Credit building
None of this is expert advice. It's what people worked out for themselves, usually the hard way — what actually helped, and what they'd tell someone standing where you are. Take what fits and leave the rest.
If you only read a few
Apply for secured credit cards or store-specific cards (like Walmart) to start building a credit history if you have none.
Using them and paying off the balance will soon result in a good credit history.
- They've got shit terms.
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- Obtain a secured credit card by depositing money (e.g., $500) to set a matching credit limit, then use it responsibly for about six months.1
- If you lack a good credit track record, consider opening a secured card where the deposit sets your spending limit.7
Pay with a credit card for items you can afford in cash, then settle the balance fully each month to build credit and earn rewards without interest.
Consistent use followed by full payment builds credit history while avoiding interest charges.
- Some monthly bills charge a small fee if paid with a credit card.
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- Do not take out loans solely to build credit history; pay off credit cards in full each month instead.1
Focus on paying off debt rather than worrying about your credit score initially.
The core issue is often debt, not the credit score itself; worry about the high score later.
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Understand that manual underwriting is rare for conventional loans.
Lenders prefer to package and sell loans to Fannie Mae or Freddie Mac rather than book and service them themselves.
- Manual underwriting is generally reserved for FHA or VA loans.
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Start with a credit card that has a low limit to restrict how badly you can overspend.
A low limit caps potential financial damage.
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Be aware that having no debt or never carrying a balance can sometimes be viewed as a risk factor, potentially leading to mortgage rejection.
The banking system often considers those who do not follow the 'spend now, pay later' norm as risky.
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Be prepared to spend significant time verifying alternative payments if you have no credit history.
Banks may view applicants with no credit history as higher risk, requiring proof of payments for things like car insurance or phone bills.
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Make minor purchases on one or two cards monthly and settle the balance in full by the deadline to help improve your credit record.
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Avoid opening utilities or bills in a child's name unless you can guarantee timely payment, as missed payments will damage their credit.
Neglecting to pay can jack up their credit for years.
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Read personal finance books such as 'I Will Teach You to Be Rich' or the 'For Dummies' series to learn foundational money management skills.
They provide an overview of many financial items.
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Keep credit cards open for emergencies rather than cancelling them, as some services like rental cars may not accept debit cards.
Rental car agencies often require a credit card or proof of return flight if using a debit card.
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Maintain active credit accounts in your name even if you have a good credit score and significant savings.
A good credit score alone may not be enough for lenders.
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Call the lender immediately after a credit card denial to ask for the specific reason.
They may have wrong information on file.
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Set up a separate savings account for shopping and transfer money into it before buying items.
Saving first avoids interest accumulation from loans and builds discipline.
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Use your credit card like a debit card by only charging amounts you have in cash and deducting purchases from your budget immediately.
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Consider switching to a different mortgage provider if your current one is overly strict or unresponsive.
Another provider may be less strict or more realistic.
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Pay credit card bills manually instead of setting up automatic drafts when starting out to force attention to your money management.
Manual payment forces you to pay attention to your money.
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Avoid store credit cards because they encourage unnecessary spending and carry high fees and APRs.
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Write down the customer service representative's name, ID number, extension, and department when requesting fee waivers.
This allows you to follow up later if the issue is not resolved.
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Diversify your types of credit accounts, including revolving and installment loans, to avoid denial for lacking varied borrowing sources.
One person was denied a loan because they hadn't borrowed from enough different sources.
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Research Fannie Mae or Freddie Mac conventional mortgage guidelines online to understand lender requirements.
Most of the information can be found online.
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Space out credit card applications over time rather than applying for many at once.
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Contact customer service to request a waiver for annual or late fees, as issuers often grant these requests for good customers.
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Consider that living without debt or credit allows you to ignore external measures of worthiness, though this is a personal preference rather than a universal rule.
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