I received a comment the other day on an old post (Have You Said “No, Thank You” To Credit Cards?) that I think everybody should read. Despite this reader’s best intentions to avoid credit (and essentially boycott the credit card industry), he’s now stuck unable to buy a home at age 29 even though he has $20k saved. Even worse, he can’t even get a simple low limit credit card to begin building credit. To him, and presumably many other Americans, the credit market is totally closed. Read his story now:
I am 29 years old and I’ve never had a credit card.
Ever since high school I’ve known that the entire credit industry is a scam, that interest rates and fees are a shell game, and that once you fall just a little bit behind, it can be impossible to catch up. I’ve seen friends get into serious trouble with cards, and think they could solve the problems with more cards. I’ve always been perfectly happy without a card, and only use my debit card for online/phone purchases. Phone bills, insurance, etc comes directly out of my account. Here’s the rub… I’m in the process of trying to buy my first house, and while I have managed to save $20,000 for a down payment, I can’t get a loan because I have no credit score. For the last month, I’ve been running around and racking my brain trying to figure out how to get credit.
The credit market in the US is CLOSED! No one seems to understand this. The card issuers are up on capitol hill screaming and threatening and begging to continue the shell game, and meanwhile they’re purging their books, lowering limits and raising interest rates, and issuing a hell of a lot less cards. You can’t get a new card in 2009 without PERFECT credit. People are giving me well-meant advice, which would have been good back in ‘05, but which is not relevant today. Things like “get a store card or a gas card.” Store cards are extinct. Done. They bit the dust. Stores like best buy and home depot have cards issued by major banks, which are not easier to get.
I can’t even finance a piece of furniture. Its all run by Wells Fargo, and requires a credit score. I’ve even been turned down for a secured card by Bank of America. Bank of America needs $34 billion to stay solvent, and when I offered them $500, they said no thanks. Bottom line, having no credit card bill is great, but its all set up for us to be owned by about 12 banks. You can play their game and win it (by managing your credit according to the FICO computer’s logarithm) or you can stay outside the system completely. There is no happy middle.”
I have to sympathize with this reader. It’s unfortunate, but it is a reality that you have to play the credit game if you want to own your home before you can pay cash (which, for most of us, would take decades). I offered some suggestions on how to build credit from scratch the other day, although it seems like this reader is trying many of these suggestions and striking out.
What would you recommend he do?