3 Tips for Building your Credit Score from Zero

Most mortgage lenders today base the borrower's eligibility  guidelines for credit on their personal credit reports " FICO score". But how do you build a credit(FICO) score when you have never had any credit and no one seems to be interested in giving you credit. That can be a real "Catch 22" dilemma. Here are 3 tips for getting your score off the ground and moving upward to where you can hopefully be credit eligible for a mortgage loan in 9-12 months.

1.) Starter Loan - Go to your bank that you have a savings or checking account with and request a small starter loan, $300 -$500 should do the trick. If you don't bank with someone, start there by opening a savings account. Make the term of the loan short, 6 - 12 months. The bank will ask for you to deposit with them, an amount equal to the loan that you can not touch while the loan is outstanding but that's okay, this is their collateral for non payment. This type of loan, is called an installment loan and scores better than revolving(credit cards) debt.

2.) Secured Credit Card - Again, basically the same concept as #1 about working with your local bank and they will require a deposit equal to the card limit. Whatever limit you get, only charge up to 30% of the limit per month on the card and pay it off every month.

3.) If your parents are nicely established with good credit, ask them to put you on one of their credit cards as an Authorized user. They would not even need to give you a card or allow you to access it, but as an authorized user it will go on your credit report also. *Word of caution here* This works both ways, Positive or negative. If you are not absolutely positive that they pay off the card every month, do not go this route or it could hurt your credit or ratios when it's time to buy.

I might note here that if you have any outstanding negative collections, judgements or unpaid debt, that needs to be your first priority.

 Follow these steps and in a year or less the banks will probably release your security deposit and the credit that you have established will open more opportunities for you in both available credit  and the interest rates that you are charged.