Building credit from scratch

Building credit from scratch
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Our son just turned 20 and will graduate from college next May, 2020. He has a full time job while attending school. He recently applied for a used car loan with our bank (USAA), only $3K but was denied due to have no credit rating at all. We loaned him the $3K so he could get the vehicle but he would like to get a bank loan to pay us back. Also, he would like to buy a small house, with a mortgage, after graduation. What is the best, fastest, and no cost way for him to build a credit rating to put him in position to buy that house a year from now?


Hi @dannycombshome and thanks for your question!

There are a few ways your son can build credit, among them getting a secured credit card and a credit-builder loan. He can also become an authorized user on your credit cards and benefit from your credit habits, assuming your score is in good shape. Here’s a story that explains each of these options and how much they cost.

Considering he has no score right now, a mortgage in one year may not be realistic goal. He can build credit fast using any one of the ways I listed above, but even then, lenders tend to view applicants with a long credit history as more reliable. He just needs more time to prove himself and demonstrate good credit habits.

The good news is, by having a job and taking steps to build credit, he is already on the right track!