I live debt free - how do I go about building/repairing credit history?

[RetireAbroadAt35]

I have always been rather debt averse.  In my adult life, I have only borrowed money twice:

• Student loans (paid off in 6 years)
• short-term car loan to buy a used car when mine got wrecked (paid off in 6 months)

I carry one credit card which I pay off monthly.  I have a decent income, live below my means and save the difference.  However, I may want to take on a mortgage or two in the not-too-distant future and so I'm thinking about my credit history for the first time ... ever.

I suspect there may be credit issues:

• A few years ago I had a Discover card get closed by the bank.  Stated reason was inactivity and some sort of credit issue.
• I have a business credit card through work.  My spending limits are lower than that of my coworkers.
• When I bought auto insurance last I was told that I didn't qualify for the best rates "because of my credit"

So today I tried running my credit report at annualcreditreport.com.  Neither Equifax nor Experian could validate my information online.  Several of the validation questions had personal data that I did not recognize at all.  I'll have to request my report manually and hope there's not some fraud or bad data.

Transunion did validate me but when I tried to buy my credit score, it came back as "score unavailable" due to lack of activity in the previous 2 years.  The credit report detail was missing the one active credit card that I do carry.  It also included:

Adverse Accounts

• CMRE, originally $100, balance $0, last payment 10/2011, status "In Collection"
• CMRE, originally $50, balance $0, last payment 10/2011, status "In Collection"
• GRANT, originally $1000, balance $0, last payment 10/2011, status "Paid In Full"

Satisfactory Accounts

• Bank of America, Closed by consumer 05/2008, balance $0, status "Current"
• CHASE/BANK ONE, Closed by consumer 04/2009, balance $0, status "Current"
• CITICARDS CBNA, Closed by consumer 07/2005, balance $0, status "Current"
• DIRECT LOAN, Closed 07/2007, balance $0, status "Current"
• DISCOVER, Closed by creditor 05/2009, balance $0, status "Current"
• DISCOVER, Closed by consumer 03/2006, balance $0, status "Current"
• NATIONAL CITY, Closed by consumer 04/2007, balance $0, status "Current"

Inquiries
There were 6 inquiries in the past year.  I recognized one of them.

• How do I get a credit score?  Should I try buying one from Experian/Equifax?
• How can I get those medical bills off my credit report?  I was assured at the time that they would not go on my credit.  They were paid off once a settlement was reached.
• What techniques should I employ to improve my score in anticipation of taking out a mortgage?

[hyla]

I just had the same problem with Equifax/Experian... haven't followed through yet, but I'll share the advice I was given by those wiser than myself.

Contact the agencies about the incorrect information, provide correct information, and ask them to get things corrected.  The agencies do have to respond to inaccuracies you point out, but I've been warned they will be annoying and foot-dragging and slow about this.  So be persistent, and get stuff in writing to keep records (if you contact on phone, also send letter or email so it is recorded).

I would work on making sure the information is corrected on reports first (which you don't have to pay for) before paying for a score and thinking about improving it. 

[usmarine1975]

Google steps to correct credit. When I was deployed I made a bad selection in who Would run my books. Had 2 mortgages 6 months no payments same with other bills.  It took some time but they did correct my info. It helped me that I was deployed and adverse credit reports on those deployed is against the law.  The mortgage companies also had to refund interest as my rate at the time was higher then the allowable.  It can be corrected.

[GardenFun]

Sign up for Credit Karma.  It is a free service that allows you to check your credit score whenever you want.  It also grades particular sections of your credit report and gives suggestions for improvement. 

Do you have any utility bills in your name?  Having and paying them on time is a simple way to improve credit.  Also, keep at least one credit card open as long as you can.  Credit companies use that card as proof that you can handle debt for an extended period of time.  You only need to make one purchase/year on it.  That can be a pain, but it is worth the high credit score. 

[forummm]

Agree with Credit Karma or Credit Sesame (similar services) as a way to see your credit history for free. Karma looks at 1 of the bureaus and Sesame looks at a different one and the 3rd isn't represented by either of those services, so you'll have to get it from your free annual report. Once they fix mistakes you might be entitled to a free updated version (don't know--just speculating) so look into that or ask the bureau.

For a mortgage you generally also need 3 active credit accounts that you use regularly. Just open some credit cards with no annual fee and use them once or twice a year and pay them off right away. A hassle, but less hassle than not being able to get a mortgage. Having no accounts open says "I can't get credit" more often than "I'm just good with money and don't need credit".

[RetireAbroadAt35]

Contact the agencies about the incorrect information, provide correct information, and ask them to get things corrected. 

Google steps to correct credit.

I don't really have any corrections to make.  There's a few adverse accounts that I was told would never hit my credit but that could be me being misinformed.  There are a couple of accounts that are not listed.  I guess you could say is it's incomplete, not inaccurate.

My questions are really:

• I wonder why I can't get experian/equifax reports or a score.  Weird?  Indication of trouble?
• How does a guy who generally self-finances everything go about building up some useful credit history?

Gardenfun:
Sign up for Credit Karma.  It is a free service that allows you to check your credit score whenever you want.

This looks like a way to automate the process of checking your credit report.  I'll go down this route if I find myself needing automation but for now I think I'm fine with just hitting up the credit bureaus directly.  Unless I'm missing some other added value?

Do you have any utility bills in your name?

Nope. I telecommute and travel often, usually renting short-term with utilities included.  I have auto insurance and cell phone bills.

Also, keep at least one credit card open as long as you can.

Affirmative, I have one credit card, open since 2001, that doesn't appear on the transunion report.

forummm:
For a mortgage you generally also need 3 active credit accounts that you use regularly. Just open some credit cards with no annual fee and use them once or twice a year and pay them off right away.

I have 1 credit card.  You're saying I need 3?  I've never heard this guideline before.

[mollyjade]

I easily got a mortgage with only one credit card (and rental/utility history). I've never had a student loan or car loan. My mortgage broker said I had the highest credit rating he'd ever seen. I'd avoid opening a card you'd rarely use since that's a security risk.

RetireAbroad, the benefit of programs like Credit Karma is that they have calculators built in that will estimate what changing different variables will do to your credit score. Does it go up if you open a credit card? What about if/when those closed accounts disappear from your report?

Your credit card company or employer might offer free credit monitoring, which will offer the same service and will also contact you when new accounts are opened.

[SwordGuy]

If you see info on your credit report that isn't yours, don't mark it as a mistake.  You will be ignored.  Mark it as fraud.

[Iron Mike Sharpe]

Get the status of these two changed to "Paid In Full"

CMRE, originally $100, balance $0, last payment 10/2011, status "In Collection"
CMRE, originally $50, balance $0, last payment 10/2011, status "In Collection"

Is your work credit card your only credit card?  You need some personal lines of credit to establish a good history.  Here is how Credit Scores are calculated:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Once you get 2-3 lines of personal credit cards, use them instead of debit cards, checks or cash.  And pay off the card every month.  You cannot be late.  Over time, with responsible usage, your score will go uo.

[RetireAbroadAt35]

I have both a work & personal credit card.  Not sure how to get the status on those accounts switched to paid in full but I'll investigate.