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how to start credit

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m00nman03

Joined: 30 Dec 2007
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Posts: 2

80 Magic Points

Subject: how to start credit

Sat Apr 26, 2008 3:58 pm

which is better to start credit, applying for a credit card or applying for a line of credit with a bank?

cbass1017

Joined: 01 Feb 2008
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Posts: 89
Location: PA

353 Magic Points

Sun Apr 27, 2008 12:55 am

If you have absolutely no credit at all you might have trouble getting either. You might need to start off by getting a secured credit card through your local bank. A lot of these charge a monthly or annual fee but are well worth it in the long run. Usually after making 6-12 payments on time you can have your card upgraded to an unsecure credit card. Most banks have very strict underwriting guidelines for approving unsecured lines of credit.

Although there are a lot of credit card companies out there that will give you a credit card with no credit but most of them have outrageous fees. I know it can be tempting just to jump right into it but you're definately better off being patient and doing right without costing you an arm and a leg to do it. You could also see about applying for a small loan for an automobile. A lot of car dealers will work with people that have no credit. These are just a few examples of places you could start.
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fireyone

Joined: 26 Feb 2008
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2195 Magic Points

Sun Apr 27, 2008 1:05 am

Doesn't seem like you need any further advise here. cbass seems to have coveresd it.

Fasfeed

Joined: 06 Feb 2008
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Posts: 87

3212 Magic Points

Wed Apr 30, 2008 6:52 pm

You could also try some department store like Macys or RICHS ,etc. This is where i got my start with no credit.The balance will be low in beginning $300 OR $400, but as stated earlier, if you make payments in a timely manner ,they will later increase.

sdchargers_63

Joined: 13 Aug 2007
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Posts: 891

2654 Magic Points

Subject: credit

Thu May 01, 2008 2:45 am

Good advice!! There are alot of Secured cards ( Visa, Mastercard, etc) that you can start with. The Secured cards aren't as high % as the Unsecured, and YOU control it. I mean....MOST of these kind of cards ( Secured don't have Annual fees, are VERY low payments, and the % is about 9%. Usually, with Unsecured 'bad credit' cards, the % can be 20% or higher.

hottopic_tink

Joined: 01 May 2008
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Posts: 1

39 Magic Points

Subject: Credit

Thu May 01, 2008 4:35 pm

Another good option to start credit is.... if you know someone that has great credit they can add you to their credit account as an "authorized user". Only thing is if they miss a payment it will equally affect your credit.

Oakland, CA

Joined: 07 May 2008
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Posts: 4

351 Magic Points

Wed May 07, 2008 10:23 pm

""Another good option to start credit is.... if you know someone that has great credit they can add you to their credit account as an "authorized user". Only thing is if they miss a payment it will equally affect your credit.""

This truly is the best way to start. I am not sure, however, if having a user with no credit on the card holder's account would have an adverse effect on the card holder's credit. Chose your partners wisely though as they also have the power to hurt your credit if they are not responsible enough to make payments on time.

Another tip I have shared with people is once you aquire your first credit reporting card, do not build up too much of a balance. This will put you in jeopordy of not affording the payment. Stay responsible and use self control. This card is a tool for building credit, not to be used as purchasing power. This is very important to remember. REAL purchasing power will come later once your credit is established.

Always keep a balance - do not pay the card off. A good method is to keep the balance above $50 and below $100. If you can keep it there and make the small minimum payments, you will build credit quickly and cheaply. Credit build-up is based on your ability to repay the debt consistantly, not all at once, from what I've heard.

Once you have established 6-8 months of successfull payments. You should be able to start applying for a second card for the same purpose. Then a third.

Remember, these cards are not for affording things you cannot afford. They are tools for building credit. It's like a game. Don't try to cheat or you will lose.

Good luck.

sdchargers_63

Joined: 13 Aug 2007
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Posts: 891

2654 Magic Points

Subject: credit

Thu May 08, 2008 12:41 am

Good advice from 'above'. ALSO...try NOT to get SOO much credit that you can't pay people back. I know a few people this happened to. they got ALOT of credit, 'all at once' it seemed like. They just 'bit off more than they could chew' type of thing.

Justin

Justin

Joined: 17 Jul 2006
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10874 Magic Points

Thu May 08, 2008 12:09 pm

Hi m00nman03

I think you can try any of the two. But you should always keep in mind that the loan amount should not be so large that you would not be able to repay it back. If it is the case, then it will adversely affect your credit score.
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Justin

Oakland, CA

Joined: 07 May 2008
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Posts: 4

351 Magic Points

Mon May 12, 2008 5:37 pm

Exactly. That's why I say that if you are trying to build credit from the ground up, then do NOT use the new cards as buying power. Do not buy anything with them that you cannot afford to pay cash for. The whole purpose of them is to show the creditor that you can make monthly payments. Purchase a tank of gas and pay it off with minimum payments until the balance is so low you need to recharge it with another tank of gas and continue. Do not use the cards for "stuff".

Mary

Joined: 06 Jul 2006
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Posts: 324

8704 Magic Points

Tue May 13, 2008 10:01 am

I agree with Oakland CA on this issue. If purchases are made with new credit cards, it should be be repaid in time. This will increase your credit score and will give you a better deal on loans in future.
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Morningstar

Joined: 17 Apr 2007
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Posts: 609

40 Magic Points

Fri May 16, 2008 1:18 pm

Code:

Another good option to start credit is.... if you know someone that has great credit they can add you to their credit account as an "authorized user".

Joint liability on the account can affect scores, but AUs are no longer a part of FICO scoring.
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CMBV22

CMBV22

Joined: 08 May 2008
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4034 Magic Points

Sat May 17, 2008 11:41 am

If you do end up going the credit card route remember to choose carefully. Everyone looks at intrest rates but dont forget some cards charge Annual fees, start up fees and those pesky fees for paying by phone or internet.

You also want to choose a card that is known to report MONTHLY to the CRAs so that you get the most out of your card.

Good Luck!
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carol

Joined: 27 Jun 2006
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Posts: 375

10293 Magic Points

Mon May 19, 2008 4:06 am

CMBV22 is correct as there are several hidden charges in opening a new credit account. So one should always be careful while opening a new account.
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Subject: can i get a car loan with my bank?

Mon Oct 13, 2008 8:15 am

even though i dont have a credit card?


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