How to Build Credit - Posted by Todd M. Findley

Posted by Elliot Hungate on August 11, 2003 at 18:23:12:

Yeah I have a question? I am 17 Turning 18 In 4 weeks and I want to build my credit.What can I do to build It when I turn 18.Should I get a credit card and pay It every month on time?And which credit card should I get for best credit report.What Do you think I should do cause I have no credit right now cause I am only 17 and I mean In no credit Is beacuse I have started or can you start at my age or no?Well Email me ASAP Thanks for your help! Talk to you later!!

How to Build Credit - Posted by Todd M. Findley

Posted by Todd M. Findley on July 13, 2003 at 06:38:52:

Hello, I have a credit score of 580 not because of bad credit its because of the lack of credit history. Can someone tell me how to build up my score so that I can buy homes?

Thank You
Todd M. Findley

Re: How to Build Credit - Posted by brad

Posted by brad on July 14, 2003 at 15:33:33:

Correction to what matt johnson had previously posted…DO NOT CLOSE YOUR CREDIT CARDS!!! The only credit cards I would recommend closing would be Gas station and
department store credit cards. too many of them can
drag down credit scores. You want open accounts on all other credit cards. Also credit scores are GREATLY influenced by ratio of High Credit limit vs. balance owed… You WANT THE AVAILABLE CREDIT ON CARDS! Even though you make your monthly payments on time, if you owe over 50% of your high credit limit on credit cards- that too can hurt your credit. Keep the major credit cards open and try and keep a $0 balance! On your current credit cards, call your credit card companies and request credit-limit increases. This will fix the “Proportion of Balances to Credit Limit” problem.
In general, derogatory credit remains in a consumer’s credit
file for seven years (Chapter 7 bankruptcies last 10 years)
that’s seven years from the date last active. By paying off
these old accounts, the date last active changes from say, six
years ago, to the current month, and the seven-year clock
starts all over again.

To add insult to injury, credit scores are weighted by how
recent the derogatory accounts are. A one-month-old “Paid
Collection” account does far more damage to a credit score than
a six-year-old "Charge Off."
Below are the top 5 items that effect credit scores:

  1. Previous credit performance
    Major delinquencies
    Length of time since last delinquency
    Judgments, bankruptcies or liens

  2. Current level of indebtedness
    Proportion of balances to credit limit
    Total amount owed
    Number of open accounts

  3. Amount of time credit has been in use
    Age of account
    Length of time since account opened

  4. Pursuit of new credit
    Time since last account opened

  5. Type of credit used
    Number of revolving accounts
    Number of finance company accounts

Re: How to Build Credit - Posted by matt johnson

Posted by matt johnson on July 14, 2003 at 10:54:00:

make sure if you have more than 1 or 2 credit cards, that their credit limit is not more than you need. for instance, if you have 5 credit cards with 0 balances, but they have $5,000 credit limits, that means that at any given time you could just go out and spend $25,000 and then be $25,000 in debt. so get rid of ALL CREDIT CARDS YOU DO NOT NEED! also, get your credit report and close all accounts reported that you don’t use. remember, just because you paid them off doesn’t mean that they are closed.
also, when paying bills every month - pay your mortgage before anything else. then pay all accounts reporting to your credit first. for example if you have to make a choice between paying a cell phone bill (most of which dont report to your credit) and paying a credit card - pay the credit card! anymore specific questions - email me. thanks

Re: How to Build Credit - Posted by Gib

Posted by Gib on July 13, 2003 at 14:26:52:

If you know someone who has a credit card with a long clean payment history, see if you can get them to add you as an authorised user. This SHOULD add a quick boost to your FICO score.

I went a long time without using credit. The only trade lines I had were a couple of car loans. I was added as an AU on an 18 year old Sears card with excellent payment history and it boosted my scores by 50 points.

Average age of accounts plays a large part in the FICO scoring models.


Everyone makes mistakes - Posted by Gib

Posted by Gib on July 14, 2003 at 17:07:06:

Most of the post was correct. Closing credit cards not only hurts your utilization, but also will drag down your average age of accounts. Keep it open especially if it’s one of your oldest tradelines.

You were wrong however about paying an old account restarts the 7 year clock. That would be “re-aging” the account and specifically prohibited by the Fair Credit Reporting Act.


Re: How to Build Credit - Posted by matt johnson

Posted by matt johnson on July 14, 2003 at 16:02:54:

if i was wrong, please pardon me. but my info came from someone who used to work for MBNA and he was one of the senior employees. I was relaying his info