Q&A: How do I build credit when I don’t have much?
Question by Heather: How do I build credit when I don’t have much?
I am trying to build credit, but no one will give me a credit card. I have a car loan in both my husband and my name and we always pay early, but that doesn’t seem to be enough. When I apply for credit cards they always say “insufficient credit”. How do I go about building credit and getting a credit card?
Best answer:
Answer by Kath6
You might try joining a credit union, if you can, and open a checking or savings account. After you’ve been a good customer there for awhile, you may be able to take out a small personal loan for something. (When my son was 16, he got a loan for $ 400 to buy a drum set.)
Another way you can get credit is to get a secured credit card. First Premier Bank is one such card. You have to basically put an amount of money up front and then you use it for small amounts, say $ 20 or so and pay it off every month. You’re really using your own money, but it shows that you’re responsible and a good credit risk. The catch is, you must repay it on time every month. You don’t want it to grow and not be able to pay it off. Only charge a very small amount each month. After a few months of doing this, your credit will improve and they may offer you a better card. But, be careful. Credit cards are very dangerous to use. If you absolutely cannot pay off whatever you charge every month, do not use it! Remember that your credit score is very important. It is the key to getting good interest rates on car loans and mortgages. Safeguard it well. The sources below will help you more. Good luck.
What do you think? Answer below!
Go to bank “A” and deposit $ 1000 in a 90 day CD. Apply and receive a $ 1000 loan using the CD as collateral. Go to bank “B” and use the $ 1000 from the loan from bank “A” to deposit in a 90 day CD. Apply and receive a $ 1000 loan using the CD as collateral. Go to bank “C” and use the $ 1000 from the loan from bank “B” to deposit in a 90 day CD.Now you have three loans, which are Installment Lines versus Revolving Lines,that you will gladly pay the higher interest rate for the three loans offset by the interest earn as a minimum cost. Expect it costing less than a $ 100.
After the 120 days, your original investment of $ 1000 is yours and three positive trade lines on your CRA’s
You’ve just experienced the problem with credit.
With a credit card, you are BUYING a credit profile.
With a savings account, you are EARNING a credit profile.
I would work on building a savings account balance.
CC issuers use various means to manipulate your credit profile to either deny you credit or justify charging higher interest rates.
Too many credit cards: you are a risk.
Too few credit cards: you are a risk – no or limited credit history
Too many credit cards with LOW balances: you are a risk as you aren’t using enough of your credit. CC issuers have been known to lower your credit limit so that you fall into the next category:
Too many credit cards with HIGH balances close to your credit limit: you are a risk as you are using too much of your credit.