Tagged: auto loan

Establishing Credit Pre-18

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^My 2nd Supra. 😆

My car obsession began with the Toyota Supra (I was 13 years old when the first Fast and Furious movie came out). I’d spend my days drawing and photoshopping that car and imagine myself driving one. Because it was so out of reach, I didn’t have any concrete plans to get one.

Three years later, I was given a well-paying job as a junior in high school. Well-paying in the sense that my dream car was fast becoming a real life possibility. I still didn’t think much of it until my friend called me out-of-the-blue and told me about a used Supra being sold at a great deal. I went the very next day. The car had obvious wear and tear–including a dent I’d later pay to fix–but it was offered at an unbeatable price point.

Assuming I’d get a loan to help cover the cost, I took the plunge. Unbeknownst to me, car loans were reserved for credentialized peoples, as in people with ancient, powerful credit scores. At 16 years old, I was well-paid but not well-informed. No one talked about credit when I was growing up. It wasn’t a conversation I’d ever had with my family. Even amongst my friends, we only looked at cars in magazines rather than looking up how to actually get one.

In an effort to procure funding for my Supra, I approached my local credit union because I’d had a checking and savings account with them. I was thoroughly (they were mean about it) denied. I was also turned away at larger, nationwide banks. My last bastion of hope was a then new online lending bank. Rumor had it that they were lenient. Unfortunately not so, from my experience.

Often, you hear people attributing their good fortune to luck. The way I see it, luck is a modest term for being mentally, physically or most importantly, financially ready to seize opportunities for success.

In the end, I was able to buy the Supra owed to my mom’s help and a generous uncle who fronted a large portion. He was incredibly kind and gave me several years to pay him back at no interest.

That Supra was the vehicular embodiment of my youth and I’d almost let it get away. The only thing standing between me and my dream car then was a credit history. It’s often spread that you can’t establish credit until you turn 18 (the minimum age required to own a credit card), but we should anticipate being wise and capable of splurging on meaningful, big purchases at any age.

Splurgists, your credit can be primed before the age of 18 by:

Being an Authorized User

Request someone close to you to sign you as a co-user of their credit card. Explain to them that you feel strongly about starting your credit history as early as possible. Prove and assure your trustworthiness by perhaps offering them collateral in exchange for a spending portion. Becoming an authorized users doesn’t require good credit or a credit history. You can still build/rebuild your score because your personally identifiable information is associated with the card.

That person may be hesitant because they believe you will affect their score negatively. Compromise and allow them to hold onto the card. You just need to be on file and exist in a credit reporting system at the very least.

Additionally, some banks even give reward bonuses for having additional cardholders.

Co-signing a Loan

Co-signing a loan with an understanding adult means that you will both be financially and contractually obligated to make on-time payments towards the principal amount and any interest. You come out ahead and prove that you are a responsible borrower to credit scoring agencies when you steadily pay off, or help pay off, a loan.

It doesn’t have to be an auto loan towards a first car. Co-signing and paying off any small personal loan demonstrates borrowing capability and integrity.

Splurgists 18+ with limited or nonexistent credit histories, Marc and Julie got their first cards without any history either! Coming up is another personal post about that. See ya,

Marc

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