Establishing Good Credit

[SpeedDemon]

i was just sitting here pondering about credit scores and how they come to be. well how in the hell do i get my credit score started?

 

ive heard that paying off tuition helps, which ive been doing. but what else is there to help me get started?

[Sapphyre]

Javy's a good one to ask about this- He gave me all sorts of useful tips and advice.

 

At the moment, I'm fighting with Chris to clear off a debt he caused on my accounts and it's the only thing I have on my credit- so I don't even have a score currently.

[SpeedDemon]

me either. im at 0 lol. technically. i thought about taking a small loan out for car parts. that way i can establish it bit by bit

[r_wiggum01]

me either. im at 0 lol. technically. i thought about taking a small loan out for car parts. that way i can establish it bit by bit

 

Get a credit card (a student credit card is a good choice if you're in school) with a very low limit. Make all of your small, daily purchases with the card, things you know you can afford because you're already buying them. Pay off all but about $100 at the end of the month. Paying your credit cards off completely every month doesn't help you build credit as fast as carrying a small balance. Creditors don't want to see that you can off all of your bills every month, if you can do that you don't need their credit and they don't make any money off of you. They want to see that you can responsibly manage having a balance and make monthly payments on time and at/above your minimum payment. That's probably the fastest way for you to build credit, short of taking out larger loans for a house or car.

 

P.S. - I STRONGLY recommend you not take out a loan for car parts. Don't get yourself into the hole over modifying a car or repairing one that's too old to hold it's value. Take it from someone who is just finally getting out of the hole from doing exactly what you're doing. Once you start getting into unnecessary debt, it's a whole lot easier to fall in further than it is to get yourself back out.

[SpeedDemon]

ah i see. well the parts thing is just once. i would be able to pay it off relatively easy and in short time. and its not like ill be selling the car anytime soon, i like it too much. if it comes to it ill scrap it and part it out

[Orca89]

Get a credit card, use the credit card like a debit card. Boom, good credit.

[SpeedDemon]

hm. i go to bank tomorrow then. and then go bowling lol

[mpearce1974]

Test

[SIR_VTEC]

Get a credit card (a student credit card is a good choice if you're in school) with a very low limit. Make all of your small, daily purchases with the card, things you know you can afford because you're already buying them. Pay off all but about $100 at the end of the month. Paying your credit cards off completely every month doesn't help you build credit as fast as carrying a small balance. Creditors don't want to see that you can off all of your bills every month, if you can do that you don't need their credit and they don't make any money off of you. They want to see that you can responsibly manage having a balance and make monthly payments on time and at/above your minimum payment. That's probably the fastest way for you to build credit, short of taking out larger loans for a house or car.

 

P.S. - I STRONGLY recommend you not take out a loan for car parts. Don't get yourself into the hole over modifying a car or repairing one that's too old to hold it's value. Take it from someone who is just finally getting out of the hole from doing exactly what you're doing. Once you start getting into unnecessary debt, it's a whole lot easier to fall in further than it is to get yourself back out.

 

+1 good advice

 

Get a credit card, use the credit card like a debit card. Boom, good credit.

 

Not exactly lol

 

Alright, this is what it comes down to...you want to build credit, great, but you dont want to get yourself knee high in debt. Basically this is how I started because I was in your shoes right when I just started college, and since I didnt take student loans or anything for that matter I had a what you call "No Score".

 

Credit works like this, you start off with a 800 score basically, and the more credit you keep applying for your score drops based on credit pulls (meaning everytime you apply for credit it slightly drops your score, but thats if you constantly are applying for new types of cards or loans). Now when you get a credit card, and I suggest getting a gas card....use it sparingly, dont go nuts and dont assume just because you have a credit card you can just pay it off later and keep telling yourself that...its true you can pay it later but the interest is going to catch up to you and as soon as you know it you reached the limit of your 300 or so dollar credit card. Also remember the banks will give you a low available balance at first but thats when you establish credit is when you start to get a high credit card limit.

 

Ok establishing credit steadily works like this, its true lenders/ credit card companies do not want you to pay off your card every month, they make their money soley on fees and interest that is tacked onto your card every month. What you want to do is always have at least 30% of your credit limit free (ex: $300.00 credit card limit = at least $90.00 available at all times) anything over that percentile they usually start to hit your credit for high balances and thats a common mistake alot of credit card holders have. Next make sure when you make your payment to always pay more than your minimum, not just a dollar or two dollars more, try to make double what the minimum is, thats how you pay down a credit card without really hurting your credit.

 

Hope this helps if you got anymore questions let me know, oh also be sure to try to look for "No Annual Fee" credit cards at first, some of those lenders may want to invest in a no score, because they rather do that than invest in a bad score borrower. But if all else fails I can recommend you a couple credit card companies that I know will give youa credit card but have annual fees, its minimal but still a fee none the less, they are mainly for low score or no score customers that cant get a break but these companies are giving them a chance to prove they are legitimate borrowers.

[diablo2dusk]

a credit card will help. But pay your bills all the time, on time.

[SpeedDemon]

well i talked to the bank today about it and i am going to gather up $200-$300 and have them freeze it in a account. i get a card then, and get to use it. as long as i dont abuse the card or not pay off my balance on time then the money stays there. i am in the exact same shoes at SIR_VTEC(i think its javy). i live at home, go to school, and work. i just want something i can buy books with and then pay off. or say buy some car parts(small ones) and pay half off at the time and pay the rest off at the end of the month. limit should be around 300.

 

what u guys think?

[SIR_VTEC]

OK anything to do with the bank freezing any funds is just to lure you into the door for you to keep you money in an account, you just need to find a credit card company that is going to give you a card within 30 days, I highly suggest this over the bank, the bank will not report to your credit, its very very rare that local banks report to credit reports, and if they say they do it wont be immediate, they might report after about a week, a month, or years. Just try to find a CC company if you cant let me know and I'll let you know where you should apply

[Xeryon]

Credit is evil in general. I have spent the last 5 years of my life trying to recover from the first 5 years of my adult life.

 

These folks all have given decent advice about building a credit score but I have an even better idea: Pay cash.

 

Certainly there are times when a loan can help you get where you want to go faster but, buying a house is the ONLY an arguable reason to take out a loan instead of saving for 10 years and paying rent. Aside from that you don't need it. Javy will also tell you that. Find a mortgage lender that does their own underwriting and bases your approval facts rather then a fictitious number. If you make the money, have a stable job, no negative history of late utility payments or rent payments, no other debts and come to the table with 10-20% down there isn't a lender in the country that wouldn't loan to you.

[DelSolSweetie]

i wouldnt go credit card unless it was one like i got.. $250 limit.. everything under 250 was 0 interest.. they end up uping the limit but as long as you dont use it your fine

 

 

your tution if subsidized is kind of 'frozen' doesnt really hurt cause your not paying it right now

 

 

 

best thing to do is go get a personal loan from your local bank.. starter loans can be anywhere from $250-1000. I have pretty awesome credit last time i checked

 

 

DO NOT get store cards.. cards like sears etc show up as a different line of credit and i've always been told its not a good line

 

 

 

*and yes loans are never an awesome idea unless you want a better car and dont have all the cash at that moment.. but its the best way to get credit.. and when you try to get an apartment/house they WILL check credit.. no credit is just as bad as too much credit (and yes you can have too many credit lines at one time.. even if you make all your payments it doesnt look good)

[Xeryon]

*and yes loans are never an awesome idea unless you want a better car and dont have all the cash at that moment.. but its the best way to get credit.. and when you try to get an apartment/house they WILL check credit.. no credit is just as bad as too much credit (and yes you can have too many credit lines at one time.. even if you make all your payments it doesnt look good)

 

Untrue. I have lived in 5 different apartments and never once had my credit checked. I have my home loan through Wells Fargo and they checked my credit, yes, but my credit and score were not part of the equation. The only parts of the credit check that were used for approval process were my negative marks - which I had none. My credit 'score' is actually quite bad, but due to my 0 negative mark history and debt to income ratio i was approved for the best rate they offered at the time.

 

No matter how much evidence to the contrary I present people will invariably argue with me that you must have a credit history to survive. Some days I can't help but wonder how so many people have succumbed to mass marketing to the point where they argue AGAINST managing money intelligently. Does no one realize that credit cards are a mere 20 years old (for the average american) and the usage of credit scores and credit history are more recent then that? Do you all think people lived in caves and huts before that? No, they saved or they took out mortgages without screwing around with personal loans or credit cards or scores or whatever.

[SpeedDemon]

OK anything to do with the bank freezing any funds is just to lure you into the door for you to keep you money in an account, you just need to find a credit card company that is going to give you a card within 30 days, I highly suggest this over the bank, the bank will not report to your credit, its very very rare that local banks report to credit reports, and if they say they do it wont be immediate, they might report after about a week, a month, or years. Just try to find a CC company if you cant let me know and I'll let you know where you should apply

 

visa or american express?

Credit is evil in general. I have spent the last 5 years of my life trying to recover from the first 5 years of my adult life.

 

These folks all have given decent advice about building a credit score but I have an even better idea: Pay cash.

 

Certainly there are times when a loan can help you get where you want to go faster but, buying a house is the ONLY an arguable reason to take out a loan instead of saving for 10 years and paying rent. Aside from that you don't need it. Javy will also tell you that. Find a mortgage lender that does their own underwriting and bases your approval facts rather then a fictitious number. If you make the money, have a stable job, no negative history of late utility payments or rent payments, no other debts and come to the table with 10-20% down there isn't a lender in the country that wouldn't loan to you.

 

yeah thats why i want to get the credit built up now. that way when i do go to get a house the credit score will help out a good bit

 

i wouldnt go credit card unless it was one like i got.. $250 limit.. everything under 250 was 0 interest.. they end up uping the limit but as long as you dont use it your fine

 

 

your tution if subsidized is kind of 'frozen' doesnt really hurt cause your not paying it right now

 

 

 

best thing to do is go get a personal loan from your local bank.. starter loans can be anywhere from $250-1000. I have pretty awesome credit last time i checked

 

 

DO NOT get store cards.. cards like sears etc show up as a different line of credit and i've always been told its not a good line

 

 

 

*and yes loans are never an awesome idea unless you want a better car and dont have all the cash at that moment.. but its the best way to get credit.. and when you try to get an apartment/house they WILL check credit.. no credit is just as bad as too much credit (and yes you can have too many credit lines at one time.. even if you make all your payments it doesnt look good)

 

yeah that was my plan, to get one with a very low limit, and my tuition isnt a loan, its just tuition. i pay $150 at the end of each quarter and thats it. but i know what your talking about with the subsadized(sp) loan. yeah if i do get a loan from the bank it will be for a better car, i like the hatch and all but its old and trashed. thats why i wanted to get a new motor for it. the body is in good condition, its just the motor that is falling to crap and back.

[Xeryon]

yeah thats why i want to get the credit built up now. that way when i do go to get a house the credit score will help out a good bit

 

You didn't read a single word I typed.

 

Credit is a worthless marketing tool designed to lure gullible people to overextend themselves for the purposes of instant gratification.

 

There is nothing in the world that you NEED credit for. When the time comes and you do not want to wait to buy a house (because they are ridiculously expensive) you can quality for any mortgage on merit alone.

[SpeedDemon]

You didn't read a single word I typed.

 

Credit is a worthless marketing tool designed to lure gullible people to overextend themselves for the purposes of instant gratification.

 

There is nothing in the world that you NEED credit for. When the time comes and you do not want to wait to buy a house (because they are ridiculously expensive) you can quality for any mortgage on merit alone.

 

ah i see now. its not that i didnt read your post, its just im new to all this so its a large bit of information coming at once

[Humphries]

1. Check you credit report. see what the hell you got on there. you get a free one every year

 

2. Get a bank account. checking and savings. it shows stability

 

3.Get a credit card while you are in school. credit card company's love kids in college because they think they are dumb and they can get debt quicker or have parents that will bail them out.

 

4.Get a department store card or gas card. not too many. just one

 

5. Get an installment loan. (car, mortgage, personal)

 

6. When you get the credit card make sure you pay the bill in full!! only charge 30% of the cards limit AND PAY IT OFF

 

7. Try a secured credit card. PROS you deposit money in a acct. CONS most of the time these have high ass app and yearly fees. go to a credit union if your doing this.

 

8. when you get a credit card make sure you use it. if there is no transactions on the card ever IT WILL BE CLOSED.

 

9. Make sure whatever card you get reports to all three credit bureaus.

 

10. If you already have debt, you need to start paying down it. setup a payment plan give what you can afford. if you can only do 25 buxs well then you can only do 25 buxs and in the long run it will add up. start with the largest debt first.

 

11. Lenders want to see to can handle credit. if you have no credit your about as worse as having banged up credit. get low balance CC

 

12. keep your identity secret meaning don't buy from a company that doesn't have a good privacy policy. Or you don't trust.

[Xeryon]

1. Check you credit report. see what the hell you got on there. you get a free one every year - Absolutely

 

2. Get a bank account. checking and savings. it shows stability - Absolutely

3 - 9 are useless

 

10. If you already have debt, you need to start paying down it. setup a payment plan give what you can afford. if you can only do 25 buxs well then you can only do 25 buxs and in the long run it will add up. start with the largest debt first. - This is good info if you already f-ed up and got a credit card to begin with.

 

11. Lenders want to see to can handle credit. if you have no credit your about as worse as having banged up credit. get low balance CC - Complete BS. Lenders check for negative history, income to debt ratio and honest cash/downpayments.

12. keep your identity secret meaning don't buy from a company that doesn't have a good privacy policy. Or you don't trust. - Well duh

[SIR_VTEC]

LoL Xeyron your about smack dab on the dot when it comes to understanding credit.

 

Sarah: No credit is not the same as having bad credit, I know 95% of lenders out there that will take a chance on a person with no credit than a person with terrible credit.

 

Ok It works like this speed demon,

 

Basically it comes down to do you want to start to establish credit when your younger...the answer to that is...YES! You dont want to put yourself head over heels in debt at such a young age. I also HIGHLY DO NOT recommend you taking out a loan to buy ANYTHING for your car, I made that mistake and I just paid that off when I was 23, and I pulled the loans out when I was 17....so PLEASE DO NOT take out money for your car...

 

Also another thing is if you get a credit card through a store, such as Best buy, Macy's, Express, GAP, any store credit cards, the only benefit of getting those is your first purchase you save an addition 10-25%, which is cool for your first bill but you can only use those cards at that specific store. Now I suggest you get a gas card or a Capitol One card, start off there, thats your best bet, LIKE I SAID EARLIER, DONT EXPECT A CREDIT LINE OF 1000.00 immediately, sometimes lenders will give you an increase as long as they see you make timely payments for 90 days, some take longer....when they increase your credit limit, then you know your establishing credit.

 

If you got any questions just let me know man, I own my Mortgage financing, and I evaluate credit every day and all the people that I've dealt with that have bad credit/ no credit I help them re-establish their credit within a couple months.

[Xeryon]

LoL Xeyron your about smack dab on the dot when it comes to understanding credit.

 

Absolutely. Unlike many of these people I was not raised as a credit using person and my family was not rich. Hell, we weren't even middle class. Mom was a bus driver/waitress and step-father was a farmer but they paid cash for brand new vehicles every 4 years and paid cash for the house I grew up in. The down side to coming from a family that never used credit was I had no knowledge of restraint. Got my first credit card in exchange for a 2-liter of pepsi and a t-shirt at the CitiBank tent at Ohio State. What a terrible transaction that was: life time of servitude to a domineering bank that controls whether I eat or not.

 

At rock bottom I peaked out at 60k in credit debt (excluding the house). My minimum payments were higher then my income. I was doing the balance transfer shuffle and having to use other credit cards to buy gas and groceries just to make minimums on the big ones. It has taken me a solid 5 years of mostly-focused effort to recover from that. I can finally see the light in the tunnel. A financial consultant I work with has estimated that my use of credit cards through my 20's will end up costing me about 3 times more then what I actually spent the money on. So for every $1 I spent I will have paid the credit card companies $3. Wife and I make a lot of money combined but you wouldn't know it from the cars we drive and the house we live in due to living such meager lives from paying down the credit monsters.

[SpeedDemon]

i think i will just start out with a gas card for now. but the loan for car parts was ONLY if i had the immediate cash to pay it off. so in essence i could pay for it in cash, but why not build credit while im at it. or is that a bad idea?

[Humphries]

You should never buy anything with credit you cannot pay off immediately. I would stick with a gas card to build it at first..

 

I have gotten out of my debt from when I was 18 from getting a "student credit card" from BOA and spending it on food while i had no job or any other source of income. I have rebuilt my credit by having a very good bank statement with no overdrafts, and no more defaulted credit cards.

 

I now have a 670 credit score when I was formerly at a 420.

[SIR_VTEC]

i think i will just start out with a gas card for now. but the loan for car parts was ONLY if i had the immediate cash to pay it off. so in essence i could pay for it in cash, but why not build credit while im at it. or is that a bad idea?

 

 

Sounds like a good start. Very True, that is the only reason I took out loans when I was around 18, I had all the money saved from working (approximately 30k at the time) and I didnt spend my money on anything but rent and utilities, but yea I pulled out a loan for the NSX, and me and my brother paid it off pretty quick under my credit because we had the cash

 

But yea start small, and believe me you'll be getting mulitple pieces of mail showing "your approved!" but becareful dont sign up for every credit card offer!