best ways to establish credit?

iteachkids81 · November 2013

Hi

I have no credit. When we applied for our mortgage my credit report came back with insufficient data to give me a score.

What should I do?

Back story- I'm not from the US, and since I have immigrated here I have not had a credit card or had my name on any bills. Should I get DH to add me as an authorized user on his cards? add my name to the utility bills? (we would have done that sooner except we were waiting til we got a house so that will be done anyway in a couple months)

Any other suggestions? I've applied for a Lane Bryant card before and have been denied every time. The only thing my name is on is our Planet Fitness membership and I pay that on time every month.

HoneyBee973 · November 2013

Are you able to get a secured CC from your bank? Would you be able to get a CC if your DH co-signed for it?

Mom987 · November 2013

DH couldn't qualify for our house, either, because his parents thought "credit" was bad. My mother in law actually said "who needs credit when you have a big down payment" ummmm, your son (and we did not even have a big down payment). Anyway, it's in my name. I've had a bank credit card since I was 18, which I used and paid off each month. So over time, I didn't have an issue.

hoffse · November 2013

Being on utilities doesn't necessarily establish credit. If you stop paying your bill to them they can always just turn off your lights, KWIM?

Having a secured card is a good place to start; so is having your H add you as an authorized user (this is probably the easiest way to get credit if you didn't start in your teens or 20's). Keep in mind it can take some time to establish good credit. The entire point of credit reports is that they show a history of credit worthiness... and that requires time to demonstrate a pattern of behavior. How much time? I don't know - I've had credit since I was 18. I'm now 27. And the general rule is the longer the better. I would be surprised if any bank would be willing to make you a loan large enough to buy a house without at least a year of good credit. Possibly longer.

Mom987 also provided a good point - your DH may need to qualify on his own if you want to buy a house before your credit has been established. That may lower the amount of house you can buy (depending on whether they would be willing to "count" any income you provide since you wouldn't be on the hook legally for the loan). On the other hand, it would get you into a house and then you could work to establish credit with cards after you move. If you guys stayed there long enough you might even be able to refinance to get the mortgage in both of your names.

Sorry, but there is no "quick fix" to establishing credit. Cards are the easiest way to do it, but it still takes time.

iteachkids81 · November 2013

We were planning on DH being the only one approved for the mortgage anyway as I would eventually plan to be a stay at home mom.

Thanks so much for the advice tho.

I did start out with one credit card back in Canada, but my credit there doesn't transfer to here and since I've lived here and been married I haven't needed a credit card (since my bank debit card functions as one as far as online purchases are concerned).

I will look into getting a secured card as well as having DH put me as an authorized user on one of his cards.

Thanks so much.

dragonstarjk · November 2013

FYI,

If you are added just as an authorized user, the card will not show up on your credit. You will need to be added as a co-guarantor. You might qualify for this being that it's already established in his name. Make sure that he/you make it clear to the credit card company that you want it to appear on your credit report so they understand what you are asking for.

A secured CC at your bank would be a fabulous starting point.

hoffse · November 2013

The card does show up on your credit report, if you are an authorized user. From Experian (one of the three credit bureaus):

http://www.experian.com/blogs/ask-experian/2013/04/24/authorized-user-accounts-can-factor-in-to-credit-scores/

It might take some time for it to appear - the bureaus are pretty slow about updating stuff - but it will get there. Eventually.

Janessadawn · November 2013

A secured CC would be a good idea if there aren't fees, which often there are. So make sure you do some research. Another similar option is to do a savings secured loan. You put cash in a savings account, they freeze it, and give you the cash back. Then you make monthly payments and as it's paid down, the funds gradually become available. Usually they're low-interest.

Utilities will often check your credit report to determine whether or not you have to put down a deposit, but they don't affect your credit history/score.

best ways to establish credit?

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