My friend has NO CREDIT at all. What is the best way for her to establish credit?

Question

She has always paid cash for the things she has purchased. She has no debt but can not get approved for an unsecured credit card. She is interested in buying a house but afraid she won't get approved for that either since she has no credit. Any suggestions?!

Answer 1

Tell her to go to rent a center they let you do payments. It also goes torwds ur credit. Going to a store that lets you make payments like Aarons, rentway, rent a center stores like this everytime you make a payment on time it goes towrds good credit this is the eisest way. Or you can go to a banck open accont and apply for a secure credit card with ur back that will all so help. Really just look aronund there is all sorts a ways. I established credit with rent a center my friend a credit card threw his back we were both 18 at the time now neither one of us has a problem getting anything im buying my own house in january. Im only 21!

Answer 2

The best thing to do is to establish credit as young as possible, since this is not the case she will need to start building her credit right now. First of all she need to know that in order for her to have a great credit she must have some sort of debt (ex. credit card, car loan, any installment loan or a dept store card) If she wants to apply for a mortgage, she might get approve with a low credit if she has a big donw payment (at least 20% down+ closing costs), this way the underwriters can do exceptions for her. If she don't have the down payment now, the best option is to get a secured credit card (or if she is a student a student credit card) so that she start building her credit; in the mean time she can save towards her downpayment. Good luck!!

Answer 3

She could go to a bank and explain her situation. The best thing for her to do is put a security deposit on her credit card. It will probably take a few years (unfortunately) to establish a good enough credit to be approved for a mortgage.

Answer 4

Okay she needs to get some store credit cards and make a few percheses with them insted of money. Make sure you show her how to pay the card companies and do it the right way. It's going to take a few years but she'll build up some good credit and than card companies will line up to her.
Same thing happend to me.
You can also go to the bank and do that kinda thing but it depends how much time she has to build up credit.

Answer 5

Tell her to buy a small piece of furniture like a tv or something and make sure she pays all of her payments on time and this will help her to establish good credit.

Answer 6

She can go to a Rental place and rent to own a piece of property(items like Tv's, Vcr's, Furniture, etc) and as long as she makes all the payments on time, Her credit will grow positively. It will take time But it does help to make payments on stuff (anything or any type of stuff like cars, furniture, and or Other items that require payments.)

Answer 7

If he has a savings account she can go to the bank and apply for a credit card. That is what I did when I was in thar situation

Answer 8

go to 2 or 3 banks. just borrow a small amt. of money,for a short period of time.don't spend the money just put it back. go back & pay the loans of early. borrow a little bigger amt a little later,pay themoff early. this helps get a credit rating built up .I have a low credit score because I don't have to borrow,have no balances on credit cards.

Answer 9

I sell real estate and this comes up a lot. If she rents, pays car insurance, a cell phone, utilities, that can be used as credit in most situations.

Answer 10

At this point, no way a mortgage is possible. Article from Forbes:

"For many young people, establishing credit seems like running in circles: You're denied credit because you don't have it.


Relax. There are basic steps you can take to establish credit: a valuable financial tool that allows you to purchase big-ticket items such as a car and, later in life, secure a mortgage for a house.


"You can establish credit even if you don’t have any," says Liz Pulliam Weston, author of two books, including Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number that Shapes Your Financial Future. "But you've got to do it the right way. A misstep at this stage can haunt you for years. The most important thing you can do is pay all your bills on time."


Start small. Put the utilities in your name and pay the electric, gas, telephone and cable TV bills on time. If you've just graduated from college and have a student loan, be sure to make regular, on-time payments. Your payment history will be collected by at least one of the three major credit reporting agencies—Equifax (nyse: EFX - news - people ), Experian or TransUnion—and will help establish you as a good credit risk.


If you're offered a t-shirt for opening an account with a major credit card company while at school, seriously consider it. The card issuers are betting on your future earning power, and it will never be easier to get a card.


Don’t go overboard on the number of credit cards you get—or with your spending.

Remember: A credit card isn't free money, and you must use it wisely. Keep monthly charges small—some recommend no more than 30% of the credit limit—and pay the amount due in full each month.


Always understand the grace period and interest rate before signing up.

The number of days you have to pay the account before getting hit with interest on the unpaid balance is spelled out in the contract. Read it. The annual percentage rate is likely to be in excess of 20%, so plan to pay the balance in full each month to avoid the stiff interest charge.


If you don't qualify for a major credit card, consider opening a charge account at a local department store or with a large oil company such as Chevron (nyse: CVX - news - people ), ConocoPhillips (nyse: COP - news - people ) or Exxon Mobil (nyse: XOM - news - people ). In general, the credit standards for opening such an account are not as stringent as those required by major credit card companies, such as Visa, MasterCard or American Express (nyse: AXP - news - people ).


If your payment history has been spotty in the past, consider opening a secured credit account with a major bank. Typically, the amount you can charge each month is backed by your deposits at the bank. The credit limit is often small and is likely to range from 50% to 100% of the amount on deposit.

Again, keep the balance low and pay it in full each month. How you handle your money is another step in building a solid credit rating.


After you've shown you can handle the basics by making regular payments on utilities and other routine bills, consider taking out a small loan from your bank. The bank will review the way you've handled your checking and savings accounts, review your employment history and ask for a detailed list of income and expenses. It takes time to gather the needed information, but it's just routine fingerwork and can be done easily in an evening or two.


On the road to building good credit, remember to guard your account and personal identification numbers. Keep a list of account numbers at home and call creditors immediately if your cards are lost or stolen. If you report the card lost or stolen before it's used, you're off the hook for the bill. If the card has been used before you report it, your liability is limited by law to $50.


Don't give your credit card number to anyone over the phone who calls on the pretext of "checking" your personal information or "correcting" a problem with your account. It's a scam—and you can bet that phony charges in your name will pile up almost immediately.


A variation on this theme is an e-mail purporting to be from your bank seeking verification of your account information. Don't respond, but call the bank immediately to alert them to the scam.


Some carry credit cards as a badge of prosperity. It's a mistake to stuff your wallet with cards that you don't use regularly. Carry only the card or cards you expect to use that day and leave the others at home.


Remember that building credit involves a number of small steps and takes time. Request a copy of your credit report and correct any misinformation. A new federal law gives U.S. consumers the right to receive one free copy of their credit report each year (see " Get Your Free Credit Report Now").


The Web sites of major banks offer solid information about how to establish and use credit wisely, including Wells Fargo (nyse: WFC - news - people ), JPMorgan Chase (nyse: JPM - news - people ), Bank of America (nyse: BAC - news - people ) and Citigroup (nyse: C - news - people ).


"Once you have credit, continue to make payments on time and don't run up big credit card debts you can't pay in full," says Weston. "If you take care of your credit score, the reward is lower interest rates and better terms on loans."