How does a young person establish credit?

enzian: How does a young person establish credit?
Chase Bank has been sending us requests for our 21 year old to apply for a United Mileage Plus Chase Credit Card. We have credit cards with them. We finally did it because we could use the miles. So she got turned down. So frustrating. Here are the reasons:

“Not enough accounts opened long enough to establish a credit history”
and

“Few revolving accounts opened long enough to establish a credit history”

One of my friends suggested we add the kids to our Chase credit card account and that will help establish credit. I thought that was weird.

Does she need to get a revolving store/gas station to establish credit? Which are best?

Would taking out a student loan help my kids establish credit? Seems like that would not help since they don’t have to pay back until after school?

Should they just take out a little loan for “no reason” to establish credit?

Answers and Views:

Answer by Tech
Don’t apply for any more credit cards. You have no score nor are you improving it.

Each time you applied, you lose 5 points.

You lose 25 – 75 points for under paid account.

You get 5 points if you hold a credit card with a satisfying limit to debt ratio .

You get more points if you hold an address with an account for more than 2 years.

You fatally lose all your points for bankruptcy. It take 7 years before you can live a new life.

To get your first 5 points, you need $ 200 to open an account. Search for Orchard Bank card.

Answer by heybulldog
Heck no he shouldn’t take out a loan just to establish credit.

Why does he need to establish credit? All it’s good for is borrowing money and getting into debt.

You borrow money and make payments on time so that you can get a high credit score so that you can borrow more money. It’s a stupid financial plan. It makes no sense.

If you pay as you go.
If you live on less money than you make.
You don’t have to obsess with the credit score and you will have money.

The only time you might have to borrow money is for a home. You can do that without a fico score. It’s called manual underwriting. It’s not a sub prime loan. It’s the way home loans were givin’ before all the fico score worship. You can get the lowest interest rates available.

If you save up for a good used car and stay away from car payments. You can easily save up an emergency fund so that when you have an emergency you don’t have to borrow money and pay interest.

New cars are a rip off. They lose value and you lose money as soon as you drive off the lot. They keep losing value year after year.

Of course the bankers, credit card people, car financiers and, their loyal followers are gonna tell you to borrow, borrow, borrow.

Debt free is the way to be!

Answer by Lynn
Chase Student Credit Card is an easy one to get with no credit history. They take into account that the child has a weak or no credit history, the limit is low, but it is an unsecured card.

Answer by wildbren83
No, getting a student loan will not help your student’s credit. Making payments ontime and not loading up with too much debt is the best way to build credit. Typically, too much debt is anywhere over 20% of a card’s limit. So keeping the balance low and paying ontime is the best. One doesn’t start making student loan payments until 6 months after graduating, so that will not help your child now. After a year or so of making ontime payments to a student loan will help one’s credit, just not the quickest way to do so.

I also wouldn’t add the kids to you card because again it isn’t showing that they can be responsible with credit cards, it shows that they are attached to yours. To establish credit someone must have a card in their own name and not as a co-borrower. There are some really good student cards out there. I’d recommend the Disocover card that pays you a certain percentage back.