Does No Credit = Bad Credit?
03-28-2013, 11:57 AM
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Does No Credit = Bad Credit?
My younger brother is just recently out of school and has no credit report. His car was totaled last week and needs a replacement one pretty quick. I'm trying to help him but I don't know what to tell him regarding his credit (or lack thereof) situation. He has little money to put down (again just out of school). What do you recommend?
Thanks,
Daryl
I had to create a new username - I couldn't validate my old one
Thanks,
Daryl
I had to create a new username - I couldn't validate my old one
03-28-2013, 12:18 PM
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My experience trying to buy cars as a young guy is no credit is basically the same as bad credit as far as they wont give you the loan. I had to get a cosigner even though i made all the payments myself.
03-28-2013, 12:44 PM
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03-28-2013, 04:55 PM
#4
cash car is what i recommend. you also don't have to get full coverage insurance.
no credit isnt the same as bad credit. if your brother has a cell phone in his name he should have some credit. no credit can be great credit if you make a few sound financial decisions and don't over extend yourself.
no credit isnt the same as bad credit. if your brother has a cell phone in his name he should have some credit. no credit can be great credit if you make a few sound financial decisions and don't over extend yourself.
03-30-2013, 10:29 AM
#5
Even tho no credit its not the same as bad credit, its treated as bad credit, when u finance a car you have 2 choices, you can finance the car thru your own bank or you can have the dealership make some phone calls for you to banks they know and get u approved, you will always gonna get better interest rate most of the time thru your own bank, when u make the deal you get the car and the bank gets the tittle. Now in your case since he don't have credit your best bet is to find a dealership that finance their own cars, meaning the dealership will loan u the car, they will be the lien holder and u will pay directly to them, they don't look at your credit score/history cuz they don't care, they just wanna sell cars. I bought my SUV up in Dallas in a dealership named DL Campbell, they finance regardless of credit... Good luck
04-01-2013, 05:51 AM
#6
Sorry to hear about the total. Good options people have posted so far, here's the order I'd go in...
(1) See if a family member can co-sign a loan with him.
(2) See if a dealer can search out a bank that will approve a loan
(3) See if a bank he uses will help him loan a car
(4) Find a dealer that finances regardless of credit
The loan percentages will be high (probably in mid to high teens) but this will help him build credit. Also when he hits 18 or if he's 18 already have him get a credit card with a low cap ($3k or so) and have him buy stuff with that and pay it off immediately to help build credit. I started when I entered college in '02 and my rating is above 800 now from paying stuff off early or on-time. Good luck to you both!
(1) See if a family member can co-sign a loan with him.
(2) See if a dealer can search out a bank that will approve a loan
(3) See if a bank he uses will help him loan a car
(4) Find a dealer that finances regardless of credit
The loan percentages will be high (probably in mid to high teens) but this will help him build credit. Also when he hits 18 or if he's 18 already have him get a credit card with a low cap ($3k or so) and have him buy stuff with that and pay it off immediately to help build credit. I started when I entered college in '02 and my rating is above 800 now from paying stuff off early or on-time. Good luck to you both!
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04-01-2013, 08:09 PM
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yes it definitely does. I have had a secured credit card for over a year to build credit and have a 700 for a credit score. I wanted to get an unsecured card that didnt have a 40 dollar a year service charge and they wouldnt even approve me for that. without a cosigner no credit=no loan
05-03-2013, 07:55 AM
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As a banker with over 5 years of experience, no credit and bad credit are similar depending on what type of loan you're trying to finance.
@ atomicrm: A credit card decision is based on three things typically. One is obviously your credit score. The second thing is your relationship with the bank and last is the financial institutions guidelines or requirements. For example at chase, you can have a 620 credit score however if you have more than $10k with the bank, your chances of being approved will be higher. If your score is a 700 and they declined you, it could've been past delinquencies from 6 years back to present or there is something still reporting (you can have a pretty good credit score with current delinquencies). I would recommend to have another line of credit. Something within the lines of a department store or something similar and to also check your credit report once a year. This will give you a peace of mind by seeing whats reporting, whats not, and if there is any fraud.
Having a phone line with you as the primary does build credit but at a very slow rate. Renting an apartment is the exact same way. A car note is one of the best ways to significantly increase your score. There are dealerships that finance a person with bad credit or with none however please be aware that the APR will be ridiculously high. If this isn't a problem then I would recommend doing that then refinancing after a year or two (assuming the note is 4-6 years). If thats not an option knowing that he just finished high school or college, try and ask a family member that will co sign for him. This changes his apr tremendously. The older the car and the higher the mileage, the higher the interest rate. This is regardless of your credit score. Credit is very important. It prety much means, "Hey, we trust you." Good luck
@ atomicrm: A credit card decision is based on three things typically. One is obviously your credit score. The second thing is your relationship with the bank and last is the financial institutions guidelines or requirements. For example at chase, you can have a 620 credit score however if you have more than $10k with the bank, your chances of being approved will be higher. If your score is a 700 and they declined you, it could've been past delinquencies from 6 years back to present or there is something still reporting (you can have a pretty good credit score with current delinquencies). I would recommend to have another line of credit. Something within the lines of a department store or something similar and to also check your credit report once a year. This will give you a peace of mind by seeing whats reporting, whats not, and if there is any fraud.
Having a phone line with you as the primary does build credit but at a very slow rate. Renting an apartment is the exact same way. A car note is one of the best ways to significantly increase your score. There are dealerships that finance a person with bad credit or with none however please be aware that the APR will be ridiculously high. If this isn't a problem then I would recommend doing that then refinancing after a year or two (assuming the note is 4-6 years). If thats not an option knowing that he just finished high school or college, try and ask a family member that will co sign for him. This changes his apr tremendously. The older the car and the higher the mileage, the higher the interest rate. This is regardless of your credit score. Credit is very important. It prety much means, "Hey, we trust you." Good luck