Credit score?

Question

I am 26 years old and I don't have a credit score. I have unpaid medical bills on my report. They don't add up to much so I should be able to pay them off fairly easy when I have extra money. How can I get credit so that I can have a score? Every credit card that I wanted to apply to (that would even give me one) has all kinds of fees and doesn't seem worth it to me. I have student loans which I don't have to start paying back until I graduate (2009). Will these loans help improve my credit when I start paying them back? If so, what can I do now to get a credit score? I want to buy a house in the next couple of years but I need to build my credit first. Any suggestions?

Answer 1

Wendy, you do not need a credit score to buy a home. This is all bull sh-t! I am a mortgage banker in Tennessee. You will have to pay the collection accounts as soon as possible. That will help your rating when an underwriter looks at your file. When buying a home with out a credit score, you will need three to four alternative trade lines. These can be your current rent, cell phone bill car insurance etc. Always pay by check especially your rent. This gives a paper trail on you that you can get copies of if you do not rent from a corporation in a complex. Once you turn in these types of trade lines, your file can be manually underwritten. There are three things involved in getting a mortgage or any loan for that matter. Collateral, the capacity to pay and credit. In your case you will be given a score of 619 with no bad derogs It should sail right through with no problem. These are Fannie Mae and Freddie Mac guidelines where the best rates are available to all borrowers.
Good Luck to you.

Answer 2

Find a local credit union that you qualify to join. They can do a number of things for you. They can help work with you to improve and build your credit through counseling (I AM NOT TALKING ABOUT CREDIT COUNSELING AGENCIES!!!!).

What I mean is, they can probably set you up with one or two lines of credit that you have secured with deposits with them. There are many secured credit cards available, whereby if you deposit $300 or $500 with the bank, they will give you a credit card equal to your deposit. Pay it on time, they may even increase your limit beyond your deposit. Most importantly, do not max out your cards or your credit scores will still suck. Never owe more than 50% of your limit.

A credit union, or even some of the major banks, should charge very little upfront for doing this for you. The interest you pay will be based on your performance, and whether you carry a balance. Bad credit cards charge interest from the day you charge. Good cards charge interest only on the balance left unpaid after the billing cycle. It will take work, patience, and diligence to build a good credit profile. Get it, and protect it with your life. Bad credit can be a never-ending cycle, where you always pay more because you get high interest rates, and never have enough money to save. Then if something bad happens, you miss a couple payments and it starts all over again.

When you pay off your medical collections, before you send any checks to them you should try to negotiate the removal of these items from your report by the collection agencies. Get it in writing. Otherwise everything stays on for 7 years. That's a long time to pay for youthful troubles.

Answer 3

you need to be making payment arrangements with those medical bills immediately or you will have a very tough road ahead of you. Negotiate to make some kind of minimum payment monthly to each one for an amount that will allow each debt to begin being recorded as current. Then pay them off... but don't wait to negotiate & minimize further damage.


Yes, starter credit cards have higher fees & higher interest, this is because you are a higher risk. You are going to have to accept that until you are able to build a worthy credit file & then are able to qualify for better offerings. Pick the best offer you can find with the highest possible credit limit. Stick with just one and then don't apply for anything else for at least 6 months (each time you apply that works against you as well)

You need to build your credit & build a savings account. You will need @ $10,000 or more in savings for a couple of years before you buy a house in order to qualify for reasonable interest rates & closing costs.

Answer 4

If you have medical bills and student loans, you have a credit history, through it may not be a very good one.

Go to your bank and see about different sorts of credit cards they offer, etc. If you bank does not offer anything or won't otherwise assist you, go elsewhere. Specifically bring up that you are looked to build a credit history.

Answer 5

Typically stafford student loans will appear on your credit report as "deferred" and should help with establishing a credit score. If you have ANYTHING on your credit report you should have a score. I suggest going to equifax.com and pay for a FICO score.