I missed the loans part - if you have loans, then stop right there. Right there is your "credit building". As long as you have those, you have credit history, and when you start paying on them (assuming deferred school loans), then you start showing payment history. Unless you are set to pay those off right off the bat, as in now, then there is NO REASON you need a credit card to build credit. You already are building it.
Building Credit...
- Thread starter little_grey_bantam
- Start date
Quote:
X2,000,000,000
Credit cards will get you no where but further in debt and please reconsider continuing to live off student loans. You do have to repay them someday, and from experience, it ain't pretty when you realize how big those payments actually are....
X2,000,000,000
Credit cards will get you no where but further in debt and please reconsider continuing to live off student loans. You do have to repay them someday, and from experience, it ain't pretty when you realize how big those payments actually are....
I was in your shoes a few months ago when I was still in school. I was thinking of ways to build my credit and I did apply for a credit card but I never activated it..good!! If you already have student loans that's enough to help you build credit.
I hesitantly weigh in here, knowing I disagree among friends.....
I will first just say that I went from a divorce and horrible credit to PERFECT credit. I did this through an extreme amount of research and reading, classes, seminars, you name it. For YEARS, I studied how to get my credit from crappy to credible. I learned A LOT.
Okay: First: yes, a credit card is good IF you follow the following guidelines. (They are technically evil, but you can use evil on your side if you are smart and educated.)
#1: Don't get one if you have impulse spending issues. When I got my first one, with the intent of establishing good credit, I left it AT HOME IN A DRAWER. Do not carry it with you if you'll be tempted to use it frivolously.
#2: NO: DO NOT pay it off every month!! Yes, I know, this is contrary to what most people will tell you. Many credit card companies do not report anything for monthly balances that are zero. So putting something on the card and paying it off that month does you little good. You actually want to carry a balance month to month, albeit a low one. The key is to pay MORE (always more) than the minimum balance, but not carry a balance of more than 30% of your credit limit. Creditors want to see that you are capable of carrying an ongoing balance. They don't want to see that you paid it off each month, and this won't usually reflect in your credit report. What you want to show is an ONGOING balance NOT MORE THAN 30% of your credit limit. This shows you have ongoing control over your finances, and by not exceeding 30% of your credit limit it shows that you know how to budget your overall finances. BTW, by paying more than your minimum monthly balance, the monthly report shows as "paid more than minimum." It doesn't matter if it's 5 bucks more than minimum or 50 bucks over, it won't show HOW MUCH over you paid, but simply that you paid more than what was due.
#3: IF you have a bad debt, tell me and I'll type the advice then. Don't want to waste a bunch of time typing if you have no bad debts.
#4. Be sure the credit card reports to all three major credit bureaus, that's TransUnion, Equifax, and Experion. You can obtain a credit report free from www.annualcreditreport.com This is the only FREE one that's legit that I know of. You are entitled to one free report per 12 month period. However, if you want a complete, easy to read, full breakdown INCLUDING your MEAN credit score (average from the three bureaus), it's worth paying to go to www.myfico.com. You can choose from a variety of packages and be sure to choose one that shows your mean credit score and be sure to PRINT it out.
#5. Pre-paid or Secured cards are okay IF: A) you can't get an unsecured card, and B) you realize that the interest rates (APR) are extremely high, and so you must be VERY CAREFUL about maintaining a high balance. Keep it as low as possible, as long as your balance runs to the next month, you've paid more than the minimum, and you aren't exceeding 30% of your credit limit. These cards do serve a purpose for establishing credit, but use caution, because you PAY in interest for that benefit.
Let me know if you have other credit questions. I have a wealth of info; I studied this extensively and brought my credit score from a 532 to an 806 in just a couple years. That's a lot of homework, I assure you. There's a few important things to know about paying off bad debts, but I don't want to type them needlessly if you don't have bad debts, so let me know. Good luck!
I will first just say that I went from a divorce and horrible credit to PERFECT credit. I did this through an extreme amount of research and reading, classes, seminars, you name it. For YEARS, I studied how to get my credit from crappy to credible. I learned A LOT.
Okay: First: yes, a credit card is good IF you follow the following guidelines. (They are technically evil, but you can use evil on your side if you are smart and educated.)
#1: Don't get one if you have impulse spending issues. When I got my first one, with the intent of establishing good credit, I left it AT HOME IN A DRAWER. Do not carry it with you if you'll be tempted to use it frivolously.
#2: NO: DO NOT pay it off every month!! Yes, I know, this is contrary to what most people will tell you. Many credit card companies do not report anything for monthly balances that are zero. So putting something on the card and paying it off that month does you little good. You actually want to carry a balance month to month, albeit a low one. The key is to pay MORE (always more) than the minimum balance, but not carry a balance of more than 30% of your credit limit. Creditors want to see that you are capable of carrying an ongoing balance. They don't want to see that you paid it off each month, and this won't usually reflect in your credit report. What you want to show is an ONGOING balance NOT MORE THAN 30% of your credit limit. This shows you have ongoing control over your finances, and by not exceeding 30% of your credit limit it shows that you know how to budget your overall finances. BTW, by paying more than your minimum monthly balance, the monthly report shows as "paid more than minimum." It doesn't matter if it's 5 bucks more than minimum or 50 bucks over, it won't show HOW MUCH over you paid, but simply that you paid more than what was due.
#3: IF you have a bad debt, tell me and I'll type the advice then. Don't want to waste a bunch of time typing if you have no bad debts.
#4. Be sure the credit card reports to all three major credit bureaus, that's TransUnion, Equifax, and Experion. You can obtain a credit report free from www.annualcreditreport.com This is the only FREE one that's legit that I know of. You are entitled to one free report per 12 month period. However, if you want a complete, easy to read, full breakdown INCLUDING your MEAN credit score (average from the three bureaus), it's worth paying to go to www.myfico.com. You can choose from a variety of packages and be sure to choose one that shows your mean credit score and be sure to PRINT it out.
#5. Pre-paid or Secured cards are okay IF: A) you can't get an unsecured card, and B) you realize that the interest rates (APR) are extremely high, and so you must be VERY CAREFUL about maintaining a high balance. Keep it as low as possible, as long as your balance runs to the next month, you've paid more than the minimum, and you aren't exceeding 30% of your credit limit. These cards do serve a purpose for establishing credit, but use caution, because you PAY in interest for that benefit.
Let me know if you have other credit questions. I have a wealth of info; I studied this extensively and brought my credit score from a 532 to an 806 in just a couple years. That's a lot of homework, I assure you. There's a few important things to know about paying off bad debts, but I don't want to type them needlessly if you don't have bad debts, so let me know. Good luck!
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Laurajean is exactly correct.
Imp
Imp
Don't do it. Credit cards are evil. If you need a credit card then you shouldn't have one. All the banks offer credit/debit cards which will work great for on line transactions and holding reservations and stuff. I only say this because I have paid CC's off with equity loans and cut them up, only to end up getting another one with the intention of paying it off each month. When I was in my 20's the only people that were given credit were those that didn't need it. They should have left it that way.
Sounds like you'll be getting one then another and another. Listen to Dave Ramsey or read one of his books. If you think you need a good credit history to buy a house, think again. I have a lifelong friend who just bought a house with zero down at 4.3%. He has never had any credit in his life. Has had a checking account for 4 years. He had 8000 in savings at the time. The house was 180k.
Sounds like you'll be getting one then another and another. Listen to Dave Ramsey or read one of his books. If you think you need a good credit history to buy a house, think again. I have a lifelong friend who just bought a house with zero down at 4.3%. He has never had any credit in his life. Has had a checking account for 4 years. He had 8000 in savings at the time. The house was 180k.
Yes, Laurajean has some great advice. We had the same issues with not using credit cards *wisely* and it took a few years and a lot of not so fun living to clear it all, but we did it. And decided not to do the credit card thing again. Then we needed a new car. The loan company was unsure about granting the loan *because* we DIDN'T have a credit card. No matter the fact that the household income was far more than enough to support the loan payments, our expenses were well withing limits, etc. The loan company wanted to see that we could carry an ongoing debt and pay as contracted. And the mortgage on the house wasn't even enough. We got the loan, but it would have been easier if we'd had just one credit card with a history of good payment on it.
Credit cards, in and of themselves, are not evil. They can be a temptation to people to overspend and then you get into trouble. That's what happened to us. But it can be managed. Laurajean had a lot of good suggestions. One more I'd add is, if you are the type of person who can be tempted to overspend on your card, decide the limit you feel comfortable with on the credit availability, and stick with it. If the credit card company raises the limit, call them and tell them you want it rolled back. Yeah, they will do their level best to talk you out of it, but if you are firm, they will do it. That way, you can't over charge, even if you are tempted to.
Establishing good credit can be done. And you can keep it that way. Takes a little discipline and thought, but it is doable. We learned the hard way. But we did wake up finally and fixed things. Starting with good habits from the beginning is key.
Credit cards, in and of themselves, are not evil. They can be a temptation to people to overspend and then you get into trouble. That's what happened to us. But it can be managed. Laurajean had a lot of good suggestions. One more I'd add is, if you are the type of person who can be tempted to overspend on your card, decide the limit you feel comfortable with on the credit availability, and stick with it. If the credit card company raises the limit, call them and tell them you want it rolled back. Yeah, they will do their level best to talk you out of it, but if you are firm, they will do it. That way, you can't over charge, even if you are tempted to.
Establishing good credit can be done. And you can keep it that way. Takes a little discipline and thought, but it is doable. We learned the hard way. But we did wake up finally and fixed things. Starting with good habits from the beginning is key.
- Aug 12, 2009
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I would avoid using a debit card.
Look for a credit card that gives rebates ,cash back,or some other benefit. I like using mine at the gas station.There were a few times I carried a balance,but generally I pay it off. My student loans are on the credit reports. Once you have a decent card or 2 you can opt out of getting more offers. Once a year you can ask for a credit increase.Wouldn't hurt to ask for lower aprs too.
I like the one credit report that gives you charts on your credit to debt ratio. You want high credit limit amounts and low debt along with timely payments.
Look for a credit card that gives rebates ,cash back,or some other benefit. I like using mine at the gas station.There were a few times I carried a balance,but generally I pay it off. My student loans are on the credit reports. Once you have a decent card or 2 you can opt out of getting more offers. Once a year you can ask for a credit increase.Wouldn't hurt to ask for lower aprs too.
I like the one credit report that gives you charts on your credit to debt ratio. You want high credit limit amounts and low debt along with timely payments.
All I have is a debit card. Whatever I buy comes directly out of my checking account. If I dont have the money to cover it, I dont buy it. Period. I still say DO NOT get a credit card. Become a Dave Ramsey disciple. Go to his website and you will read many articles of valuable advice. If, if your lucky enough, and decide to call in to his show<it aint easy> he would rip you a new one for even thinking about getting a credit card. And who says you have to get a loan to buy a house? SAVE!! Save enough to either pay for it, or enough to put down a serious downpayment and get a 15 year FIXED loan. You can find banks, mostly small mom and pop community banks who will do whats called underwriting, which takes a look at your work history, your history of paying for purchases, and other things<cant remember what but Dave can tell you>. Next car I buy, will be in cash. No more loans. I will have my house paid off at the end of the year. No more house payments. It took me almost ten years to pay off all the credit cards and loans my ex left me stuck with.
I could only spend 20 bucks a week at the grocery store for two years. I only got meat when my parents invited me for dinner. I almost lost my house three times to forclosure because of the debts from credit cards. I played credit card roullette, getting a new one with lower or no interest rate for six months, transfered the balance of one card to another, then when the new card was ready to go up to its normal 22% interest rate or higher, I would cancel that one and do the same thing again. That saved me interest but screwed up my credit.
If you have student loans, they will be in your spare bedroom for the rest of your life. My sister has 50 thousand dollars of student loans that she will probably take the next 20 years paying off and she is two years younger than me. And what did her degree get her? A job shuttling people to thier gates at the airport. Yeah.
I heard a very valuable piece of advice when I was younger<dont remember exactly what age. The advice was on a program about the Depression. This guy was talking about how his family would all vote on whether or not to buy something. They finally agreed that, if they still needed it after three days, they would buy it, if after three days they didnt need it, they wouldnt buy it.
Do you NEED a house? Not really, but most people want one. Do you NEED a car? Not really, but it makes it easier sometimes to just hop in a car to go buy a gallon of milk that costs about 4 dollars a gallon, and you probably used at least 10 driving to the store to get it. What you NEED to survive and what you WANT are two different things. Decide what you really NEED and will you be happy with that once you buy it. Might make a world of difference.
Rammy
I could only spend 20 bucks a week at the grocery store for two years. I only got meat when my parents invited me for dinner. I almost lost my house three times to forclosure because of the debts from credit cards. I played credit card roullette, getting a new one with lower or no interest rate for six months, transfered the balance of one card to another, then when the new card was ready to go up to its normal 22% interest rate or higher, I would cancel that one and do the same thing again. That saved me interest but screwed up my credit.
If you have student loans, they will be in your spare bedroom for the rest of your life. My sister has 50 thousand dollars of student loans that she will probably take the next 20 years paying off and she is two years younger than me. And what did her degree get her? A job shuttling people to thier gates at the airport. Yeah.
I heard a very valuable piece of advice when I was younger<dont remember exactly what age. The advice was on a program about the Depression. This guy was talking about how his family would all vote on whether or not to buy something. They finally agreed that, if they still needed it after three days, they would buy it, if after three days they didnt need it, they wouldnt buy it.
Do you NEED a house? Not really, but most people want one. Do you NEED a car? Not really, but it makes it easier sometimes to just hop in a car to go buy a gallon of milk that costs about 4 dollars a gallon, and you probably used at least 10 driving to the store to get it. What you NEED to survive and what you WANT are two different things. Decide what you really NEED and will you be happy with that once you buy it. Might make a world of difference.
Rammy
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