Helping an older parent develop credit

Question

Hey folks,  I'm looking for some advice on how to help my mother develop credit. She is older and doesn't necessarily need it as she works and gets some Social Security, but we both agreed that having her own line of credit (or two) wouldn't be a bad thing -especially in an financial emergency.  I pulled up her credit about 8 months ago and literally nothing was there. She is a ghost. Apparently, back in the day she had some credit issues but that must have been like 15-20 years ago and since then she's just "opted out" of credit entirely. Her buearu's show nothing. It's almost frightening. I'm guessing any charge-offs she had disappeared a long time ago.  Last July I made her an AU on a few of my accounts and she basically runs all her bills/groceries/gas through the Amex EveryDay card. Additionally, she has used a couple other cards I made her an AU on a few times as well, always paying everything off. She's held no balance or increased my debt at all.  My idea was to maybe use Credit Karma (which I've never used before) to get her FAKO scores and see if after 8 months of use as an AU on some of my accounts if she finally has a score to speak of. The goal is to get her approved for an entry-level card, maybe even getting her a card through her bank (Wells Fargo).  Anyway, I just want know if I am going about this the right way, or if there's something else I can be doing. I'm not sure what else we can do to get her credit up and running when she has been out of the game for so long. Her income is around 25k, most of that coming from her job + the Social Security she gets.  Any wisdom, observations, or advice would be helpful. Thanks everyone!   

Answer 1

Revelate wrote:
dpeezy wrote:
Revelate wrote:
dpeezy wrote:
relentless602 wrote:
ravo2009 wrote:
If she isnt a member of a credit union already she should join one and apply for a credit builder loan.  This is a secured loan where you give them money and they loan it back to you and then you pay it back monthly.  I have read on here that other people have taken this one step further and used the loan money to open a secured card also at the credit union.  This will give her history pretty quickly and it will give her an installment loan which fico likes. As of now she isn't a member of a CU (actually I am), but the credit-builder loan is something to think about. I hadn't really thought about that before. I'm not sure how much she could put up for one though, she's on limited income and I'm not sure she would want to do that. But it's definitely something I'll tell her about.   Thanks ravo2009!She doesn't have to put up her own cash for one. Here's an example: -Mom takes out $500 credit builder loan (and holds on to the money, do not spend it)-Payments are $45/mo for 12 months-At the end of the 12 months, Mom has paid the original $500 back plus $40 of interestMost credit builder loans don't quite work like that. The "credit builder" marketed loan I have seen from DCU and others is they stuff $X into an account you can't touch and you make payments based on that.  I think this is what you're referring to? The more common one is you deposit whatever their minimum amount is in a savings account generally with a CU, and then take out a 100% LTV loan against that labelled a share secured loan.  Generally this one has longer terms, low APR, and therefore lower payments plus the FICO goodies you get from it. In either event someone giving a consumer cash is an unsecured loan and a no-file wouldn't qualify for that; a no-file + AU accounts might. Anyway @OP when the accounts are reporting as verified by CK or other sources, go ahead and have her apply for a starter card and might even be able to do better than that by checking pre-qual sites.   The Amex will only be from the date you added her on; however, every other AU you established if they report should inherit your entire positive history on the line.Hey Rev, That's interesting. Maybe my CU does it differently. I helped my younger brother (zero credit history) open a CU savings account a couple months back and they offered him an unsecured credit builder loan right off the bat. Always good to get different perspectives.Wow, what CU was that may I ask and what was the APR?  That's pretty much too good to be true with how the financial marketplace views unsecured personal loans.Travis Credit Union. He was offered a signature loan. Here are the rates: Unsecured LoansLOAN TYPE LOAN AMOUNT TERM APR PAYMENT PER $1000**Signature Loan$500.00 - $25,000.00Up to 60 months***15.25% - 17.75%$23.92Computer$500.00 - $1,000.0024 months9.99%$46.14Computer$1,000.01 - $3,000.0036 months9.99%$32.26Teacher$500.00 - $1,000.0024 months9.99%$46.14Unsecured Loans
LOAN TYPE LOAN AMOUNT TERM APR PAYMENT PER $1000**
Signature Loan $500.00 - $25,000.00 Up to 60 months*** 15.25% - 17.75% $23.92
Computer $500.00 - $1,000.00 24 months 9.99% $46.14
Computer $1,000.01 - $3,000.00 36 months 9.99% $32.26
Teacher $500.00 - $1,000.00 24 months 9.99% $46.14
Teacher $1,000.01 - $3,000.00 36 months 9.99% $32.26
Energy Loan $1,000.00 - $35,000.00 Up to 180 months*** 6.99% - 9.99% $8.98Teacher$1,000.01 - $3,000.0036 months9.99%$32.26Energy Loan$1,000.00 - $35,000.00Up to 180 months***6.99% - 9.99%$8.98