I'm 27 and have no credit history!?

Question

When I was 18, I overdid it with credit cards - I had 7 or 8 - one Gold Visa and the rest were department store cards. I racked up about $5000 in debt, decided not to pay it, and have lived on a "cash only" basis since. I think I just overwhelmed myself and didn't know where to even START paying off the debt, so I never did. I've always had great banking history and I checked my credit report before I got married in September 2007 - there were still a few things on it. I applied for a Wal-Mart card last month to try and build my credit up again. I was turned down for "no credit history". Impossible. I checked online yesterday - it's true - I have no history, with the exception of a Macy's account I closed in 2001 (showing $0 balance and $0 credit limit), and a medical bill for $343 (paid). My husband has an 800+ credit score and a $23,000 limit on one of his cards. My banker said to get a small personal loan, or have my husband put me on his card as an authorized user. What do I do?

Answer 1

Being an authorized user on his account will not help you.  You will need to be a joint account holder with your husband.

Answer 2

For the best interest rate your banker is correct. Ride on the coattails of your husband for a while. Even at 27 with no credit history (meaning everything derogetory has dropped off so nobody knows if you have EVER had credit before) the interest rates will be high for you. But if you have your husband put you on as a card as an authorized user then you get to capitalize on his good behavior and take advantage of the low interest rate he gets.

Once you've been an authorized user on the card for about a year you should be able to get a loan on your own. However, if you ever buy a car go in jointly too. His credit score will qualify you for the best interest rate and the payment history will be recorded equally on yours and his reports. So you'll be building your credit up further while getting a good interest rate.

Good luck to you!

Answer 3

why not have a joint card with your husband?

Answer 4

I started with a small loan from my bank.

Answer 5

I work as a credit analyst and underwriter at a credit card company, and I have firsthand knowledge of what you're going through not just from my job, but when I had to build credit when I got out of high school.

Well, for starters, your banker is partially right. A small personal loan would definitely work. Being that it would be an installment account, that would satisfy one portion. Getting added as an authorized user on a credit card won't work anymore. The better thing to do would be to open a secured card. Which is actually better to rebuild credit with than a regular card. It takes 6 months to a year of payment history to have a positive affect on your credit, as opposed to 60 days with a secured card. Granted, you would have to put up your own money as collateral, but you can control the limit and get the deposit back at some point later on. Knowing that you're having to use your own money, should give you enough motivation and incentive to keep the account in good standing. But depending on how much $ you have to temporarily invest, you could "custom-build" a credit card with a higher limit than you would get if you tried to apply for one, not to mention starting up an emergency fund with the leftover deposit once it converts. A perfect way to use the card would be by making a SMALL purchase (max $20/month), pay that off in full on time, and raise the limit by increasing the deposit. Usually after a year or so, the card converts to a regular one, and you get the deposit back.

I posted links to several secured card companies, which in my opinion, Bank of America offers the best overall secured card.

Answer 6

I'm in the same boat.  Do you have an auto loan or anything?  I have an auto loan and have made my payments religiously.  I also have a capital one card with a small limit.  I make it a point to charge something each month.  I make sure it's something that I would buy weather or not I had the card since I used to buy things just because I could.  Then I pay it completely when the bill comes.  I was told by someone that not carrying a balance on your card looks good on your report.  I just make it a point to use it each month and I'm hoping that along with my auto loan will slowly work me up to good credit.  

Your husband putting you on his card may help too since that will show up on your report.  It may also hurt though becasu it will make your debt to income ratio out of wack.