 How
to build a credit history
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 Dear
Dr. Don,
I have been trying to apply for a credit card so I can start establishing
credit. However, I keep being rejected because I have no established
credit. Is there a credit card out there that will actually accept
me?
-- Gary Ground-Up
 Dear
Gary,
Back when I first established credit, the conventional wisdom was
to get a gas card and a Sears card, then stay current on the payments
and eventually Visa or MasterCard would accept you as a cardholder.
With the cobranding across product lines this strategy
doesn't make as much sense in today's market. My Macy's card, for
example, is also a Visa card. I don't even carry a gas card.
My best advice is, don't flail around trying to get
a credit application accepted. Every credit application shows up
on your credit report and stays there for two years, although it
only impacts your credit score over the first year. A string of
credit applications and denials makes you look desperate for credit,
and lenders hate lending to desperate people.
The Fair and Accurate Credit Transactions Act of 2003
gives you free access to your credit report once each year. There
are three major credit bureaus, Equifax, Experian and TransUnion.
I suggest rotating through the group so you're requesting a credit
report once every four months. The Bankrate feature, "How
to get your free credit report," provides you with the
contact information to request these free reports.
You're also entitled to a free credit report each
time you're denied credit by the credit bureau(s) the lender used
in making the lending decision. You just have to request the report
within 30 days of the loan being denied. Bankrate provides the contact
information. Take a look at your credit report(s) to see the
number of inquiries and what other information is on the report.
If you belong, or are eligible to belong, to a credit
union, try applying for a credit card from that credit union. The
National Credit Union Administration Web
site can help you find credit unions in your area.
Since you've been repeatedly denied credit, if the
credit union approach doesn't work, I'd suggest getting a secured
credit card. With a secured credit card you deposit funds with the
card provider. Your credit line typically is limited to the amount
on deposit. You're establishing a payment history, but the credit
card company isn't taking on any real risk that you won't pay. You
can search
secured card offerings on Bankrate. While you're at it take a look
at the Bankrate feature, "Baby-step
your way to credit with a secured credit card," about secured
credit cards. Good luck!
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