About Me -
Age: 18
State: New York
Bank: Chase
Accounts: Checking and Savings, each have a couple thousand in them.
Issue – I need to build up credit to apply for an auto lone or a loan to buy a good first car. Will be able to keep up with the payments, that isn’t an issue, the problem is that when I had opened my accounts I was asked to fill out a credit card application, which I declined because I had no credit history, and he told me it was worth a try anyway. Sure enough, turned down. What can I do to get a credit card to build credit with? I currently have a cell phone that I pay for under my grandfather’s name and can change it under my name, that is the only utility I pay for.
I don’t really know what else to say, just looking for some guidance without receiving commercial answers cause I have already received those. Anyone?
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Go to your bank and ask them to if you can open a secured credit card or a secured loan for $300-500 dollars and see if they can use your savings account for collateral. Its a win-win situation for both parties. If you can create a good account standing with your bank Im sure it’ll help your credit.
Or you can shop online for companies who give credit cards to people with little or no credit.
Nothing prevents you from applying for a credit card. the trick is to use it wisely. That means not charging more than about 20-25 percent of your credit limit, paying the entire balance each month, and having no late payments.
Of course the primary consideration when you apply for an auto loan will be the amount of income you earn each month, because that’s where the car payments will come from.
Go to your Bank Officer and ask to purchase a CD, then after 2 days go back in and ask for a loan secured by the CD. If the loan is 9% and the CD is paying 5% you are paying on the spread of 4%.
After you receive you payment book (12 months)and your loan go to banks #2, #3 and repeat the process, pay 20% more than your payments from the loan you received from the bank over the next 4- 6 months. Then pay off the the entire balance in 6 months this will have show 6 months of new credit a 3 banks. It also shows you are paying ahead of time and a good credit risk. Know go back to bank #1 and ask for an unsecure loan. When they pull your credit report they will see 3 new bank loans (good credit) this should help. I do recommend Pre- Paid Legal/Identity Theft Shield Plus it is $26.95 per month with a 1 time $10 enrollment fee( you get your credit report, monthly monitoring of changes on your report, and if anyone attempts to steal it – you have a license professional that will retore it for you so you don’t lose time from work to get it resolved).
Do you currently have a job? Most banks like to see steady, monthly income as opposed to a large checking account. That may be why your credit card application was turned down.
At your age, you may want to have a co-signer for your loan. You receive the credit benefits for paying off the loan and you’re not placed in the “risky” category. Having a balance on a loan is much better, credit wise, than a balance on a credit card, because the loan is considered “secured” – there’s collateral. With a credit card, you can just stop paying it and the company can send it to a Collection Agency … there really isn’t any guarantee that you will or won’t pay for it. So getting the auto loan itself will build your credit.
When you apply for the auto loan, the banks will be better about the rates and term (and thus your monthly payments) if you put down a downpayment.