I've never needed to borrow money. The only loan I owe is my student loan which I've been paying for a year now.

The only way I can think of getting my credit rating up would be to get a car, so when it comes time to buy a house I'm able to get a better rate.

Is this really the only option available to me? Buy stuff I don't really need to get a higher rating?


These are the things to focus on... do not put yourself in debt with a car, there are other better solutions.

1) Get a credit card (Unless you already have one) -Research this and get the best cash back or points card you can get at the best rate. - Start with buying gas and groceries every month do not run the balance up. - Pay the card off every single month. (THIS IS IMPORTANT) - Never carry a balance above 25% of your credit limit. - Every 8 months or so call your credit card company and ask for a credit line increase. They should be able to do this WITHOUT pulling your credit you are only looking for the automatic increment that they can automatically approve. This will help increase your available credit and will help keep your credit utilization low. Only do this is you are successfully doing the other bullet points above.

2) Pay all of your bills on time, this includes everything from water, electricity, phone bill, etc. never be late. Setup automatic payments if you can.

3) Minimize the number of hard credit inquiries. -This is particularly important when you are looking for your mortgage lender. Do not let them pull your credit automatically. You should be able to provide them your credit score and other information and get quotes from those lenders. Do not let them tell you then can't do this... they can.

4)Strategically plan when you close a credit line, closing them will do two things, lower your credit limit often times increasing your credit utilization, and it may hurt your average age of credit. Open one credit card and keep it forever.

*Note: Credit Karma is a great tool, you should check your score monthly and see how your efforts are influencing your score. I also like Citi credit cards because they will provide you monthly with your FICO Score which Credit Karma will only provide TransUnion and Equifax.

This is educational information and you should consider talking to a banker/lender who can also give you more detailed instructions on how to get your credit improved so that they can approve you for a loan.

Many people can get their score above 720 in 1-2 years time going from no credit doing the steps described above. It does take time be patient and don't fall for gimmicks.

  • My preference is to ignore cash back and rewards points offers. I use credit cards where they are the most convenient (and/or safest) way of purchasing something. I am aware that the credit card company charges fees to the merchants, and that those fees are (somehow) passed on to me. (Cashback and rewards cards have higher merchant fees.) I am also not fond of Citicorp -- I remember their policies of stealing from children in California. Citicorp also has a reputation for being very hard-nosed with people who have trouble paying their loans. The rest of your advice makes a lot of sense. – Jasper Nov 21 '15 at 0:40

To get a credit history you need to use credit from someone that reports to the major credit agencies.

I don't suppose you have to BUY anything. You could just get a cash loan and hold it for a long time, but it seems silly to pay interest only for the purpose of building credit.

The student loan should help you build credit. Also, I'm assuming you buy things all the time like gas, groceries, etc. Why not put those on a credit card and pay the balance off every month? That way you aren't buying anything specifically to get credit.

Also there are numerous other benefits:

  • With the right card you can get airline miles or cash back.
  • You get an extra 10-20 days to pay for things.
  • You get an itemized list of your spending each month in the mail.

Another suggestion: Set up your cards so the full balance is drafted from your bank automatically on the due date. That will ensure that you always pay on time (helping your credit) and also make you think twice about putting things on the card that you can't afford with the cash you have in the bank.

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