Conflict Resolution

Our credit experts tackle the most common credit issues for people starting out in the world of credit. From dealing with student loans to building credit for recent immigrants, we break down the issues you may face and suggest different solutions.

Q: How do I open my first credit card?

A: Opening your first credit card can be scary! The key is to choose a card that meets your needs and is likely to accept you. If you are student, try applying for one of the student credit cards offered on our site. These cards usually offer the best features of any credit card designed for first timers. If you are not a student, you may want to start by opening a gas card or secured credit card. These cards may not offer all the features you are looking for but they are a great way to build your credit. Read the fine print about each card's rates, terms, and fees before you send in an application. Only apply for one credit card at a time to avoid being stuck with more accounts than you originally wanted.

Q: How do I buy a car without any credit?

A: “Bad credit, no credit, no problem”…right? While car salespeople like to promise that they can help anyone buy a car, it’s a little more complicated than that. If you have no credit or if you have credit problems, you could end up with an extremely expensive auto loan. Instead, investigate auto financing options with online auto lenders and local credit unions. If you are buying a new car, try to find deals with “cash back” incentives. The “cash back” option can often be used as a down payment on a loan, which helps you reduce your rates.

Q: Why do I keep getting turned down for new credit cards?

A: If you are having trouble opening your first credit account it could be due to a problem with your credit reports. Your denial notice should include instructions for ordering a free copy of your credit report. Check your credit reports and credit scores to see if there is something negative in your credit file. If so, try opening a secured or pre-paid credit card as a way to rebuild your credit. If your credit report is squeaky clean, you may have been denied a new credit card because the acceptance standards for the account you selected were too high. Aim for a credit card that accepts people with no credit or fair credit.

Q: How do I get out of debt?

A: Being in debt is no fun. Whether you owe $1,000 or $10,000 on your credit cards, you should start working on reducing your balances right away. Because credit cards charge high interest rates, you could end up paying a lot of money for your debt over time. Read about getting yourself out of debt.

Q: How do I open a checking account?

A: You can open a checking account either online or by visiting your local bank. You will need two pieces of identification (one with a photo), your Social Security number, and a small initial deposit in order to open your account. It’s best to compare rates, features, and minimum balance requirements before you decide where to put your money. Most likely, a free checking account with no minimum balance requirement is all you need. Your credit reports and credit scores will not used by banks when you apply for an account. If you have negative records on your ChexSystems report (such as bounced checks), it may be harder for you to open an account.

Q: What if I can’t afford to pay my student loans?

A: If you cannot afford to make your loan payment, contact your lender immediately. Most student lenders will allow you to put your loans on hold temporarily through their “deferment” or “forbearance” programs. In certain situations you may even be able to cancel your loan. Contact your lender to see what options are available to you. Not paying your loans or paying them late can lead to serious financial issues and credit damage. If you can afford to pay your loans but just barely, you may want to consolidate your student loans into one new loan with a lower monthly payment.

Q: What happens when I bounce a check?

A: In most cases, your bank account has overdraft protections that help you avoid problems when you bounce a check (writing a check for more than is in your bank account). Even with these protections, you will probably have to pay a fine to the bank. The incident may be recorded in your ChexSystems file. If you don’t have overdraft protections, you will likely need to pay a fee to the business that received the bad check in addition to paying them the money that you originally owed them.

Q: How does someone new to the country establish credit?

A: The first step is to obtain a nine-digit taxpayer identification number, or Social Security number. If you are a lawful immigrant, you can request a SSN from the Social Security Administration. Once you have this number, you can apply for a US credit card. Start with a gas card or secured credit card. After using your first credit card for about six months, you should have a fairly solid credit report and score. After a year, you should be able to apply for auto and home loans using your new credit profile.

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