How can I improve my credit score and establish credit when I don’t have any debt or current credit cards?

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When I apply for credit, I’m denied. It seems like I’m stuck between a rock and a hard place. I’m afraid to apply for a car loan because I think the interest rate will be too high. I also know that all these inquiries will further reduce my score.

  1. Reply
    Ryan M
    July 20, 2011 at 11:48 pm

    The only way to improve your credit score is to have debt and manage it properly. Unfortunately, that will mean that you may have to get a car loan at a high interest rate. The good news is that after a year or so, that loan will boost your score and you can refi the loan into more reasonable loan. Sorry, but that is the way it works in the real world. Good credit and low rates are not just given to you….you have to earn them the hard way by showing you are responsible.

  2. Reply
    July 21, 2011 at 12:20 am

    Apply for a collateral credit card. This means that you will have to deposit $ 500 with a bank and they will give you a credit card with a $ 500 credit limit. Use the card responsibly for a year or so to establish your credit and your rating. Check your FICO intermittently. When you reach a 650 FICO range. Apply for a credit card from another bank. You will get one since by then you have established a good rating.

  3. Reply
    July 21, 2011 at 12:23 am

    To find out specifically what you must do to raise your score, you can order your score report from all three national credit bureaus. In addition to your score you’ll get your credit report, an indication of how your score ranks nationally and an explanation of how you can boost your standing.

    In order to improve your credit score, it’s important to know where you stand currently. Despite all the media attention given to free credit reports you still have to pay to find out your credit score, the three-digit number ranging from 300 to 850 that is the key to your borrowing costs.

  4. Reply
    Jay, not J.
    July 21, 2011 at 12:52 am

    Do you already have at least five lines of credit? Companies usually look at your past history to determine whether or not you can pay back what you borrow.

    If you have no lines of credit you can start them pretty easily. Try asking about a Shared (Savings) Loan. This will basically open a loan in your name and the back will cut you a check. Place the funds into your account and use that money to make your monthly payments. (Just don’t spend the money they give you) Remember, the money is for making payments, not for spending.

    If you already have credit and want to improve it, cut out some credit cards that you don’t really need. Pay off as much as you can on your credit cards to reduce the capacity used on them. For example if you have a $ 1000 limit on your card, and you owe $ 900, you’re using 90% of that cards capacity. Dropping how much you owe will improve your credit score. Capacity makes up 35% of your credit score, so keep your cards low.

  5. Reply
    Dan W
    July 21, 2011 at 1:26 am

    Get a credit card from local bank and pay it in time. You also can use this service to avoid common mistakes while buiding credit and pre-estimate future scores for different scenarios of payments –

  6. Reply
    Raj A
    July 21, 2011 at 1:42 am

    Your credit score is a figure lenders use to decide whether or not to give you credit or a loan, to determine your credit limit, and sometimes the interest rate you will pay. A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.

  7. Reply
    Smith P
    July 21, 2011 at 2:40 am

    Yes..I can understand that having a bad credit is worst problem to have.
    Its not necessary that you are not able to get finance for your car if you are suffering from bad credit.I was in same situations few months ago.I was very worried about finance of my car.Then I got a car loan from CarLoan123.I got a car finance at very low rate of interest.You should try there may be you can also get car loan at possible low rate of interest.It will help you.

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