It Turns out a Student Loan Isn't Enough to Build a Decent Credit Report
Contributed by Roland Head
Getting yourself started with a credit report.
In this age of highly available credit, most people have it and their credit reports that follow.. This article is not for them. However, if you are like me, you never developed a credit resume until it was too late.
By the time I needed a loan, my chances for getting it were nil. Why? Because I had bad credit; not because I had defaulted on my obligations, but rather, I had never created any.
This is not entirely true. I did take out loans to pay for my college. I was quite proud about paying back every nickel. When I considered a loan for a new condo, I was sure my credit report would be favorable. Hadn't I paid back in full all the money I ever borrowed?
I was soundly turned down by mortgage companies because I had never established a sufficient credit report on which to base my application. My credit report history was bad because it was insufficient.
Establish a credit report even if you don't need credit.
My remedy came in applying for and using credit cards even though I had always used cash. I got an American Express Green Card which had the fee waived for my first year. I used it to pay for gas on Sundays when I drove the church van.
My mail had always been full of solicitations for credit cards. I had never taken up the offers because I didn't want to deal with it, and I was fine using cash. Furthermore, I was a little scared about having credit cards which might be lost or stolen. I also didn't want the hassle of paying my balance every month, etc. And, finally, I wasn't sure I would discipline myself and stay within my means.
All these factors certainly need to be weighed before deciding to build up your credit report. Nonetheless, if I wanted credit for a home loan, I had to start small.
