Author Topic: Building credit (young worker)  (Read 1306 times)

AMandM

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Building credit (young worker)
« on: July 25, 2018, 10:22:43 AM »
My daughter graduated from college two years ago and got a good job at a federal agency. When she started her job, she opened an account at the agency credit union in her new city but did not apply for a credit card. Now she realizes she would like to have one, so she applied for the one carried by he credit union but she was turned down. She would appreciate advice on the best way to build up her credit so that she can get a credit card and one day a mortgage.

I suspect that the reason she was turned down is that she doesn't have any credit history at all.  She rents part of her sister's house, so her rent payments don't get reported anywhere, and the utilities aren't in her name; she doesn't have any debt, so there's no history of timely payments; she has no cell phone contract.

Someone recommended a personal loan from her credit union. I suggested a secured credit card, on the grounds that the forgone interest on the security is less than the actual interest on the loan. Other options? Should I temporarily put her on my credit card? (Can I, if there's already me and my husband?) Is there some way for her sister to report the timely rent payments to the credit bureaus?

Thanks for any advice!

RWD

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Re: Building credit (young worker)
« Reply #1 on: July 25, 2018, 10:49:33 AM »
Has she tried applying for any other credit cards? A secured card would have the highest chance of approval, but is probably not necessary.
https://wallethub.com/credit-cards/starter/

chaskavitch

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Re: Building credit (young worker)
« Reply #2 on: July 25, 2018, 11:14:24 AM »
You can probably add her as an authorized user on your credit card.  You don't even have to actually let her use it, as far as I know.  Just add her to the account and it should go on her credit report.  Hopefully someone will correct me if I'm wrong :)

A secured credit card is also a good option.  A small portion of your credit score is the number of accounts you have, so doing both might be the best idea.


TeresaB

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Re: Building credit (young worker)
« Reply #3 on: July 25, 2018, 11:38:03 AM »
Not all credit cards report to the credit bureaus on behalf of authorized users so you'd want to double check that. I would get a secured credit card so that it's representative of her true creditworthiness, or else look for an easier card to get, if there is such a thing.

Catbert

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Re: Building credit (young worker)
« Reply #4 on: July 25, 2018, 12:38:22 PM »
I'd do both - a secured card and adding her as an AU on one of your cards.  As Cheskavitch said you don't even need to give her the card if you don't want to.  Or maybe if she's trustworthy you might give her the AU card for emergencies.  (Assuming you have the same definition of "emergency".)

It should go without saying but the biggest thing she can do it pay all bills on time.  Set up automatic payments for at least the minimum payment so she's never late.

SunnyDays

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Re: Building credit (young worker)
« Reply #5 on: July 25, 2018, 12:46:58 PM »
Could her sister put her name on the utilities?  Assuming they get paid on time.

AMandM

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Re: Building credit (young worker)
« Reply #6 on: July 26, 2018, 03:28:47 PM »
Thanks for the advice, all!

It should go without saying but the biggest thing she can do it pay all bills on time.  Set up automatic payments for at least the minimum payment so she's never late.

The problem is she doesn't have any regular bills! So getting a secured card is a way of creating one. Maybe being an AU, if it gets reported for her, is another.  So is a small personal loan, I suppose.

By the River

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Re: Building credit (young worker)
« Reply #7 on: July 26, 2018, 03:41:33 PM »
My son has the same problem.  He signed up for a Discover $200 secured card 4-6 months ago.  He received an email this week that it has been converted to a credit card with an $1800 limit.  He needs to find out the annual fee which I think was waived for the first year.

AccidentalMiser

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Re: Building credit (young worker)
« Reply #8 on: July 26, 2018, 03:42:14 PM »
I'd do both - a secured card and adding her as an AU on one of your cards.  As Cheskavitch said you don't even need to give her the card if you don't want to.  Or maybe if she's trustworthy you might give her the AU card for emergencies.  (Assuming you have the same definition of "emergency".)

It should go without saying but the biggest thing she can do it pay all bills on time.  Set up automatic payments for at least the minimum payment so she's never late.

Me too.  My son started with a secured card at Navy Federal.  Within a year, they had raised his credit limit to 6000 and converted him to a non-secure card.  I'd also add her as an AU and toss her card in your safe or let her use it for little things.  Sign her up for Mint and get her credit reports also.

haflander

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Re: Building credit (young worker)
« Reply #9 on: July 26, 2018, 03:48:39 PM »
Not all credit cards report to the credit bureaus on behalf of authorized users so you'd want to double check that.

I have a ? about this, but didn't want to add it to the massive tradelines thread. I added that link below if anyone is curious.
https://forum.mrmoneymustache.com/share-your-badassity/selling-tradelines-piggybacking-part-ii-$1000hr-20-40kyr-side-gig/

I'm no spring chicken, but I have a weird thing about avoiding credit cards. I've never had one. Laugh and mock if you must, but I don't really care about that or the rewards/points. Emergencies are addressed with the EF/FU fund. More often, emergencies are addressed with cash flow from the checking account (just save less that month). I've been lucky to have few real emergencies thus far *knocks on wood*. Credit score is currently 721.

I've been wondering about being added as an AU to a family member's CC. Obviously the ideal card would be the one that was the oldest and had the largest limit. I have no need to use their credit even in an emergency, for the reasons listed above. I wouldn't even care to have their CC #. The sole reason would be for the credit history and raising my credit score. I brought up this idea to the gf when we were discussing buying a house ("but doesn't your credit score suck?? what about buying a house and the interest rate??") and she hated the idea of adding me as an AU; I don't really blame her.

So...what cards and companies would be most likely to report to credit bureaus regarding AUs? Or, do you think 721 is a score high enough to not be worried about raising it?

AccidentalMiser

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Re: Building credit (young worker)
« Reply #10 on: July 26, 2018, 07:56:14 PM »
Not all credit cards report to the credit bureaus on behalf of authorized users so you'd want to double check that.

I have a ? about this, but didn't want to add it to the massive tradelines thread. I added that link below if anyone is curious.
https://forum.mrmoneymustache.com/share-your-badassity/selling-tradelines-piggybacking-part-ii-$1000hr-20-40kyr-side-gig/

I'm no spring chicken, but I have a weird thing about avoiding credit cards. I've never had one. Laugh and mock if you must, but I don't really care about that or the rewards/points. Emergencies are addressed with the EF/FU fund. More often, emergencies are addressed with cash flow from the checking account (just save less that month). I've been lucky to have few real emergencies thus far *knocks on wood*. Credit score is currently 721.

I've been wondering about being added as an AU to a family member's CC. Obviously the ideal card would be the one that was the oldest and had the largest limit. I have no need to use their credit even in an emergency, for the reasons listed above. I wouldn't even care to have their CC #. The sole reason would be for the credit history and raising my credit score. I brought up this idea to the gf when we were discussing buying a house ("but doesn't your credit score suck?? what about buying a house and the interest rate??") and she hated the idea of adding me as an AU; I don't really blame her.

So...what cards and companies would be most likely to report to credit bureaus regarding AUs? Or, do you think 721 is a score high enough to not be worried about raising it?

I think you should start a new thread.  If you have a family member with good credit and an aged card and they are willing to add you as an AU, then it won't hurt either of you.  I'd shoot for at least 750, if you're looking for a target score.  BTW, 721 doesn't suck but it isn't great.

haflander

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Re: Building credit (young worker)
« Reply #11 on: July 27, 2018, 08:38:05 AM »
Eh, I thought about making a new thread yesterday but I was lazy. Thread derailment is the worst so I went ahead and did that.

https://forum.mrmoneymustache.com/ask-a-mustachian/never-had-a-cc!!-want-to-add-self-as-au-to-family-member's-cc/

Lemonhead

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Re: Building credit (young worker)
« Reply #12 on: August 01, 2018, 09:45:01 AM »
I added two of my kids as authorized users to Home Depot account soon after each graduated from high school.  I chose it because it is through Citi, we have had it for 10 years or so, there is a large limit and DH and I rarely use the card.  I never gave them physical cards but even if I had or if they used it I wanted something where I would instantly be able to identify any of their purchases. 

22 yr old DS recently got good paying job and wanted apartment.  He checked Credit Karma and was happy that he has excellent credit thanks to Home Depot.  He has never had credit in his own name (no credit cards, no loans) but as authorized user it was enough for him to qualify for the apartment.  Yes, I have strongly advised him to get credit card, but I don't think he has yet. 


teltic

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Re: Building credit (young worker)
« Reply #13 on: August 01, 2018, 02:19:39 PM »
I added two of my kids as authorized users to Home Depot account soon after each graduated from high school.  I chose it because it is through Citi, we have had it for 10 years or so, there is a large limit and DH and I rarely use the card.  I never gave them physical cards but even if I had or if they used it I wanted something where I would instantly be able to identify any of their purchases. 

22 yr old DS recently got good paying job and wanted apartment.  He checked Credit Karma and was happy that he has excellent credit thanks to Home Depot.  He has never had credit in his own name (no credit cards, no loans) but as authorized user it was enough for him to qualify for the apartment.  Yes, I have strongly advised him to get credit card, but I don't think he has yet.

What was his credit score, if I may ask?  I have a 780 score, and have urged my family to gets cards, but they won't.  If I give them an AU on my 10 year card... How will their scores look?

Lemonhead

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Re: Building credit (young worker)
« Reply #14 on: August 07, 2018, 09:36:44 AM »
I added two of my kids as authorized users to Home Depot account soon after each graduated from high school.  I chose it because it is through Citi, we have had it for 10 years or so, there is a large limit and DH and I rarely use the card.  I never gave them physical cards but even if I had or if they used it I wanted something where I would instantly be able to identify any of their purchases. 

22 yr old DS recently got good paying job and wanted apartment.  He checked Credit Karma and was happy that he has excellent credit thanks to Home Depot.  He has never had credit in his own name (no credit cards, no loans) but as authorized user it was enough for him to qualify for the apartment.  Yes, I have strongly advised him to get credit card, but I don't think he has yet.

What was his credit score, if I may ask?  I have a 780 score, and have urged my family to gets cards, but they won't.  If I give them an AU on my 10 year card... How will their scores look?

He said Credit Karma showed a 726 credit score for him.

boarder42

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Re: Building credit (young worker)
« Reply #15 on: August 07, 2018, 10:08:49 AM »
Put her on your credit card as an authorized user and that will jump them a ton. 

its not possible to exactly predict what their score will look like but assuming its not an AMEX card it should jump considerably for a 10 year card.  your score does not matter its age of the card and credit limit.  I added my sister in law who had something in the 500s and she jumped to 680 on a chase card with a 20k limit that is over 10 years old.