Can someone answer a financial question for me?

"K-Roll-PorscheTamer" (k-roll390)
08/15/2014 at 00:31 • Filed to: Financelopnik

How does someone have a credit score, but no credit history to speak of(as far as I know)?? Cayman for your time.

So at one point this summer, I applied for a loan, knowing that I had no credit, or history to speak of. Of course, I was rejected said loan because of an insufficient history via form letter from the credit union I applied at; but it said I had a credit score(I will not disclose the number though). Where'd this number come from??

DISCUSSION (45)

Nibbles > K-Roll-PorscheTamer
08/15/2014 at 00:33

Everyone has a base score.

K-Roll-PorscheTamer > Nibbles
08/15/2014 at 00:34

Really? I had no idea. I just assumed that everyone started at 0 and had to work their way up...? That's new.

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 00:35

My mom works at a credit union but she's sleeping so that's of no help to us. How'd you buy the FiST if you didn't get a loan? Or am I just missing something here.

K-Roll-PorscheTamer > norskracer98-ExploringTheOutback
08/15/2014 at 00:39

You're missing one detail. I had my dad sign the loan for the FoST. I'm simply paying it off.

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 00:41

Oh, that'd make sense. It wouldn't make sense you could buy a car but couldn't get a loan for what ever you're trying to get. Not going to ask what because it's not of my concern.

nFamousCJ - Keeper of Stringbean, Gengars and a Deezul > K-Roll-PorscheTamer
08/15/2014 at 00:42

I've heard "beacon score" (not to be confused with bacon score) thrown around a few times. I believe the beacon comes from having a bank account and such and can be used inleau of an actual credit score when there is no history to base it off of. But this can also be seen as fluff "I've never had a job but I'm the hardest worker around you'll see!" High beacon, no history. Having a high bacon score however is where it's at.

K-Roll-PorscheTamer > norskracer98-ExploringTheOutback
08/15/2014 at 00:43

Yeah haha. Took out a $14000 to pay off a car and is doing so very on time, but can't take out an even smaller loan for something else; hogwash! :P

K-Roll-PorscheTamer > nFamousCJ - Keeper of Stringbean, Gengars and a Deezul
08/15/2014 at 00:44

Maple flavored bacon score? Better be maple, I've got no time for hickory smoked.

Trunk Impaired 318 > K-Roll-PorscheTamer
08/15/2014 at 00:45

Its just a base score, a good way to build it up is to sign up for a credit card, use it fairly often but not exceed the cash amount that you have, pay the bill when the time comes and every time you do that your score will creep higher and higher

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 00:45

How exactly did you work that out? Is it your dad's loan and you pay him for it or did he just sign it saying something to be able to get the money?

K-Roll-PorscheTamer > norskracer98-ExploringTheOutback
08/15/2014 at 00:48

He takes out the loan, and the place where he got the loan takes the money out of my account monthly on a scheduled basis. Very straight forward and simple.

K-Roll-PorscheTamer > Trunk Impaired 318
08/15/2014 at 00:49

I'd love to, save for the fact that I need a co-signer for a credit card as well. -_-

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 00:49

Ok, that's very interesting, very interesting indeed.

K-Roll-PorscheTamer > norskracer98-ExploringTheOutback
08/15/2014 at 00:51

I know, I was shocked when I found out how simple it was as well. Modern technology and getting with the times I suppose.

BoulderZ > K-Roll-PorscheTamer
08/15/2014 at 00:51

Credit scores are based on probabilities + actual history. "Actual history" would be things like, "guy had only one credit card, with only a $1000 limit, and still was late on his payment 6 times in 4 years" (that's bad). Probabilities are "21 years old and in college", probably a good bet, especially if you can snare a brand-loyal customer as they start a career.

Remember, credit is only ever a calculated bet from the lender to the borrower. The lender holds all the cards, but the borrower has absolute approval/veto power on the transaction to start. Basic demographic info gives the lender more than enough foundation to price a smart profit because they're not lending to you , in particular. You're one data point in a very big cloud, as far as they're concerned. They're lending to a generalized population of thousands (to 100s of thousands) of people in a very predictable, normal distribution (bell curve). So, starting out, you might not have credit history , but you do have a credit score , based on very well characterized population assumptions. Of course, where your score goes from there is up to you and how you use and manage your credit (and a lot of luck).

Trunk Impaired 318 > K-Roll-PorscheTamer
08/15/2014 at 00:51

Generally speaking you can get a deal with a company as a first time customer with a fairly low limit that should eliminate the need for a co-signer, unless things have changed that much in a few years, which wouldn't be all that surprising

K-Roll-PorscheTamer > Trunk Impaired 318
08/15/2014 at 00:54

The credit union my mother uses and I share requires a co-signer.

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 00:54

Well good luck with your payments and all. I'll have to see if my mom would let me do something when I get a job to be able to make payments.

Trunk Impaired 318 > K-Roll-PorscheTamer
08/15/2014 at 00:57

What about straight through Visa etc?

K-Roll-PorscheTamer > norskracer98-ExploringTheOutback
08/15/2014 at 00:58

Thanks. I'd say start saving up the money from that job, and setting aside maybe 25% for the car, and the rest for your savings and other needs/wants. At least, that's what I tried to do until I started paying for it.

K-Roll-PorscheTamer > Trunk Impaired 318
08/15/2014 at 00:59

That's a good question? How does one do that?

Nibbles > K-Roll-PorscheTamer
08/15/2014 at 00:59

Yup. Theres a trove of intricacies surrounding it, but basically it's the law of averages. You start off somewhere high (in the mid to high 700s IIRC) but the slightest ding sends that to the toilet. The more you pay well, the quicker it moves up. Since it starts so high it is easy to go lower, but much harder to move it northward. If you are a credit union member (and you should be, fuck banks) they are generally very happy to help you get on with building your credit. They can start you off with a 500 dollar loan then, once that's paid off, get you in their credit card line with a 250 initial limit. Best way to build unless you can do CD to loan.

Soloburrito > K-Roll-PorscheTamer
08/15/2014 at 01:02

get a secured credit card. You put down some cash as collateral and have a small limit. Pay it off every month and you'll be on your way.

The sooner you open a credit account the better and longer your history.

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 01:02

I'm probably not going to buy until the spring anyway so that's all winter to make the monies. I was planning on at least $3000 on a down payment. I've got 2,000 aside already so at the most I'd put up $5k on down payment. No FoST for me probably just a FoSE since winter package.

Trunk Impaired 318 > K-Roll-PorscheTamer
08/15/2014 at 01:02

I might've given you false hope, I know I get stuff directly from them but it looks like you need a established provider and if you want to stay with that credit union I think you're SOL

K-Roll-PorscheTamer > Trunk Impaired 318
08/15/2014 at 01:05

Figured. Oh well!

K-Roll-PorscheTamer > norskracer98-ExploringTheOutback
08/15/2014 at 01:06

$5k should be a good down payment. :)

Trunk Impaired 318 > K-Roll-PorscheTamer
08/15/2014 at 01:06

I never really looked into it but I figured by getting stuff straight from the credit card companies it would be possible to go right through them

K-Roll-PorscheTamer > Soloburrito
08/15/2014 at 01:08

Sooner is definitely better.

norskracer98-ExploringTheOutback > K-Roll-PorscheTamer
08/15/2014 at 01:09

If I had the $5,000 right now the one I just "built" would be $209/mo over 72 months.

K-Roll-PorscheTamer > Nibbles
08/15/2014 at 01:10

Good thing I'm with a local credit union right now. That's a good start.

K-Roll-PorscheTamer > Trunk Impaired 318
08/15/2014 at 01:11

Eh. This seems to be a very complex process. I think it should be much simper than what it is now.

Eric in the PNW > K-Roll-PorscheTamer
08/15/2014 at 01:44

Capital One will give you one even if you have awful credit. The trick is finding a decent no-fees first card, or one that you can upgrade to a no-fees variant. They give out ones with a $30 or $40 annual fee and 1.5% cash back (with a laughably-low limit) like candy to nearly anyone.

samssun > K-Roll-PorscheTamer
08/15/2014 at 01:50

Open a checking account, auto-deposit your checks. Open a credit card, if you can use it like a debit card, meaning spend what you already have and pay it off every few weeks. Stick with the same account to build history, and keep upping your credit limit to lower your debt utilization ($100 on a $500 limit card isn't as good as $250 on a $5000 limit card).

Around 17-18 I got a "student Visa" with a $500 limit, which I used for day to day purchases through college, never having more than a hundred bucks or so on it and paying off before month end. Couple times a year they'd send me a letter upping my limit, and once they stopped I started calling about once a year.

A decade later I've never paid any interest charges, the same card is capped out around 17-18k, and my credit score is fantastic despite never having a car loan or mortgage (the traditional but expensive ways to demonstrate creditworthiness).

Eric in the PNW > K-Roll-PorscheTamer
08/15/2014 at 01:55

Take that number and figure out where it falls on the range of scores, then you can save yourself some hard pulls by only applying for stuff you'll get.

Learn to read those interest rate/charge/fees disclaimers that the government mandates to meet a specific standard before signing up for anything. Make sure you know exactly what they're offering you, because a lot of people don't and some shady banks take advantage of ignorance.

samssun > K-Roll-PorscheTamer
08/15/2014 at 01:56

My parents' generation used department store "charge cards" (Macy's, Belk) to build credit and qualify for a "real" one (Visa). When I got mine in the early 2000s, anyone with a pulse could get a starter card.

Despite the economic wreck of the last 5-6 years, I'd be surprised to hear you couldn't get a $500 limit student CC tied to your Chase checking account or whatever. Have you gone into your bank to see what they have available?

K-Roll-PorscheTamer > Eric in the PNW
08/15/2014 at 02:02

I did. and it falls in the "good" section according to what the letter said.

Saf1 > K-Roll-PorscheTamer
08/15/2014 at 05:52

Maybe it's like an ELO rating - you start with a number and that increases or decreases depending on how poor your life choices you make are :P

Brian Silvestro > K-Roll-PorscheTamer
08/15/2014 at 07:04

Get a credit card at Sears. Use it for EVERYTHING. Build credit. Buy new GT3.

That's what I did.

Except that last part.

shop-teacher > K-Roll-PorscheTamer
08/15/2014 at 07:54

Its actually fairly easy to build a history. Others have talked about credit cards, so I won't rehash that. Get a cellphone in your name, and make sure you're never late. You can also buy a piece of furniture on store credit (they'll approve ANYBODY!), and pay that off over six months or so.

You're really just proving that you have your shit together well enough to send a check in every month (so to speak). You wouldn't believe how many people have plenty of income, but are constantly late and behind on their bills. A dude I know is a walking disaster, his opinion is, "They'll get their money eventually, it shouldn't matter when they get it." Which is why his score is somewhere in the 300's.

Anyways, after six months or so of paying these little things, try applying for an auto loan to "buy" your car from your dad. Having that on your history will really help next time you want to buy a car, or if you ever want to buy a house.

Manuél Ferrari > K-Roll-PorscheTamer
08/16/2014 at 01:34

I dunno

What I wonder is if someone will give me a 30 year car loan with a balloon payment at the end

That's the only way I can buy a super cool car

K-Roll-PorscheTamer > Manuél Ferrari
08/16/2014 at 01:40

Buy dat Aventador!

K-Roll-PorscheTamer > Manuél Ferrari
08/16/2014 at 02:13

Also, here ya go!

https://www.google.com/webhp?sourceid…

Hope some of this helps for now.

Manuél Ferrari > K-Roll-PorscheTamer
08/16/2014 at 02:18

I wish!!!

White Aventador is so nice

Manuél Ferrari > K-Roll-PorscheTamer
08/16/2014 at 02:19

cool I will check them out

Thanks!