BikeNinjagirl

ok i am TRULY stumped at this maybe just maybe you guys have had a similar problem : I go to get a checking account after years of only having a savings account - i had a checking account back in 1998 closed it and opened a savings account with a different bank - I'm denied ??? stating that my credit is the reason -- uhhhhh i'm not sure i understand -- so i pull my credit report -- no negatives - no lates -- no collections -- one large loan paid paid in full the same year it was taken out - one amex account paid and closed the same year -- i have no other credit cards , no mortgages nothing - but my credit score is LOW??? ok ok...wtf?? i go looking around the internet to see if any advice is offered for this situation and why yes there is ADVICE.....if you can call it that here's what i was told in a nutshell : i can't get a credit card but I can get a SECURED credit card - it will report to 3 major credit reporting agencies...that will help build up my credit....but it's suggested that I then get MORE credit cards keeping at least 3 of them at 80% of their limit for at least 5 years !!! that will give me a WONDERFUL credit score ??? so let me get this straight - I'm being penalized for being responsible with money so far and because I have NO debt no credit cards no loans because I only buy what i HAVE MONEY FOR- im being punished by the system??? ok ok... so I am way angry and confused. I work full time earn good money take the summers and hang out -live in my own paid for house don't owe anything to anyone and I'm penalized for this??? I sold my car several years ago to commute full time - my lord I can only imagine what the devil will occur if I EVER need to get a car again .....i guess i will pay cash for it -- will they take CASH??? seems to me that cash has a bad name nowadays.....WHAT IS THIS WORLD COMING TO !!!! ???

Has anyone on this board had this problem ? I'm getting married here shortly and we are thinking of buying another house......see my problem.... I suddenly have NO credit history with which to purchase another house.....ohhhhhhh how embarrasing for someone as responsible as me what to do what to do.....i'm angry i'm upset i'm sad i'm frustrated -- i just plain do not understand. On top of that I found out that working like I do - taking 3 months off in the summer leaves gaps in my employment history - even though I return to the same company every year - I've been doing this for 7 years now !! but because my company see's my return as rehire it looks bad ??? I've always gotten my raises never had a bad review and was just asked to take a management position -- but "the internet gurus " say I look "unreliable" ??? OMG !!! It was suggested to me to NOT take the summers off , take the management position , work diligently for the next 5 years and things will EVEN OUT......I'm going to scream.

ok i've vented.......thx -- comments? help? please someone talk to me about this stupid ****

same time

Is this when you bought your house? Was the large loan a conventional mortgage, or something else? Are you planning to sell your first house when you buy the second?

People who lend money want to see a predictable pattern of borrowing and paying back. It sounds like your situation is more complicated than that. Even though you know you're responsible with your money, there are no numbers to back it up.

Do you still have the savings account? Why can't you get a checking account from that bank? Also, you can often write checks from savings accounts, it's worth a call to that bank to see what your options are.

gwd

I've had similar experiences, when I had never been in debt and never had a credit card. It was something like the landlord wanted two months rent up front instead of one because I had no credit report. Also the guys who did background investigations for security clearances had a problem with the lack of paper trail - no phone, no cable TV, no credit card, no passport but hearsay reports of foreign travel raised some red flags according to friends and neighbors who were interviewed. I got a credit card years ago so I could rent cars when on business travel. I'm not sure what my credit score is but I only have 1 credit card and don't go near maxing it out, pay it off every month. When I went to buy my place, for cash, I had no problem.

I also had a problem when I got my first checking account at age 31 or so. Some shops didn't want to take checks with low serial numbers on them. Finally a shopkeeper told me to get the next batch of checks made up with higher numbers. I guess my checks started out at 1,2,3... Is that weird?

I guess some of us stay off the radar longer than others and when we come up on the screen for the first time at an older age people get suspicious that while we were out of sight we were up to no good.

Artkansas 

Well, basically you have a low credit score because you have no credit cards, no loans etc. Aside from having a high asset to debt ratio, there is nothing for credit givers to go on. Did your credit report have mention of that large loan being paid off? Maybe you can talk to the people who loaned you the money and see if it can be included in your credit report.

Can you get an account with a credit union? They are member owned and will probably work with you more. And their loan rates tend to be lower.

Yes you are being penalized for being smart with your money. But consider the source. This is the money loaning industry. All they care about is whether they can make a profit off of loaning you money. So it's no real comment on you. You just don't fit their profile.

I think you need to keep talking to more people. Your house should be significant collateral. And that should count for something.

You don't say what your fiancee's credit profile is though. When you are married, it will significantly change your credit. When I got married, my fiancee, unknown to me had a bankruptcy on her record. After the marriage she got lots of credit card offers because my credit rating boosted hers. I was denied for a loan to buy a computer because of the bankruptcy. So this may help you if your fiancee has a better record by loaning standards. That, with your house, may be all you need.

To establish some credit paperwork, perhaps get a smallish home equity loan. Bank the cash or invest it in your house in something that clearly increases the value and pay it back.

same time

Re-reading your post, RUN AWAY from whoever is telling you to get secured credit cards and keep them at 80% for five years. There are MUCH cheaper ways to borrow and pay back money, especially if you own a home.

acroy

wow. I get the impression you're upset sorry, that was my poor attempt at humor.

credit history is just that: a history of your use of credit. It sounds like you basically have no credit history. So yep, you are being penalized by the system. The system looks at historical use of debt, and you have none, so they don't know what you'll do. Thus they are unwilling to take a chance on you.

I am unaware of any way to quickly build a credit history. It takes 3-5 years to get a solid rating. your best bet may be to get a credit card (bite the bullet & get a "secure" card if you have to) and use it a little for everyday purchases, and pay it off every month.

another way to build debt history is to finance something. Most "regular" folks do this with a car but you could do it with a t.v., furniture, etc etc. I'd suggest next big thing you get, see if you can get "0 percent" financing and pay it off just in time to avoid finance charges. This gives somthing to look at on the credit report: a nice fat loan, paid off in a predictable manner.

Right now, the suit in the office building has no idea how, or if, you will make mortgage payments on a house.

The job is another thing: The credit rating agency has no idea that you get good appraisals, etc. I'd suggest seeing if your company might be able to keep you "officially employed" but at zero salary for the 3 months you don't work.

If you had tried to buy a house 2 years ago, you'd likely have had no problem. A transient worker family in Cali bought a $750,000 house on an income of 20k/yr. just an extremem example of why the global economy is getting a bit crunched right now - abuse of credit risks. Unfortunalty, responsible people like you are penalized as well.

best of luck to ya and congrats on the upcoming wedding.

BikeNinjagirl

No that loan was startup money for a business venture between my dad & I - we then realized it was not going to be a profitable endeavor so we just repaid the money that year. Yes, this house will be sold when we find another - I moved down here to south florida a year ago and we have decided not to stay - the townhouse here is the one we want to sell -I still have my 1981 paid for house up where i came from. My family lives there and handles all the bills for that home - they have the checking account ,utilities etc..all in corporation name - I have never had any of those things in my name. I guess thats hurting me too...but i moved from my parents home directly into my 1981 home that was paid for by family - basically you could say I have spent the last 26 years having a good time -- I worked like crazy but turned my money over to family to handle all expenses -- I took an allowance monthly. I've done this for all these years... I never really needed to participate because all of it was handled for me.
Now I find myself in this crazy position -- I just need the checking account to establish credit - not to pay bills or anything like that - thats handled. I don't want or need credit cards...i'm kinda in a weird place here aren't I ? I know it sounds bizzare - it's like a corporate trust fund situation with my family....there is money there but no "credit" to back it up...in MY name. does this make sense at all ? I just go to them and get money ( contingent upon my turning over my paycheck)- wow...who knew that stiking out on one's own at 44 would be such a problem I'm so inept at all of this simply because it's always been done for me...i know i know....how stupid of me to have just allowed all of this to occur. I know I could go to my family and easily have all of this taken care of....but ya know, i'm getting married - I want to take care of my life myself from this point on....I just had NO idea this was going to happen. You know I hadn't even thought of going to my savings bank and getting a checking account there...I've been with them for years - maybe that will solve some of this problem. THX!!! lord this is complicated...maybe i do need some type of financial counselor just to tell me how to do all of this stuff

super-douper

Not too long ago I read an article about a legal but shady way at a quick credit score boost. I can't find the article now, but it was about how people take advantage of deficiencies in the credit reporting system.

The gist of it is this.

- poor credit person finds a person with a long history of good credit.
- poor credit person persuades good credit person to add poor credit person as a joint user to one of their long history credit cards
- after a couple billing cycles, the credit card company now reports the long history credit card account to credit agencies for both the good and poor credit people.

The article was about the companies that would do the matches between the poor and good credit people. They'd do it in such a way that the poor credit people couldn't charge to the account or change any info for the credit card account. It is shady because the poor credit (or in the OP's case, no credit) person basically gets a 10yr credit history in a couple months and lenders will lend money to at lower rates than their actual credit history deserves (according to their formulas).

To the OP. If your future spouse has good credit history, you could try this "trick".

acroy

i saw that too, but the article i saw said FICO was adjusting it's policies to compensate. probably still worth a shot if, like you say, the spouse has a good credit score.

BikeNinjagirl

ThX Super-douper but i think i'll skip that idea. I'm all for fair play. - I really want to do this on my own . Having let everything be handled by family seems to be a boon and a bust for me. They have been so good to me I admit I should have been more involved - better late than never I guess. sigh

same time

I don't think playing fair and doing it on your own necessarily means you rule out your family. After all, you've helped them pay for the house, and you've helped them develop good credit. If you approach them for help with your credit, it certainly seems fair to me. There's no shame in doing business with your family, especially if their family corporation owns your house!

What would happen if the family member whose name is on all the paperwork added you to their credit card(s)? You might get the same boost described in the "shady" deal above, but with a family member who you trust and who knows you are responsible with money.

I really don't know if it would work, though. I'm not a pro at this. Maybe a credit counselor would be a good investment for you. Good luck!

Lamplight

Been there myself. It's very hard to borrow money when you've never borrowed money before. I needed a personal loan a few years ago and had trouble getting it even though my credit score was extremely high. I had several items in my credit history, and everything always paid in full and on time. Yet someone with a lower credit score but more history would have gotten the loan with no trouble at all. I can understand why they do it that way but on the surface it does seem ridiculous.

Platy

Join a credit union. They have eligibility requirements but in many cases they can be satisfied by doing something like signing up for a membership in a local food co-op.

As best I can tell as an outsider, credit unions these days are much more eager to serve individual account holders than the old style banks. The banking industry as a whole is in serious financial trouble and their minds are occupied with the commercial and investment side of their business.

Kimmitt 

Platy has a good point -- joining a credit union is a great way to get basic access to the financial system.

Kimmitt 

In terms of purchasing the house, Fannie May has a lot of programs for folks with small credit histories. That's where I'd go.

Oh, and you can buy cars with checks and wire transfers, so even a savings account will get the job done.

redtires

Okay, I think I get the idea of what's happening...credit is a VERY weird thing, your credit score actually goes down if you pay off debts quickly and completely. My experience is that EVERYTHING is based off of interest and longevity, an hardly anything on the principal. I've actually had financial advisers tell me NOT to pay off and then terminate a credit card because it will have a negative impact. The weird thing is, to a point, the more debt you have, and as long as you make regular and timely payments, the better credit you will have. Now, IMHO, this system will eventually collapse around us, making cash king once again, but you may have to wait a while for this to happen, actually quite a while. Sorry for the tangent. Really, you should pick a credit card or two, even if it don't use it. You may pay a bit every year for annual fees, but it will improve your score pretty significantly. And that's my two cents....with interest, of course.

Doug5150

You have no credit, because you have no credit record. It is bad, and now you're faced with trying to get credit in a tightening credit market, which isn't going to help either.

If your BF/husband has credit, you'll just have to go on that for now.

Get the secured credit card through a local bank (not a mail-order one, local bank terms are better), charge stuff on it, and don't pay it off every month! Let it carry a balance, and pay the credit card fees. Paying it off is the WORST thing you can do for building credit. Make sure you always make the minimum payments, but make payments of different sizes, and carry a balance every month. If you need something that will nearly-max out the credit card, then use the credit card instead of paying cash, and pay it back down to the "normal" balance on the next bill.

After a year of the secured card, ask the bank if they'll drop the security requirement. If they don't, ask them every 6 months until they do.

-----

There are people who insist you're better off not ever going into debt at all.
That may be true in principal, but being in debt considered typical in modern life and a credit rating is basically a measure of the debt you can maintain. You must go into debt to get a credit rating, there's no other way to do it--but that doesn't mean you have to rack up tens of thousands of dollars in the hole. Just maintaining a credit-card with one or two paychecks' worth of debt on it can accomplish a lot in this regard.
~

WriteABike

I got a credit card when I was 18, and never charged anything on it, so it automatically closed. Years later, I got another credit card, and have always paid it off every month. I've never paid a finance charge. My wife has a couple thousand dollars of student loans, but that's the only loan we'd ever had when we applied for a home loan. Our credit scores were quite high. I don't know why, exactly. It sure wasn't necessary for me to have debt, and my wife's student loan was much cheaper than any credit card.

bhchdh 

Is the bank you are trying to get the checking account the same one you have your savings invested with ? If so I would speak to the bank manager and see if they can accomidate you. If not you should probably do buisnes elsewhere.

KnhoJ

Same here, the wife and I each had a card which we'd never used; neither one had any kind of fees so there was never a balance. Turns out we're sporting one heck of a credit rating as a result. It's been explained to us that the publicly available credit reports don't list on time payments exactly, but rather a record of late payments and defaults. In other words, a never-used credit card which has never seen a penny of account balance shows up as an open line of credit with no late payments, just like a maxed-to-the-hilt card payed at the minimum, on time, every month.

Whether it's true or not, large debt balances, especially on a credit card, are a red flag to prospective creditors. Credit cards are often used as a measure of financial responsibility because they're so easy to use impulsively; how likely is the person to pop out and rack up ten grand in debt on Ebay next month? However, even with a responsible payment history, a massive potential debt (ten cards adding up to a potential debt of $30,000?) just waiting for something to go wrong might worry potential creditors. Steady income history also figures in to the picture; job hopping or periods of unemployment can be detrimental to your attractiveness to creditors.

I'd suggest approaching your credit rating objectively. The credit card companies and used car lots present your credit score like it's some kind of video game: the more you spend the bigger it gets! But, what most creditors are looking for is exactly what you'd look for if you were considering loaning a large sum of money to someone. Has the person demonstrated responsibility with credit? Would you loan money to someone who you know owes money to everyone else in the whole neighborhood? Can this person hold a job long enough to pay you back? It's not all about the score. An unemployed person with a great credit score will have trouble talking the bank out of a loan, while a demonstrably responsible, stable person with limited credit history might do a lot better.

JeffS

Hmmm, it's even worse than I originally thought.

You might as well be an 18yr old right out of high school. To the computer, you're a nobody, and to a loan officer, you're an extreme risk - especially given the current problems with the housing market.

You're only hope will be to rely on the credit of your family, if they are willing to cosign for you, although the problems in the credit industry still will make that hard.

You either have to choose to participate in the system, working it to your advantage, or expect it to bite you in the ass when you try to rejoin the game.

JeffS

That depends on the loan.

The unemployed person will get all the unsecured debt they want. The employed person will come closer to getting a secured loan.

georgewietor

+1 on credit unions. Get a DEBIT card with your checking account. Check out Dave Ramsey at his eponymous .com for great personal finance info.
Basically, credit card companies can/will raise your interest rate on unpaid balances any time they wish with minimal notice. a DEBIT card looks like a credit card but siphons cash for the transaction from your own checking account. BOL George

JusticeZero

Get a credit card from your bank. Even if all you can get is a secured card. (You pay $200 for a $200 credit limit) Put it on auto-pay from your checking account for the full balance; put some small recurring bill like a subscription on it, put the card somewhere hard to reach. Every now and then, ask if you can have your credit limit increased. Lack of use of credit does not inspire creditors to think you are a -responsible USER- of credit. If you don't trust yourself with credit, why should THEY trust you with it? They want to see that you have a lot of credit available to you, and you only can get that by using credit, though the part of that is important is that you pay it off all the time, not that you actually spend much with your credit. Paying off a $0.01 credit card bill on time is just as good as paying a $2000.00 card bill on time; better in fact because when they pull your score, the $2000.00 counts against how much credit you have available to you.

JeffS

A debit card will do nothing for your credit score though.