How to Safely Build Credit

It’s becoming increasingly clear, especially in this economy, that having a good credit score is absolutely crucial. Whether it’s credit checks for job applications or one of the other unexpected places your score is used, it’s clear that your credit score has a significant impact on your life… even if you don’t need a loan.

That’s why it’s absolutely crucial to begin building a responsible credit history as soon as possible. It might feel like you’re reinforcing a broken system but, then again, you probably don’t use kilometers and kilograms either.

The first step is to see if you’ve already developed a credit history. If so, you can skip this article entirely as you’re well on your way to building credit. It’s important to review your credit reports at AnnualCreditReport.com at least once a year from each bureau.

If you have no report or it’s completely devoid of accounts, try applying for a credit card. Despite the economy and the higher requirements for other loans, like mortgages, getting a credit card is still relatively easy. If you have income, chances are you will be approved for a small line of credit. If you aren’t, the next best option is to try to apply for a retail credit card, such as from a department store. Those cards have very low limits, often in the hundreds of dollars, but they all count (practically) the same when you’re building your credit.

If you can’t get an unsecured credit card, you have two options. The first is to be added as an authorized user on another person’s card, known as credit piggybacking. The second is to apply for a joint account with someone else that you trust. You may have remembered during the debate on the CARD Act that many student advocates were upset that students without income would be required to have a co-signer, usually their parents, on credit card applications – this is an alternative open to anyone.

Finally, if all else fails, you can try a secured credit card. Secured credit cards are often expensive, having application and maintenance fees, but if you shop around you can often find very affordable secured credit cards from major banks.

Once you get a card, pay it off in full and don’t charge more than you can pay within a single payment period. You don’t get bonus points for carrying a balance and paying the credit card company interest or fees. 35% of your credit score depends entirely on your ability to pay on-time and experts say a solid 2-year history can put you on track for a good credit score.

Jim writes about personal finance at Bargaineering.com.

Comments

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  1. Me - now with more humidity says:

    There’s some serious disinformation in this piece.

    1. You are better off carrying a small balance on your secured card. Pay more than the minimum on time every time. But leave a small balance.

    2. The rules have changed on piggybacking. It can’t be a random person…. it should be a someone you have a relationship with (spouse, parent). Credit reporting companies have gotten wise to piggybacking on a stranger’s card.

    The best thing to do is pay on time and keep your debt ratio low.

    (And yes, I do know what I’m talking about. I’ve raised my score 220 points to 700 in less than 2 years after starting over.)

    • Bob Lu says:

      No you don’t need to carry balance on secured CC. I had a secured CC for an year and never carry any balance (but I always use at least 1% of the credit line each month) and now I have unsecured CCs.

    • johnva says:

      The carrying a balance thing is almost certainly false. Your credit report does not differentiate between a “balance” that you pay off in full every month and a “balance” that you’re rolling over. There is no need to pay interest, ever, in order to build credit. Your bank will probably report your statement balance on your report and your utilization will be calculated from that.

    • KyBash says:

      For 1) — it depends on how/when the bank reports the debt.

      I had one CC which usually had a balance of $2-300, but it always showed up on my credit report as having a zero balance because their report went in monthly soon after the date I’d pay it all off.

      Another reported the highest balance in the last month, another reported only the balance on which they could charge interest.

      It’s best to check your credit report to see how/when things are reported.

    • sweaterhogans says:

      I’ve always been so confused with the contradicting carrying a balance advice. It just doesn’t make sense to me that paying a balance in full on time every month reflects negatively on a credit score. I shouldn’t have to pay ridiculous interest fees and be punished for paying my bill. I’m going to keep paying my bills whether it affects my score or not.

  2. sirwired says:

    Piggybacking no longer works. The rules have been changed so being an authorized user is no longer counted towards a credit score.

    • Xyjar says:

      Yes, it definitely still does count. My wife is an Authorized User on my cards, and within one month of adding her on 5 cards (of which 4 now report to her credit), she went from a zero credit score (no credit) to a low 700s score.

    • justinb105 says:

      That’s not technically correct. It used to be for about a year, but lots of people complained that parents who were helping their children build their credit or husbands who were helping their spouses build credit were being unfairly penalized. Consequently, FICO revised the scoring again last year that allows authorized user cards to count positively (or perhaps negatively) towards a consumer’s credit score. They have gotten wise, though, and will not count it if there is no clear relationship between the cardholders.

  3. mac-phisto says:

    check out a credit union – mine offers “sharesecured” loans. basically, you pony up $500 or more & borrow your own money. no credit check or income verification required (basically, we’ll just take your money if you default). & the rate is usually pretty low. nowhere near what most of those secured credit cards charge in rates & fees.

    just make sure that if you’re taking out a secured loan:
    1) the account is reported to CRAs
    2) you pay on-time (this sounds like a “duh!”, but you can build bad credit history if you don’t pay on-time)
    3) you keep the account open for at least 6 months – anything under that is (supposedly) considered “unscoreable” by the CRAs.

  4. DingoAndTheBaby says:

    I would have liked to see something more along the lines of how to rebuild credit once a person has gone through a short sale or foreclosure.

    Also, i think the article is failing to take into account the sheer number of people who’ve taken credit hits BECAUSE of short sales or foreclosures. The result is that there’s got to have been a shift in the way people use credit scores to determine, well, credibility. So, technically, I think that’d make it easier for people with no credit to establish themselves as loan-worthy. Also, I would tend to think credit is now LESS important as a determining factor since the bar has been lowered.

    • mac-phisto says:

      i think it’s pretty much the same route – you need to re-establish your credit by building a positive payment history. time will fix negative history. in the meantime, be prepared to explain negatives. what caused the foreclosure or short sale? was it because of a life-changing event or was it just poor financial planning? people are more inclined to ignore a foreclosure caused by job loss or a medical event than one caused by buying too many toys.

      • Awesome McAwesomeness says:

        It would be too easy to lie and say it was caused by job loss. Then, one would have to wonder why they bought a house that they couldn’t pay for with a job loss, and why they weren’t responsible enough to have savings that would augment their unemployment checks. If I were a lender, I wouldn’t lend to either group because neither is likely to be prepared in the future should they lose their job again or overpurchase.

        People are responsible for themselves–their own actions. It is an individual’s responsibility to make sure they can provide for themselves and honor their debts even in emergency situations.

        These people need to stop worrying about credit. Move into a dumpy apartment, drive a beater that you paid cash for, or take public transportation (move if you are in a place where there is none.) Eat cheaply (there are many blogs on how to eat nutritious meals on a tight budget.) Save money so if you have an emergency you don’t need a credit card. Then, rebuild credit. The last people who need credit are people who defaulted on loans, bankruptcy’d people, etc…

        I’ve been through this. It’s touch. It’s a good time to learn financial lessons though. Situations like this are quite humbling. You learn to decipher a need from a want very quickly.

        • CookiePuss says:

          I always keep like 100k in the bank for unexpected medical emergencies that my insurance company refuses to cover. I keep another 100k under my mattress in case my future kids decide to go to a university but don’t qualify for a full scholarship. Theres another 100k in the cookie jar on top of the fridge in case Wall Street wants to drain my life savings by running ponzie schemes. And just to be safe I keep another 100k in my sock drawer in case my employer wants to lay me off on a whim. I also have some cash set aside for total knee replacements and lots of drugs so I can keep working until I’m at least 90. Seriously, I don’t know why everyone don’t do that!

          • tournant says:

            I know, right? It’s simply irresponsible and ignorant not to have several 100K as a “rainy day fund”. I myself have one simple rule: Keep at least 50 years worth of income in easily liquidated funds as a back up plan. How hard is that?

        • jamar0303 says:

          And if you’re going to “move” just pay a little more and go to China or somewhere where there’s still a healthy job market for Americans. Lower cost of living too. In Shanghai I can cover all of my needs (except housing) and most of my wants on about US$500 a month. Housing depends on what you’re after so I’ll not include that.

    • Awesome McAwesomeness says:

      Just because more people have defaulted on loans and ruined their own credit, doesn’t mean that there should be adjustments made to the system. If anything, they should be making it harder for people to get credit so crap like this doesn’t happen again.

      I Bankruptcy’d 2 years ago over incredible medical debt (haven’t incurred any new debt in 4 years), which is certainly more valid than walking away from a house I can’t afford because I overbought, or bought something that I couldn’t make payments on if I lost my job. I don’t expect special treatment because I had multiple illnesses and crappy insurance. I have sucked it up and learned to live a life with credit scores in the 600′s– as should people who signed a contract for a house that they can’t live up to and are now whining about what victims they are.

      Rebuilding credit is the same for everyone. Do a secure card or one of the secured loans. Let it be a lesson and start living within your means. Get an emergency fund going ( a secure loan would be a good way to rebuild your credit and keep a fund going.) Build up your 9 months of income as padding so you won’t get yourself into a mess like that again.

      Dave Ramsey Baby!

  5. erinpac says:

    “Despite the economy and the higher requirements for other loans, like mortgages, getting a credit card is still relatively easy. If you have income, chances are you will be approved for a small line of credit.”

    Due to the new stricter credit card rules, no it is not easy to get one anymore.

    I got a great mortgage with my credit history, but had been unable to get a card (before & after the mortgage), and this is with a stable job at a good income and only small school loan debt, well within paying ability.

    • tbax929 says:

      I have great income, low debt, and a good credit score – about 770. Yet I was declined for a Costco AMEX. I have no idea why. I have four regular credit cards, of which I only use one – and I pay that off every month.

      I think they’ve made it tougher to get credit cards.

      • ben says:

        They should tell you why you were declined.

        • tbax929 says:

          I was told it was because my utilization was high. But I pay off the only card I use every month, so I’m not sure what that means.

          Transparency would be nice. This whole credit thing should not be a guessing game.

          • ben says:

            Even though you pay your card in full each month, at the time each month that the bank reports your balance to the credit bureaus, you probably have a balance. If that balance is near your combined credit limit of all your cards, you will have a high utilization.

            Given that you have a high credit score, though, that probably shouldn’t be an issue, since utilization is already factored into that. I agree with you that the whole process could be more transparent.

            • tbax929 says:

              My card never has more than a couple of hundred dollars on it, so that wouldn’t explain it, like you said.

              It’s just strange to me. But it does make me more disciplined in my spending.

  6. Bob Lu says:

    Secured CC is not that expensive. I am a foreign graduate student so I my credit record till one year ago was totally blank (although I had been working in the University as a rechearcher for more than one years and have a SSN). I applied for a Wells Fargo secured CC with $19 annual fee and and $500 deposit an year ago and “graduated” recently to a unsecured card. so the total cost of building a reasonable credit record is like $20, including the interest lost.

  7. yankinwaoz says:

    This is BS, Why don’t we step back and ask the bigger question… Why are now requiring people to borrow money in order to have a life in the US? The banks, insurance companies, and employers are using computerized formulas base on at best dubious information to make decisions that have huge impacts on our lives. It is outrageous. Why don’t we ban using credit reports for anything but credit and make everyone else get off their fat asses, do the homework like they use to, then use their brain.

    My sister and her husband are a perfect example of where the system is f**ked.

    They are both in their late 40′s. Never had or wanted a credit card. They own their home outright. They both have good paying stable jobs. She works in the medical field, He works for local government. They have been with the same bank for 20 years. Earlier this year they decided they needed to redo the siding on the house. My sister got estimates of around $20k. She was $5k short of cash in her savings account. She asked me what she should do, and I recommended they get a home equity loan or line of credit.

    Guess what? Their bank (US Bank, BTW) absolutely could not figure out how to get them a $10-$20k HEL on their paid for house. She was able to prove the house was worth over $250k. She proved it was paid off. She proved they have plenty of income and good jobs. But they have no credit histories.

    So she gave up. Instead the contractor she hired floated $5k on his bill for 12 months for 10 percent interest. So he get the interest and the business.

    It just amazed me that corporate America is so screwed up these days that they can’t figure out how to make easy money off the most solid, reliable people in the US. I have another friend in the same boat. House paid off, never carried a CC, good income, etc. Yet can’t get credit to save their lives.

    • Bob Lu says:

      This post already said: you still need a good credit record if you don’t borrow money. Yes the bigger question is that the system is broken but still, people have to deal with their day to day smaller question and live.

      • Bargaineering.com says:

        I agree with you all, it’s a broken system… but it’s what we have and until we fix it, we have to play by the rules.

    • mac-phisto says:

      sounds like the people you know are banking with the wrong financial institutions. local institutions are ALWAYS the better bet when dealing with situations like this, because they actually have people reviewing loan applications instead of a computer model. try a local savings bank or credit union next time – that’s my advice.

      though, fwiw, 10% isn’t all that horrible – a HE loan would probably carry a rate in the high 7 or 8′s & there might also be closing fees. at least she was able to get the work done.

    • Verucalise (Est.February2008) says:

      I agree. Another thing that perturbs me is the way that banks molest their mortgage customers for the first 15 years of their loan, pocketing all the money in interest. I think there should be a more fair system- in our case, we borrowed $87K for our modest home in upstate NY (We have escrow, but the actual monthly payment is $475 for the house on 5.125% interest). If we paid our mortgage as agreed, the bank makes like $90-$100K in INTEREST over 30 years, and the majority is made the first 15. I think a better system would be to have a mortgage agreement that says “It’ll cost you $90K for the priviledge of borrowing this money over 30 years, but we will always take 1/2 of your payment as interest, the other half as principal”

      Now I’m not saying people didn’t screw themselves over in the market, take some sweet ass loans they couldn’t afford out… but BUT maybe if there was a different way banks could make their money while helping the customer pay down their loan responsibly, we might not have gotten into this mess to begin with. If banks took their cut of the mortgage responsibly while helping people create equity in their homes… I don’t think the housing market would of tanked like it did, deeming credit twice as important as it was a few years ago.

      P.S….. tell your sister to get a small credit card, or a small personal loan at her bank. (HELOC’s are great but a pain in the ass with no credit) Stick the personal loan (maybe $1,500) cash into a lock box, and pay down the loan in a year. Then she has a completed loan. Or else, to build SOME sort of credit history, if she buys a car outright or anything like, maybe she should pursue getting the initial loan and using her cash to pay it off in 6 months instead of the 4-5 years. It might cost her a few dollars for the credit use, but then she would have something instead of nothing while still maintaining her debt-free lifestyle.

      • johnva says:

        Your first paragraph doesn’t really make sense to me. Of course they’re going to take the most interest up front, given that money has a time value. Money now is worth more than money down the road, so if you owe more money early in the mortgage’s life you’re going to have to pay more interest for it. There’s nothing really unfair about the fact that the amortization schedule works like that: it’s just a natural consequence of the time value of money and the fact that you owe the most when you first take out the loan. It would be unfair to NOT do it that way, in fact.

        • Verucalise (Est.February2008) says:

          No I understand the amortization schedule quite well. I just wish there was a different system where people who’ve owned their homes for 10 years, paid on time religiously and maybe even a little extra towards principal could have more equity than they usually do. I would of paid the mortgage company $57,000 after 10 years, but my original mortgage only dropped $15K.

          … I know my first paragraph is a bit jumbled, more like wishful thinking that the banking system were a bit fairer. “Hey, for 360 months your house payment will be $475. Every payment, $237 will be interest and $237 will be principal. Then we as a bank make profit on the same time span as you gaining equity. Now everyone is happy.” LOL…. ahhhh I wish.

          • johnva says:

            If it did work like that, then it would be a massive subsidy for homeowners. And it would also heavily encourage “flipping” and other short-term speculation (such as people buying homes they couldn’t afford in the hopes that their salaries would go up in the next few years or whatever). In fact, a practice very similar to what you’re describing is part of what led to the housing bubble: the heavy use of ARMs and introductory “teaser rates”. Essentially what you’re saying is that the interest rate should be lower at first, which isn’t much different.

            You’re free, BTW, to do exactly what you’re describing on your own, if you’d like. Your bank just won’t help you do it. But you can get a mortgage that has no prepayment penalty and then send double your actual required mortgage payment every month. Of course, a lot of people would find that unaffordable unless they bought a much cheaper house than they otherwise could. You have to sacrifice something if paying off your mortgage quickly is important to you, as it’s not okay for things to just run on cheap credit anymore.

      • Awesome McAwesomeness says:

        15 year loans are good solutions for this problem. I know not everyone can afford one, but if you can manage to possibly do it, it is the best solution.

        The sad thing is, when people talk about how great it is to be a homeowner and how set they will be in retirement, they forget that they actually paid double the purchase price of the house by the end of the loan and that they most likely would never be able to get that much for it. They also forget that their house is considered old now, that the neighborhood will go down, that they will have massive upkeep bills–foundation, roof, a/c, old plumbing/wiring, furnace, hot water heater, flooring, etc… etc…

        My grandma’s house is paid for and worth exactly double what she bought it for. This doesn’t include the massive amounts of money she has had to pour into the house over the years. If she sold it today, she would actually take a huge loss. Sure she would have the money it sold for, minus relator’s fees, but in the end, she definitely isn’t making a profit of any kind. If she decided to move because the house is too big or she doesn’t want to mess with it, she couldn’t even purchase a 10-year-old condo for what she got for the house because the house is older now and near a declining neighborhood. It’s also not updated at all.

        • johnva says:

          Or a 30 year loan with no prepayment penalty, that you pay extra on every month. That way, you retain a little more flexibility to pay less if you need to in the future. Might be a consideration if the interest rate isn’t much different. Paying extra is always an option, but not a requirement.

  8. Blow a fuse? I can fix that... says:

    Why yes, yes I am in fact using kilometers and kilograms.

    • Cantras says:

      Ditto, and celsius and 24 hour time too. In the U.S.

      (not that there’s this big international divide on 24hour time, but our work schedules are posted in it and someone was complaining about it, and I said that it was like the metric system: Better, and something people get a stick up their ass about using.)

  9. Riroon13 says:

    One way to build credit-

    Next time you need an appliance or furniture, go to Aaron’s Rent-to-Own and purchase the items as 90-days-same-as-cash.

    When our clothes dryer went out, my wife and I did this. Instead of the $1000 or so ‘two year cost of ownership’ scam, the 90-days-same-as-cash was not nearly as a rip off.

    IIRC, the dryer we bought would have been around $350 at Lowe’s. We got it for $450 at Aaron’s.

    BUT in that price we got:

    -free delivery, set-up, and haul-away (not included in the Lowe’s price)

    and more importantly,

    -a nice ‘paid in full’ happy face on our credit reports once we paid it out

    • Niphil says:

      How odd that it wasn’t included. When I bought a new fridge (2 weeks ago), they included all those, for free. Delivery, haul-away, and they set up the new fridge.

      • Riroon13 says:

        This was a purchase from about 2 years ago. Not sure if you got a special promotion, Lowe’s changed policy, or if it’s a regional thing, but I can guarantee it wasn’t offered to us. (Also, we live in a rural area, so delivery usually isn’t an option with anyone unless we cough up the ‘out of area’ fee — Surprised Aaron’s didn’t hit us with an upcharge, to tell you the truth. Not complaining at all though.)

        • MrEvil says:

          Individual Lowe’s stores often run special promos on delivery charges and setup/haul-away It depends on what the store has to do for disposal of the old appliances. Some stores actually sell them for a song to a guy that refurbishes them for low-income families. Others are probably stuck paying high disposal fees with a local recycler.

    • CFinWV says:

      I bought a computer like that, Dell was offering a 12 months no interest deal so I put the computer on my card. I’ll have it paid off before the 12 months is up and I get the boost to my credit.

  10. Alvis says:

    Crucial, my ass. I’ve got no credit to speak of, and I’m doing just fine.

    • Awesome McAwesomeness says:

      You are absolutely right. Plenty of people live their lives with no credit. If people would get out of the keeping up with the Joneses mentality and drive older cars, not worry about having the newest cell phone/Ipod, etc…rent until they can afford to pay cash for a house (and saving all of the interest on the house in the long run), go on local vacations or save for that trip to Disney, have emergency funds, etc… People wouldn’t need credit. It’s the competitive/materialistic mentality of our society.

      • SBR249 says:

        Yeah, in fact, why don’t we all go back to the stone age?

        - Internet? Who needs to talk to people halfway around the world? Talk to people locally I say!
        - Cash? Who needs money when you can barter? I’ll trade you my almost new hand-knitted sweater for your home-raised free-range chicken!
        - Cars? pffffft…let’s go the environmentally friendly way, after all, who needs to go more than 10km or so a day? Nothing that your two good legs and maybe a horse or mule can’t take
        - Houses? No way! Plenty of caves around where I live! If not, either make some bricks from the plentiful mud that comes from mother earth herself or kill a buffalo and use its skin (you can use the other parts too and it’ll last you a winter!)

        Man! Those were the good ole days!

    • KyBash says:

      People without a decent credit rating pay more for car insurance because the insurance companies learned that low/no credit means increased risk of scams.

      I didn’t read the click-to article, but I wouldn’t be surprised at almost anything with higher costs because of low/no credit.

      • speedwell (propagandist and secular snarkist) says:

        People without credit pay a lot less for things because they pay no interest. Fixed it for you.

        • jamar0303 says:

          Except for those things that for some reason are linked to your credit rating despite having nothing to do with lending of any sort.

        • johnva says:

          I have good credit and I don’t pay interest and never have.

      • Alvis says:

        “Crucial” doesn’t mean “getting the best deal possible”.

  11. Fantoche_de_Chaussette says:

    If you have to worry about “your credit”, then you shouldn’t be using credit.

    Credit is a luxury, and a dangerous one at that. Pay cash or do without.

    • Awesome McAwesomeness says:

      But I shouldn’t have to do without a new car. Cars are a necessity. Mine is five years old and has 100,000 miles on it. It’s time for a new one. I wouldn’t want my neighbors to think less of me. So you see, paying cash isn’t the answer.

      • speedwell (propagandist and secular snarkist) says:

        Boo, hoo. Save your pennies and buy a used car for cash, like I did. Tell your neighbors you’re free of the debt that keeps them up at night, and you’ll have all the envy you can possibly handle.

        • jamar0303 says:

          Which works fine until your car breaks down due to a well-hidden mistake on the previous owner’s part or a missed recall. Then it’s saving up your pennies all over again… unless your job requires it, in which case have fun dealing with the fallout without a safety net.

          • speedwell (propagandist and secular snarkist) says:

            Think I’m stupid? I bought my current car for cash after my last one was totaled by a hit-and-run driver and my insurance paid a fraction of what it was worth. I now have full coverage insurance (which contrary to reports did not cost more than the same insurance for someone with high credit) and a modest, but late-model and presentable, paid-for car. And the minute I paid for the car, I also had a plan to replenish my savings, and they are fully replenished now. Moral of the story: PAY YOUR SAVINGS FIRST. It’s not rocket science, it’s more responsible than carrying debt all the time.

            • jamar0303 says:

              When giving advice: Never assume that the people you’re giving advice too are 100% like you. They are going to screw up, they are going to end up with a seller that turns out to be a scammer with no recourse, or they are going to end up with a car that should have all its recall fixes done but isn’t.

              What America really needs is a Suzuki Wagon or Tata Nano. New cars that are purchasable with cash on a practical basis.

  12. Berries_n_Brains_Cereal_is_Zombilicious says:

    Three worlds: Small secured loan. If you don’t have access to a credit union, I’m pretty sure a bank can give you one, but the interest will probably be higher. Still, it’s better than a credit card and will build your credit. I got one last year after finding out that I didn’t have anything being reported, payed it on time every month so far and otherwise forgot about it and I just got pre-approved for a mortgage loan that I was denied for just moths ago. Not sure if we’ll jump on it or not, but still, it’s an option. We could own a house when before we kept getting told “no.” I didn’t have to bend over for a credit card company to get it, either.

  13. FrugalFreak says:

    So Consumerist.com opinion is to take on debt of money you don’t have just to support an industry? I just say NO! It’s Better to save money and buy what you want without needing the help by begging dictating power hungry industry.
    Ol’ Jim seems to be trying to save the economy himself through his blog posts. Do you have industry backers Jim? First it was Don’t spend cheaply like say at a “Dollar store”(fatwallet.com blog), now this. I will now take your journalism for what it is.

    • jamar0303 says:

      On a small scale, credit gives you protection that you wouldn’t have otherwise. Merchant go belly-up between order acceptance and delivery (not just small products- airlines collapse too, for instance)? Or during your product’s warranty period and it needs help? Purchase screw-up? Exchange troubles? With credit it’s not your money being used until you pay the bill so they’re motivated to get it back from the merchant when they don’t fill their end of the deal. On debit they’ve gotten their cut so they don’t care so much anymore. And with cash it’s all you. Under these circumstances why *wouldn’t* you use it if available?

      That and two other circumstances- medical emergencies (who hasn’t heard stories of five-digit medical bills?) and unforeseen moves overseas (one parent got sick while on vacation and had to stay there while the other had to fly hundreds of thousands of miles a year on business with no other options at the time; with no relatives open to take guardianship the children stayed behind with the sick parent. English-speaking school tuition in that country was in the five-digits of US$ per year. It was that or derail their education for years to pick up the local language, then insert them into a local school. One in 100 million, I know, but once bitten, twice shy.)

      • speedwell (propagandist and secular snarkist) says:

        Why do you think those things cost so much, if it isn’t for the fact that so many people are now so very willing to take on crushing, five-figure debt loads? You are confusing cause with effect.

        • jamar0303 says:

          Well, maybe you have a case with the medical emergencies, but in the case of “unforeseen overseas move” it’s not America; the same conditions don’t exist there. In that case it’s part paying for native English-speaking teachers to move to China to take the job and part government regulation. And you go with it, especially if they’re in high school, because going from zero to high school level in the space of a “winter vacation” is impossible.

      • Alvis says:

        “one parent got sick while on vacation and had to stay there”

        What the hell? Why didn’t the sick parent just go home? And then the kids had to move there, too? Can someone make this story make sense to me?

        • jamar0303 says:

          Long story short- cancer. And not early-stage. Treatable, but took an eternity. And all the family was in China anyway (it was a visit as much as it was a vacation), so staying was a no-brainer (treatment is more expensive in America, and having two minors staying alone for most of the year just doesn’t fly). (China also offers “child fosterage” visas so that was a piece of cake). But just because they’re family doesn’t mean they’ll have that kind of money to throw at you on a moment’s notice, and especially not over US$20000 for each of two kids, so credit it was. I wasn’t lying when I said “1 in 100 million”. I am also still of the “once bitten, twice shy” camp. Safety nets are good to have.

  14. smo0 says:

    I have some questions about bankruptcy then. One of the account specialists at my local bank branch said rebuilding your credit after bankruptcy is based on whoever is the first to lend you credit after the fact. Now, with that said – if it’s on your credit for 10 years, does that mean you have bad credit for 10 years? Or can you declare bankruptcy then build a 700+ credit score within the first year…?

    • crazydavythe1st says:

      I think bankruptcy stays on your credit for seven years. After that, I’m guessing you’re still not going to have great credit, as no one will have really extended you credit during that seven years. So, my best guess is that a high credit score wouldn’t be possible for awhile.

  15. crazydavythe1st says:

    You know, interestingly enough, I had the easiest time ever getting my first credit card. Turns out that Transunion had placed some of my father’s accounts under my name, as I’m a junior – and my dad would sell one of his kidneys on the black market before he would pay a bill late. Not that he has to worry about doing something like that. It doesn’t make much sense to me since we have different socials that they would confuse our information, but by the time they corrected it I had already established my own accounts with a good history.

  16. XTREME TOW says:

    “Credit is for people who don’t NEED Credit!”
    I’ve heard this saying several times over the years, from various people, including some who worked in the banking and investment industries. Unfortunately, it’s very true. Credit is a financial tool offered not to make YOUR life better, or to enable you to manipulate your resources to your benefit. It is a service offered by banks to make money off of YOU.
    Requiring “Credit Reports” for various reasons like apartment renting, employment, and other non-credit purposes, is only a way to “Economically Discriminate” against those who do not have ‘credit’. By making it fashionable to use credit reports for non-credit purposes, the banking industry has placed itself squarely in the drivers seat for controlling peoples lives, and livelyhoods. The American Dream isn’t dead, merely ‘consolidated’.