CLICK HERE TO SEE MORE ON HOW TO REPAIR CREDITBuilding or rebuilding a credit score seems like an impossible task. Young people starting out think they'll never qualify for the best interest rates. Homeowners who may be facing foreclosure think their scores will never recover.
We asked readers what they wanted to know about FICO scores, and we had many requests for guidance on building or rebuilding them. We posed these questions to Fair Isaac product support manager Barry Paperno, who has worked for the credit-score company since 1995.
A reader who hasn't used credit cards in 15 years and has paid off the car and the mortgage wants to know how to build a credit history again. Any suggestions?
A misconception is that it takes a lot of credit, or that you need a long history or a lot of credit to establish credit, and that's not true. You can get by with one account on your credit report, because the minimum criteria are an account that's at least six months old and one that has been reported to the credit bureau or updated at the credit bureau within the last six months. It doesn't even need to be active; it just needs to have been reported by whoever issued that account. It can be the same account you've had for over six months that gets reported every month -- then you have a credit history with that account. Or, like in this person's case, let's say that the mortgage that they paid off is still on the credit report from 15 years ago. That would meet the requirement of being on the report for six months. Then let's say he gets a new credit card -- the first day that that gets reported to the bureau and shows up on his credit report, he's got a FICO score.
A reader who hasn't used credit cards in 15 years and has paid off the car and the mortgage wants to know how to build a credit history again. Any suggestions?
A misconception is that it takes a lot of credit, or that you need a long history or a lot of credit to establish credit, and that's not true. You can get by with one account on your credit report, because the minimum criteria are an account that's at least six months old and one that has been reported to the credit bureau or updated at the credit bureau within the last six months. It doesn't even need to be active; it just needs to have been reported by whoever issued that account. It can be the same account you've had for over six months that gets reported every month -- then you have a credit history with that account. Or, like in this person's case, let's say that the mortgage that they paid off is still on the credit report from 15 years ago. That would meet the requirement of being on the report for six months. Then let's say he gets a new credit card -- the first day that that gets reported to the bureau and shows up on his credit report, he's got a FICO score.
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