No Credit - Blank Slate - Help?

The banks don't have to report anything, whether authorized user or account holder. They usually do report on both.

The good news: You have no negatives, so you are in a good position to build up a solid positive credit history in time to use it for your home purchase.

It sounds like your existing credit history is limited to your one loan. You may want that to report for a few months, while you look at gradually adding accounts on good terms.

If you have problems opening additional accounts, you might try initially adding a gas card or a department store card, instead of a secured card, since they may have more incentive to open accounts to consumers with limited credit history. The interest terms are typically high, but this is to establish a history of paying as agreed, and assist in opening more general VISA or MasterCard accounts. Pay it off in full each month.

When you look at department store or gas cards, look beyond the retailer to who is handling the credit card operation. Some banks specialize in just retail accounts, but with mediocre terms. Others handle both retail accounts, and their own VISA and MC accounts. You want one of the later banks, provided they have a good reputation in extending credit on their own accounts on good terms.

For the long haul, you don't need to grow a banking relationship with subprime lenders that you will quickly outgrow. You also don't need any accounts with any banks that have problems in customer service, billing, posting of payments, etc, as these represent risk you don't need. Just as banks look at your risk as a debtor, you should look at their risk.

Look for accounts handled by Citi, BofA, Chase, etc. even when considering applications for store cards. For example, Citi handles Sears MC accounts, and you may find opening a Sears account starts a banking relationship with Citi on a broader basis.

Some banks have subprime accounts on poor terms: annual fees, high rates, low limits, etc., and also have prime accounts on good terms to applicants they want: No annual fee, low rate, high credit limits, no fee low rate balance transfers. Cap One is an example. Some banks seem to think that you will just get their card based on your affiliations, or their rewards programs, or milage you may not use, regardless of interest rates. You want the good terms; wait for them to come. Ignore the teaser rate, its just their marketting cost; the interest rate offered tells you how much they want your business.

Another approach is to open a credit union account, and get a credit card thru them. Even a limited credit limit will start to establish your credit history, and you may find that for some types of financing, such as car loans, credit unions are competitive.

A third approach might be to open a joint account with your wife. Then they would almost certainly report to both your CRA files.

Although you might open a secured account, you may not have to, and you shouldn't have to pay thru the nose like some who are having to reestablish their credit after messing it up and are desparate to accept any offer. There are banks that cater to them, and the terms reflect that. The banks in this business may never look at an initially subprime customer as anything but subprime.

Be patient. Make sure the credit history you are establishing is excellent, since you have the opportunity. You don't have to establish 2 years of credit history with multiple accounts all at once. One new account chosen carefully every 6 months should have minimal impact on FICO due to inquiries, and should allow you to get better offers for the next round as they start to report.

 

In addition, keep in mind that what you are trying to establish is a record of banks willing to give you credit, along with a record of meeting your contractual agreements, not high debt itself. You want your available credit to rise, as your actual debt falls. This decreases your total debt to credit limit ratio, which is what will improve your scores.

 

Also keep in mind that having an established credit history, in both your name and your wife's name, is an important part of hedging against risk, just like having insurance is. If in the future, you have a house, and then children to support, and something should happen to one of you, the other may benefit from having good credit already separately established to best continue to support your family, even if you also have insurance to help.

 

Sears sold off their credit division to another credit card lender. I'm thinking Chase, but I could be wrong.
Now Sears cards are not particularly easy to get, unlike in the past.

 

Rejections per-se don't affect your credit score. Only the inquiries that were pulled resulting from the application, whether rejected or not. However, some companies will reject purely on too many recent inquiries, since it may show you are "desparate" for new credit. In addition, if you have little credit history, some companies don't want to be first.

Credit union membership may be available to you based on some "affinity", such as through your employer, union, or sometimes even living in a certain area. Some colleges have credit unions available to students, staff, and alumni. In addition, if your wife is in a credit union, that usually allows you, her spouse, to also join, with your own separate account.

Since this is apparently becoming a problem, pull your 3 reports, with FICO scores, to see your full position as potential lenders see it. Rule out erroneous negative information first.

What is reporting, and for how long? What are your scores? How many inquiries are showing? Is the problem that your credit history is too thin, too recent, or whatever?

 

How many hard inquiries are showing on your reports over the last 6 months? How much total debt is showing, and how much available credit? (debt to available credit ratio)

 

The problem is that $5,000 loan is standing out like a sore thumb. Especially since you have no other credit. $5,000 is a substantial amount to a bank when you have no other credit. Your other problem is all those inquiries on your credit report. Those are killing you because they tell the banks that you are desperately seeking credit. Solution: pay off the $5,000 loan and apply for a secured card.