Does No Credit = Bad Credit?
05-16-2013, 09:57 AM
#11
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
this is the best and most thorough advice in this thread thus far.
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