When and how do I get a credit score?
A credit score is generated for you six months after something is reported under your name or social security number.
Credit cards and loans are the most common things reported to the credit bureaus.
Utility bills are generally only reported to the credit bureaus when you are delinquent on payments.
Lenders like to see at least three years of credit history before you will be considered a legitimate borrower.
How do I get credit if I don’t have credit?
Students are in the best position to get credit without having credit. Before the Credit Card Act of 2009, student credit cards were passed out like candy to any and every student that was at least eighteen years old.
Students now have to be twenty-one or prove that they have a way to pay back what might be owed.
If you are a student, student credit cards are still the best place to start. Students may also find a student loan listed on their credit report: some student loans are not listed on the credit report until it is time to repay the debt.
Regular people should first try obtaining store charge cards. A store charge card will not have the little Visa or MasterCard symbol you may see on your debit card or credit cards.
If getting a store credit card turns out to be impossible for you, you should then get a prepaid credit card from your bank. Banks, especially yours, will most likely approve you for a real credit card after six to twelve months.
It is important that you realize that the interest rate on store charge/credit cards and regular credit cards offered to people with little credit will be high.
Does credit cost money?
No, credit is free. You do not have to pay interest on any debt for it to benefit your credit score and history.
For example, your credit card bill can be paid in full each month after you receive your statement.
What is on the statement is what will be reported to the credit bureaus, so it is important that you wait for the statement before paying.
If you pay before the statement is posted, your credit report will make it appear as if your card has not been used.
Can I see my credit report?
By law, you are entitled to a free credit report every year from Experian, Transunion, and Equifax. Your credit report can be requested online at AnnualCreditReport.com.
Viewing your credit score is generally something that must be paid for. There are two ways to see your credit score for free.
When a potential lender or landlord checks your credit, you can ask him or her about your score. The other way is to sign up for a credit monitoring free trial and cancel the service before payment is required.
What is piggybacking?
Credit piggybacking is when the authorized user of a credit card has the card’s history reported to the credit bureaus, which usually results in good credit being gained without actually having a credit card.
It is called piggybacking because you are basically riding on someone else’s financial success.
People have learned to take advantage of this system and the credit bureaus are aware of this. Despite its abuse, piggybacking is still an option for people with little or no credit.
Credit bureaus have made small adjustments to the system: it now takes longer for piggybacking to benefit the authorized user.
The good and bad of the card’s history will go onto the authorized user’s report, which is why you should only ask to be an authorized user on the credit card of a person you know is financially responsible.
If things do go wrong for you as an authorized user, you can be removed from the card and the history will disappear from your report.
Authorized users are not responsible for repaying any debt incurred on the credit card.