Have yet to understand the concept of credit

Question

im 27, always paid bills on time, but never had credit, only have used cash or checks. i have a credit card with a $500 limit that ive used a few times and always have paid off with no problems but it doesnt seem to build anything. me and my girlfriend were looking at getting a house down the road but anyone know how i can build credit? ive tried getting other credit cards like sears and best buy, but it sounds like itll hurt me if i get denied for them, and ive already been denied by both. i make around 1600 a month, my bills are all caught up, but it seems like im not getting anywhere with not having credit. any ideas?

Answer 1

There are a few things you can do to improve your credit score, which in many cases is more important than your credit history.  And, getting denied will not hurt your score, but applying for a lot of loans over a short period of time can hurt your credit score.

Your credit limit is too low on your credit card.  This makes your debt utilization ratio too high whenever you do have a balance.  If you have had the card for a year or more, and you've always paid responsibly, ask to have your limit raised to at least $2000.

Check your credit report with each of the three major credit bureaus - Equifax, Experian, and TransUnion - by going to www.annualcreditreport.com.  There may be some incorrect information that is causing you to be denied.  And, each time you are denied, the lender is required to tell you the reason why.

Finally, you need not have a regular credit history or a minimum score for a home loan through FHA.  They will accept an alternative credit history.  You'll need to have records of at least 12 months of payment history from your landlord, utility companies, cell phone company, etc.