Credit Score in 60123>Question Details

Melissa Thom…, Renter in Chicago, IL

what if i have no credit?

Asked by Melissa Thomas, Chicago, IL Mon Mar 21, 2011

college student, no credit at all

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11
Melissa -

You need to build credit. However, if you pay a cell phone bill or ultility bills - you have some credit. The easiest way for you to build credit is to apply for a credit card. However, catch 22, sometimes you can't get one until you have good credit.

You can try to apply for a mastercard or visa at your bank and see what happens. If they turn you down, you can try to apply at a store and see what happens. If you get one of these, however, the important thing is not to carry over a 50% balance each month and not to charge more than 30% of your credit limit at any time. And, of course, never be late on a payment.

If you can't get one of those, there are a couple things you can try. Some banks offer what is called prepaid credit cards to help build credit. 5/3 bank does it and some others. You give them $500 and they let you charge up to $350 at a time. When you get your statement each month, pay off the entire amount. That will help credit.

Another thing you can do is get a secured loan from Harris Bank. It is like a savings account, but you put money in each month and they report it, but you can't take the money out until the specified time.

You can also look at http://www.YourIllinoisHome.com for info.
0 votes Thank Flag Link Tue Mar 22, 2011
or you can go with owner financing or a lease to own type deal. those work great if you can find the right home.
0 votes Thank Flag Link Tue Mar 22, 2011
Melissa,

You can either have a relative co-sign for your loan, or you can start to build your own credit now. Linda gave good advice regarding a gas card or department store card, or even a secured credit card. Ask for someone to add you as an Authorized User to their card as long as their credit is good. Your score will benefit from that person's on-time pay history. Ideally, you want to have at least 3 open and active accounts that you have been paying on for at least 12 months. That will give you the best shot at being approved for a future mortgage.

Good luck,
Mike.
mcline@waterstonemortgage.com
0 votes Thank Flag Link Tue Mar 22, 2011
Hi Melissa,
You may have some options available to you. It all depends on your personal situation. First, some mortgage brokers specialize in using your existing track record of steady rent and utility payments to build a case for your creditworthiness to lenders. Second, having someone with strong credit be a cosignor on the loan. Third might be having a relative fund the purchase and, in effect, be the lender. I have worked with a few young people where that turned out to be a win-win. Parents had substantial assets in banks earning a fraction of a percent interest. So they funded their kids real estate purchase, charged a below-market rate and both sides won.

Call me today and let's see if we can make you an owner,
Ed plaskacz
Prudential Starck Realtors
630-561-0885
AskEdAboutRe@hotmail.com
0 votes Thank Flag Link Tue Mar 22, 2011
Hi Melissa,
You may have some options available to you. It all depends on your personal situation. First, some mortgage brokers specialize in using your existing track record of steady rent and utility payments to build a case for your creditworthiness to lenders. Second, having someone with strong credit be a cosignor on the loan. Third might be having a relative fund the purchase and, in effect, be the lender. I have worked with a few young people where that turned out to be a win-win. Parents had substantial assets in banks earning a fraction of a percent interest. So they funded their kids real estate purchase, charged a below-market rate and both sides won.

Call me today and let's see if we can make you an owner,
Ed plaskacz
Prudential Starck Realtors
630-561-0885
AskEdAboutRe@hotmail.com
0 votes Thank Flag Link Tue Mar 22, 2011
If you're thinking about purchasing a home, there are possible options for no credit. There are lenders who have programs that accept "Alternative Credit." Perhaps you pay a cell phone bill, rent, Auto Insurance??? It would be best if you met with a Mortgage Consultant to go over your options. They may be able to find a loan that can work for you or give you advice on what to do so you can purchase sometime in the future.

If you're looking to rent, you might consider the same "Alternative Credit" options, write a letter of explanation and/or see if you cold get a co-signor. If you need additional help, please feel free to contact me.
0 votes Thank Flag Link Tue Mar 22, 2011
Hi, Typically no credit is just as bad as "bad" credit. Your best bet is to wait and build your credit or have someone act as a guarantor.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
914.406.9023
0 votes Thank Flag Link Tue Mar 22, 2011
You need to begin establishg credit. This can be done in a variety of ways, including a car loan, utility bills, a store credit card (Sears, Home Depot etc), credit cards for gas stations etc.

Without establishing credit it is highly unlikely you will be able to get a mortgage loan and if you do have someone offer you one it will be fore well above the normal rates and honestly you should not do this.

Your young, be patient and start establishgin your credit by taking out small unsecured loans and paying them off on time each month, within a year you will have established a good credit score.

Good Luck!
0 votes Thank Flag Link Tue Mar 22, 2011
I know around here, some lenders will consider accounts with utilitiy companies.
0 votes Thank Flag Link Tue Mar 22, 2011
You actually have a few options.

Definitely start building your credit like Linda suggested, but that won't do much in the short term.

Speak with some local lenders to find out if there are any programs that help college students out with mortgage loans.

Another option is to have your parents cosign on a loan for you. They can also gift you your down payment if you don't have one saved up.

Like I said, speak with a lender who can give you more information that is specific to your area and situation.

I have also written a series of articles on my website about how to go about starting your search to buy a house once you decide if it is indeed possible. Take a look at it and read through it. http://brianrayl.com/buyers/real-estate-buyers-guide-steps-t…

Because it’s more than real estate. It’s RAYL-Estate!

Brian Rayl, REALTOR®, e-PRO, SFR
Keller Williams Elite – Park Cities
972-949-4222
Brian@Rayl-Estate.com
http://brianrayl.com
Web Reference: http://brianrayl.com
0 votes Thank Flag Link Mon Mar 21, 2011
The best thing to do is to start building credit. Most lenders require three lines of credit. Perhaps you can apply for a gas card, department store card like Kohl's and a visia. When you use them, make sure to put aside the money to pay them at the end of the month so that you don't get yourself into trouble. After a few months, they should show up on the credit reports. Try calling a lender that you trust, they will advise you for sure if this is the best thing to do. I have a few names of people who would be happy to take such a phone call.

Good Luck!

Linda Dressler, Realtor®
SRES, SFR, ADPR
Helping From The Heart
Schaumburg, Illinois
0 votes Thank Flag Link Mon Mar 21, 2011
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