How did you build your credit?

[googleport]

So, I am trying to build my credit. Right now it is honestly shit.
I had 13 derogatory marks, 11 inquiries, and a high credit card balance.

I am down to 5 marks, one of which is paid in full and I will be disputing as soon as I get the receipt and two are in the process of being paid. They will be finished in April and I will dispute those as soon as I get a receipt. That will bring me down to 2

I have a few missed payments from when my school loans were not in forbearance and I didn't realize. I thought about calling them to see if they could be removed, but since I am not actually paying them and have them over in forbearance, I don't think it will do any good.

I have my one and only credit card paid to the full with a low $40 removed to pay off once a month. I figure I will buy my first tank of gas of the month with it and repay it when due.

According to 1 I have 1 inquiry, but according to the other I have 11 (one drops of in March, May, 2 in June, 2 in August, 1 in December).

My point to this endless ramble is I am trying my hardest to get my credit up. I am wondering if anyone has any experience in this? What worked for you?

[cinnamon]

I have a good credit score, but I've been really lucky (and fairly responsible due to anxiety and paranoia) to have no missed payments or derogatory marks. In that aspect I can't give much advice although it seems like you are taking the right steps in doing what you can to get marks removed as quickly as possible.

What I can tell you is I have found that utilizing more than 75% to 90% of my available credit card limits greatly affects my credit score.

I pay off my store cards in full every month, but my main card had steadily accrued a balance of over $3,000 from the time I opened the card in college about 6 years ago. I made some big purchases and ended up with a total of $5000 on that card. That one card having that high of a balance utilization made my credit score drop to between 650 and 695 each time I checked it (as the balance wavered between 4 and 5k). I transferred that entire card balance into a direct personal loan with a fixed interest rate and my credit score shot up to 750 once the reporting agencies registered it. I am paying it off aggressively now so I'm hoping my score will tick up a little more as I continue to pay off the personal loan. If I'm reading your post right did you just pay off that card? If you did it in one big chunk, give it a month or so and see if that didn't help your score some.

Credit Karma was always yelling at me for using 90% of my available credit. Credit utilization has a high impact along with payment history & derogatory marks (so the one you probably have the most control over at this point is your utilization). Hard inquiries do not seem to have a negative impact on my scores but I have found that having too many inquiries in a short period of time has prevented me from being able to open new lines of credit, which sucks because I've moved a lot and every rental agency runs my credit.

I will say every time my bank or a rental agency runs my credit they've shown I have a much higher score than what Credit Karma shows me. I think Experian is a little more forgiving which is the one major agency CK doesn't report for.

(FYI my credit is all based on CC and one federal student loan I do not have a car or home loan to boost it)

I wish you luck. If your student loans are in forbearance you might try to get on a income-based repayment plan so you can start making payments when you've got your cards paid off. Making timely payments on debts will help build your score up, although I can't say how much.

[googleport]

Thank you @(you need an account to see links) that is my plan, until April I am paying 314$ to two different companies. One held 8 or 9 of my Derogatory Marks and they agreed that if I split up into four payments starting in January they would remove them immediately. The other one had only two and those will be the ones I can have removed in I guess Mayish. After that I do plan on working out an agreement with the student loans and am hoping that if I agree to begin payments they can forgive the missed payments and boost my score that way. Of course I am no expert so they may say no.

Oh and my card only has a $300 limit so I plan on only using $20-30 to fill up my tank at the first of the month and then paying off on the 18th.

[cinnamon]

Thank you @(you need an account to see links) that is my plan, until April I am paying 314$ to two different companies. One held 8 or 9 of my Derogatory Marks and they agreed that if I split up into four payments starting in January they would remove them immediately. The other one had only two and those will be the ones I can have removed in I guess Mayish. After that I do plan on working out an agreement with the student loans and am hoping that if I agree to begin payments they can forgive the missed payments and boost my score that way. Of course I am no expert so they may say no.

That's amazing that you've been able to get that arranged. Like, damn, you are working for it. XD It's possible you may not see a real boost until all the marks are gone, but I know people with only 1-3 and they don't seem to be totally screwed, so that's good!

Student loans are so hard to give advice on because depending on whether they were private or federal student loans greatly affects your experience and repayment options. The loan agency I have has been pretty helpful and incredibly nice on the phone so I really hope you have a good experience working with yours!

Also, I forgot to recommend the subreddit /r/personalfinance. I've been trying to be more proactive about paying off my debts and building a savings up and they have TONS of guides and advice on this kind of stuff. They do have a credit section with guides specifically on credit rebuilding.

[alfa_romeo]

The personal finance subreddit on Reddit is a good resource for anything related to finance, if you have any questions.

But to your question, it looks like you're going the right away about it by paying off your credit card and loans. The important thing is to not miss a payment (as that is the largest factor in how your score is calculated). Credit utilization ratio is also weighted (basically try not to use more than 30% of your limit, which looks like what is what you're doing), but not as much as paying off your cc/loans or credit history. So whatever you end up doing, do not close your $300 card. I also have a low limit card that I still use every month, that I will never close as it was my very first card.

Basically everything else cinnamon said holds true.

It all takes time. You'll get there!

EDIT: It looks like cinnamon beat me to it with the /r/personalfinance recommendation, ha.

[googleport]

Update:
Up from 420 to 550s.
I have opened 3 more cards. My total available balance is 1600 and I am at 100 in use.
I have one more payment with one company, 2 with another, and three with another and all my derogatorys will be knocked off. I started the year at 13!
My inquiries went up from the new cards, but since I was approved I was told each of the new three will increase my score by 20ish points, plus will bring my on time payment % up since I screwed up and let my student loans fall out of deferment for a few months.

[Maison]

@(you need an account to see links) Im guessing you are over 18 lol but when I was a kid I think I was 14 years old my parents put me as an authorized user on their credit cards and that helped build my credit. Then when I was 18 I was already pushing a really high credit score that I was fortunate enough to take out 5 prime cards (50k revolving and one unlimited) Right now I'm happy with my credit card portfolio but I am pretty sure since I spend more than my parents can pay off it dropped significantly because they slashed my limits in half now I'm kinda scared to check my score atm but scores fluctuate all the time so it's fine xDDDD I used to be a real credit card freak though like it was mad unhealthy like I was in a club about credit cards (wtf) and I joined a credit card forum (myfico forums) and for days on end all I would do is live for credit cards!!

In your case @(you need an account to see links) is right like don't use 90% lol that's just ridiculous unless you can pay the balance in full before closing only use 9% maximum on each card per cycle. And don't ever let cards sit with an empty balance like what's the point of openin cards to not use it!! Even if you run something small like a Netflix payment it's better than charging nothing that month and your score will raise. Do not keep opening new cards every now and then and do it all at once and then wait till your accounts age and then open more later at once. The term is gardening. And for the love of God do NOT close accounts unless you HAVE to... It will drop your average and let's just say if I was a credit lender I would not let you take a credit card out. And do not use credit karma fuck that fake shit. Use Myfico it's the real deal but you have to pay like 30$ per pull. You don't want to pull your report too much though because it hits your CS. The credit game is a fun game good luck lol

If you need any more help you should PM me because I could give really good advice especially tips and tricks with opening new accounts.

[googleport]

No lol, not under 18. I don't have anyone who could cosign for me with anything which is why I really wanted to get a jump on it now.

[ub0r]

I followed this helpful guide from Reddit when I first started building my credit - it was very helpful and certainly got me to where I needed to be:

Step #0: Assess your financial situation.

Your financial health comes first. Your credit score is not everything; it is only a supplement to your financial activity. Your first priority is always going to be ensuring that you are already practicing good financial habits.

This start-up kit will contain recommendations to obtain a credit card. While there are benefits to credit cards, there are also severe dangers. I do not recommend this tutorial to anyone who:

Has no emergency fund.
Plans on living beyond his/her means.
Does not have an income.
Has spending habits that have not been dealt with.
Does not have a budget.
If you do not fit into any of the bullet points above, then you're likely safe to go on to the next step.

Step #0.5: Consider becoming an Authorized User

If a family member or a spouse has an old credit card with a solid history of on-time payments, you may want to take advantage of this by asking to become an Authorized User (AU)

AU's will sometimes have the benefit of getting the credit history of the account copied to their report. This can sometimes accelerate the process of credit building (assuming the account holder is responsible with the account). This is called "piggybacking".

Note that every creditor, however, does this differently. American Express, for example, has a different reporting policy than Chase. In addition to this, some creditors only allow certain family members to be reported as AU's.

It should be noted that, over the years, FICO has diminished the benefit one can obtain from becoming an AU. It is stil, however, beneficial to piggyback on a credit account.

Step #1: Pick a Card.

See the scenarios below and pick one that best fits your situation. When you are done finding a card, go to Step #2. Do not skip Step #2.

For your first credit card, a general note is to avoid cards that have an annual fee. You do not need to pay a dime in interest or fees to obtain a fantastic credit score.

I am a student or graduate who has student loans, and is looking to build credit.

Since you already have student loans, you likely already have a decent (but short) length of history on your file. In this case, I would look at what is generally referred to as a "starter card". A couple of the most recommended in this situation are the Chase Freedom and the Discover It. There is also the CapitalOne Quicksilver (Do not confuse this with the Quicksilver One, which has an annual fee).

You may also want to look at the bank where you currently have a deposit account; you are more likely to be approved for a credit card if you're in a position where the institution can clearly gauge your financial health.

If you are a student who cannot get approved for a "starter card", there are still plenty of student cards that are available for your situation.

I am a student who does not have student loans, but I am looking to build credit.

This means your file is completely empty. But since you are a student, you have plenty of financial institutions willing to take a chance on you. I would take a look at possible student card to get started.

I am not a student, but I also have no payment history. Where can I start?

You may want to look at a "starter card" first, and see if you can get approved anyway. Many of the options listed above (Freedom, It, and Quicksilver) are good at taking chances on thin or new files.

Again: You may also want to look at the bank where you currently have a deposit account; you are more likely to be approved for a credit card if you're in a position where the institution can clearly gauge your financial health.

Try for a few starter cards first. If you are having bad luck, see below:

I can't get approved for any cards listed above. What do I do?

Since you've exhausted all of the above options, you can try to get approved for a secured card. This is a card where you lay down a security deposit, which becomes your credit limit.

Unfortunately, secured cards tend to have annual fees. You can find some secured cards without annual fees by searching online, or finding some from local credit unions. Magnify Money has a pretty comprehensive list of secured cards available from credit card companies, banks, and credit unions. If this doesn't work out, you may want to go to your bank or local credit union to explore more options.

Usually, within 6-12 months of on-time payments, you can call your bank and request to move from a secured card to an unsecured card, or do a product change to a different card entirely.

I can't even get approved for a secured credit card. What now?

If this is the case, it's likely something is keeping your credit file back. Do you have an account in collections? Could there be a mistake on your credit file (which happens frequently)? At this point, please check (you need an account to see links) to pull a report. You may or may not have to do a mail-in request to obtain your report. If you need further direction or support, you can always ask for some.

If there are any inaccurate items, and they have been disputed successfully, you may wish to go back through your denials. Call the bank and ask them to reconsider your application.

Step #2: Understand The Rules for Using your Card:

Use your card only for planned expenses.
Do not change your spending habits simply because you are using credit instead of cash. Rewards are nice, but spending a dollar to earn a penny is foolish.
Always pay your statement balance in full by the due date. No exceptions.
Using the rules above, a typical billing cycle will look like this:

You charge a planned expense, sticking to your budget and not changing your spending habits.
The bank will sum up all of the activity in 1, and will send you a statement, or a summary of the information it believes to be correct.
Review your statement for errors, and pay your statement in full by the due date. As long as your statement is paid in full, you will not pay interest. Any charges that you made that were not listed on the current statement will appear on the next one.
Go back to 1.
If this seems confusing to you, consider an analogy to your Electric bill. Your institution monitors your charges (pun intended), and sends you your bill. As long as you pay your bill in full, there are no interest or late fees.

I have bad credit, and I am looking to repair it.

Depending on how serious your situation is, you may or may not need to know a few important bullet points. This is not legal advice; if you are seeking legal advice, you should speak with a lawyer versed in the FCRA and FDCPA.

Bad marks, such as late (30, 60, 90 day) payments, liens, judgements, collections accounts, and chapter 13 bankruptcy will fall off your credit report at the 7.5 year mark from the Date of First Delinquency (DOFD) or the judgement date.
Note: Debt cannot legally be re-aged. All delinquencies must be dated from the DOFD or the judgement date.
If you have a Chapter 7 or Chapter 11 bankruptcy, you will need to wait until the 10-year mark for the public record to fall off of your report.
Creditors and collections agencies are obligated to comply with both the FCRA and the FDCPA. If you believe these laws are being violated, you should speak with an attorney.
The burden of proof is always on the creditor. Always ask for documentation. Period. Even if you know the debt and know you owe on the debt. When you pay off a debt in collections or under a judgement, you should always demand and keep proof of the payment.
Look up the statute of limitations of debt for your state. Please note that the link provided may or may not be completely up-to-date, and may or may not contain accurate information. Verify this with your state through your attorney.
Just because your statute of limitations is up doesn't mean that a creditor is required to remove it from your credit report. The latter is governed by the FCRA, whereas the former is state law. It may, however, give you leverage against collections agencies and other creditors.