looking for a loan. Multiple inquiries for a car loan within a short period of time only count as one inquiry against your score, and even that is only going to matter a couple of points. It's not enough to worry about.

Your score is fine, you have steady employment, you have a clean record even if it's only a couple years old. A credit union will give you a car loan, and any normal bank would also.

I think your bank has sent you a message that you are irrelevant to them. I can't believe they didn't even offer you a loan with a lousy rate.

 

[Ns1]

yah, seems pretty ridiculous as the above posters mentioned

got a costco card? try a quote from their auto loan guys? (i think through cap1)

 

[thomsbrain]

You need more credit cards for sure.

In the meantime, try whatever credit unions to which you have access. You may also consider that a $20,000 loan with only $5,000 down doesn't look too promising, especially if you make "good" money. What you're saying to the bank is you can't save very well, which doesn't make them want to overlook your nearly non-existent credit history.

At 25, I bought my first used car with $7,000 down and a $13,000 loan @ 5.5% from my credit union. My income was fairly low for the area in which I lived, but I had lots of assets and was making a ~35% down payment. I had had two credit cards for seven to nine years and my credit score was 802 at the time I applied. Not bragging by any means, but just wanted to point out how good it can be to have a good credit union.