4 ms·

First, get your name on as many bills as you can (utilities, cell phone, cable, etc). Get a credit card that you actively use but pay off every month (rolling

First, get your name on as many bills as you can (utilities, cell phone, cable, etc). Get a credit card that you actively use but pay off every month (rolling over debt will not hurt your credit score as long as payments are on time, but as a personal bit of advice, pay it off every month as to avoid a ridiculously slippery slope). Once your score is somewhere in the 650+ range, and if you're considering a car, financing some of it isn't the worst way to build credit. Lastly... time. Unfortunately, it just takes a long time to build an excellent credit rating. One ding you'll likely see on every report you pull will be something saying you haven't had credit very long. After about the five year mark, this starts to disappear. Once again... caps for emphasis - PAY EVERYTHING ON TIME. A year of great payment history can be erased by a few late/missing payments. Keep good track of when bills are due and set up auto-payment if possible to ensure payment. But also watch those accounts like a hawk as even auto-pay is not a guarantee.

toomuchtodo 12y ago
> Once again... caps for emphasis - PAY EVERYTHING ON TIME. A year of great payment history can be erased by a few late/missing payments. Keep good track of when bills are due and set up auto-payment if possible to ensure payment. But also watch those accounts like a hawk as even auto-pay is not a guarantee. Counterpoint. I have ~13 years of solid/good credit history, and walked away from a severely underwater townhouse ($~100K underwater) 3 years ago. I have over three years of missed payments on that mortgage (+36 "dings"). Credit score dropped from 750s to 690, no credit lines closed by other institutions, and I'm still able to easily get financing. Credit scores are highly overrated. Pro Tip: Being an authorized user on someone else's card who makes all of their payments on time will positively affect your credit history. This was originally not going to be the case, but was changed at the last minute when the Federal Reserve mentioned Regulation B to Fair Issac: http://www.bankrate.com/finance/credit-debt/fico-08-will-score-authorized-user-accounts-1.aspx http://www.bankrate.com/finance/credit-debt/fico-08-will-sco...
- chimeracoder 12y ago
  > I have ~13 years of solid/good credit history, and walked away from a severely underwater townhouse ($~100K underwater) 3 years ago. Credit items last either 7 or 10 years at most (I forget which). So, from the point of view of the credit bureaus, you have 7 years of solid credit history. That probably weighs heavily in many credit scores, and if you've only missed mortgage payments but haven't missed payments on revolving credit, that may be strong enough on some credit scores to outweigh the mortgage. Note that I said 'some credit scores' - there isn't a single credit score, even for any given institution. They all have several, and when a prospective lender pulls your credit score, you don't know which one they're going to use. They use them as secret formulae to figure out whether or not you present a risk to the specific lender, which is why a single agency can have as many as 40 different scores for the same person, depending on which the lender requests.
  - toomuchtodo 12y ago
    > That probably weighs heavily in many credit scores, and if you've only missed mortgage payments but haven't missed payments on revolving credit, that may be strong enough on some credit scores to outweigh the mortgage. The FICO model was specifically modified in their latest revision to downplay the significance of a mortgage default if all other lines of credit were paid on time (due to the housing crisis). I don't have any proof of this other than a conversation I had with a Fair Issac employee over a beer and my own data from my credit report/score.
falsestprophet 12y ago
Having your name on bills does not affect your credit rating unless they are delinquent, which will severely negatively affect your credit.
- peterjmag 12y ago
  Exactly. I had this myth drilled into my head when I was growing up, but I was disappointed to eventually discover that years of religiously paying utility bills on time had no positive impact on my credit rating. Not that there aren't other advantages to paying bills on time, but still.
- yebyen 12y ago
  Yes. I was once presented an option of paying either the Gas and Electric bill for our half of the duplex house that I was living in, or paying the rent and a share of the utilities (since nobody else would do it.) We renewed 18 month leases two or three times, with either four out of six or four out of eight tenants signing. None of this ever appeared on any credit report. I don't think I actually believed it would improve my credit score, but when the rental company came and threatened to evict every tenant for the third time (presumably because it was a dilapidated, drafty old flophouse and nobody wanted to sign a lease renewal), everyone took the opportunity to move out and I was stuck with the entire bill for half a house, for the extra two months I needed. (I managed to split it with someone and get the hell out.) In the cold winter months, gas heat cost more than the rent for the entire half of a house. In the summer, I could get away with paying sometimes $50 or even sometimes $0 for a month, due to past estimated bills that were over actual usage. That was nice, but it really sucks getting stuck with all the bills when everybody splits because someone convinced you it would be a good idea to put your name on as many things as possible.

toomuchtodo 12y ago

> Once again... caps for emphasis - PAY EVERYTHING ON TIME. A year of great payment history can be erased by a few late/missing payments. Keep good track of when bills are due and set up auto-payment if possible to ensure payment. But also watch those accounts like a hawk as even auto-pay is not a guarantee. Counterpoint. I have ~13 years of solid/good credit history, and walked away from a severely underwater townhouse ($~100K underwater) 3 years ago. I have over three years of missed payments on that mortgage (+36 "dings"). Credit score dropped from 750s to 690, no credit lines closed by other institutions, and I'm still able to easily get financing. Credit scores are highly overrated. Pro Tip: Being an authorized user on someone else's card who makes all of their payments on time will positively affect your credit history. This was originally not going to be the case, but was changed at the last minute when the Federal Reserve mentioned Regulation B to Fair Issac: http://www.bankrate.com/finance/credit-debt/fico-08-will-score-authorized-user-accounts-1.aspx http://www.bankrate.com/finance/credit-debt/fico-08-will-sco...

chimeracoder 12y ago
> I have ~13 years of solid/good credit history, and walked away from a severely underwater townhouse ($~100K underwater) 3 years ago. Credit items last either 7 or 10 years at most (I forget which). So, from the point of view of the credit bureaus, you have 7 years of solid credit history. That probably weighs heavily in many credit scores, and if you've only missed mortgage payments but haven't missed payments on revolving credit, that may be strong enough on some credit scores to outweigh the mortgage. Note that I said 'some credit scores' - there isn't a single credit score, even for any given institution. They all have several, and when a prospective lender pulls your credit score, you don't know which one they're going to use. They use them as secret formulae to figure out whether or not you present a risk to the specific lender, which is why a single agency can have as many as 40 different scores for the same person, depending on which the lender requests.
- toomuchtodo 12y ago
  > That probably weighs heavily in many credit scores, and if you've only missed mortgage payments but haven't missed payments on revolving credit, that may be strong enough on some credit scores to outweigh the mortgage. The FICO model was specifically modified in their latest revision to downplay the significance of a mortgage default if all other lines of credit were paid on time (due to the housing crisis). I don't have any proof of this other than a conversation I had with a Fair Issac employee over a beer and my own data from my credit report/score.

falsestprophet 12y ago

Having your name on bills does not affect your credit rating unless they are delinquent, which will severely negatively affect your credit.

peterjmag 12y ago
Exactly. I had this myth drilled into my head when I was growing up, but I was disappointed to eventually discover that years of religiously paying utility bills on time had no positive impact on my credit rating. Not that there aren't other advantages to paying bills on time, but still.
yebyen 12y ago
Yes. I was once presented an option of paying either the Gas and Electric bill for our half of the duplex house that I was living in, or paying the rent and a share of the utilities (since nobody else would do it.) We renewed 18 month leases two or three times, with either four out of six or four out of eight tenants signing. None of this ever appeared on any credit report. I don't think I actually believed it would improve my credit score, but when the rental company came and threatened to evict every tenant for the third time (presumably because it was a dilapidated, drafty old flophouse and nobody wanted to sign a lease renewal), everyone took the opportunity to move out and I was stuck with the entire bill for half a house, for the extra two months I needed. (I managed to split it with someone and get the hell out.) In the cold winter months, gas heat cost more than the rent for the entire half of a house. In the summer, I could get away with paying sometimes $50 or even sometimes $0 for a month, due to past estimated bills that were over actual usage. That was nice, but it really sucks getting stuck with all the bills when everybody splits because someone convinced you it would be a good idea to put your name on as many things as possible.