TW! Whats the best way to build credit?

Hey TW I have a few questions about credit building!

To make a long story short, after saving all year, I thought I was going to pick up a 1st gen this summer. Well after our awesome government decided to raise college fee's (AGAIN ), things have changed . So I've decided to save up for another year to get a even bigger down payment as well as try and build up my credit so I don't need a co-signer.

Since I've always payed for things in cash I have no credit. My plan is:

1) to apply for a card and get accepted

2) depending on my spending limit:

• If its small like a 100$ limit then I would but something 30-50$ every month of so and then pay it off with small payments so I have a payment history and then repeat it all year
• If the balance is bigger like 400 or 500, then id probably buy my books for the Fall semester with that (600$ last semester! ) or at least a few of them, and pay it off over the semester and do the same thing for the Spring semester and pay it off by the time school ends.

I'm very good with money and I'm always checking my savings and checking account a few times a day. I will have a job when I go back to school, but I will probably have a co-signer for a little bit on the card so I can at least get one. I applied to a Chase Freedom card, but got denied I also had no co-signer when I applied.

After all that, here are my questions

First off, is that a good plan? and have any suggestions? or changes

If I do get a co-signer, can I take him off later and put the card in my name after I build some credit up?

Do you guys have any cards to suggest that are better than Chase Freedom? The reason I'm going for that is because I already bank with Chase. I'm not apposed to a different card.

And lastly, do you guys have any other information that you think I should know before I start this?


Thanks!

 

Getting a credit card and paying the balance off every month is a great start. Make sure you use your head and never buy something that you don't have cash for in the bank to pay it off with.

Be careful with leaving a balance as credit cards have high interest rates. If you plan on keeping a balance on the card you're better off getting a car loan with a co-signer and paying that down. In your situation you shouldn't pay cash for the truck, take out a loan and pay it down (esp with some of the interest rates at like 3% or lower...its like free money).

 

ya there interest rates are pretty dam high! I was going to take out a loan with a decent down payment for the truck as well, forgot to mention that Id rather make payments on it then dump all my money into a truck and have nothing to fall back on

I do have a pretty good chunk of money in my savings that will double by the time all my paychecks come from my job right now, should be at least over 5k. Getting paid once a month sucks ass, but its money either way

 

^ i agree with most of this, if you can get a fixed rate put as little down as possible. In a few years when inflation starts to really kick in the cost (price) of your truck (loan) will decrease relative to other items... when this happens your truck will actually appreciate in value

To build your credit, I would look into getting a secured card (it's basically a card with a credit limit equal to a deposit you put down).

If i were you i would keep in mind that qualifying for an auto loan is some what easier than qualifying for a credit card, this is due to the fact that the car is collateral (if you default) and the dealer/bank usually asks for proof of income.

I don't think you will ave trouble being approved for the loan... the rate you qualify for is a different story. Finally, i would say that 1 yr is not really long enough to establish a credit history that will increase your score... but you have to start somewhere.

-Kev

 

Ya iv heard of those cards, I was going to look into them aswell. Someone told me about them and they kind of sound like a debit card, but it builds credit?

And even if I dont have a credit score a year isn't long enough to have something show up?

And if I do get a card and pay off the things I buy to get some sort of history, would getting a co-signer on a car loan also help my credit or just theirs?

I think that made sense haha

 

It helps yours as long as you do not default on the loan.

 

Defaulting would be shitty haha I would definitely have at least a years worth of payments set up before signing for a truck. Thanks for your guy's input!

 

The secure card is similar to a debit card, but you build credit. it's similar to having a small loan where the asset is your own cash... if you "default" on the secured card, the bank keeps your cash as collateral. This is the main way you could build credit... you could also apply for a store card (and if you exaggerate your income)... you would be approved.

A year establishes a payment history but it's not really long enough to boost your credit score... they compare the length of your credit history against the average (the average is much higher than a year). When you buy a truck they use something similar to a credit score but it's slightly different... the credit score penalizes young people i.e. recent college grads. The "time" aspect is fixed, there's nothing you can do about that.... other than just wait! but like i said before you have to start at some point!

The dealer will consider a clean payment history (and put more weight on that, than on your length of credit).

Having a co-signer wont help your credit, it will increase the likelihood of being approved, and it generally reduces your interest rate (assuming the co-signer has good credit). Like i said before, the dealer/bank is going to want to see a pay stub as proof of income, so either the applicant (you) or co-signer is going to have to provide that information. (of course you would not give this info to them until you settle on a price ;-) )

 

Capital one will give you a card. Thats where i had to get my first one. The interstate sucked but i did not have a co-signer so thats why but they have a student card thats what i did. Look into them.

x2 on the dont charge anything you dont have money in the bank already for.

 

Sub'd for me starting college soon and getting one for books.

 

You sir Thanks for this!^

 

I use my credit card for my books for school, but I also buy my gas with it and groceries. I rarely use it for anything else. I'm only 21, but i've never been late on my truck payment or any bills so that also helps build credit. Once you get a truck and have a payment that will also help build. But I guess in your case your still trying to get credit to buy a truck.

 

Get a card with a small limit on it. Buy your gas and groceries on it. Pay it off FULLY every month. Don't buy anything you can't afford right now.

 

Ya the end goal is a truck (then a motorcycle, but first things first) Im kind of bummed its going to take more then a year to build credit, but thats what ever I can get a co-signer to get the interest rate down. And I do plan on using the card like you for food and other stuff I am already going to buy.

 

so you currently have no credit at all right now?

 

no....I always save up and buy stuff cash, kind of regretting not starting a little sooner

 

You actually DON"T want to fully pay off a credit card every month. Carrying a small debt will build credit faster. Say you get a card with a 500 limit. You want to carry a balance of 3-10 dollars on it. Yes you're essentially giving them a small amount of money in interest every month but it builds faster. You do not want to have a card you don't use either. If you go 5-6 months without using it they can take it away and that will hurt your credit more than if you never had it at all.

 

goto your credit union, they have better rates or live debt free.....


capital one , I had couple late payments (post marked 3 days before payment was due, so I open it and its all ready 1 day late) stayed on credit file for 11 years yup 11
they keep your account open even when you close it.

and my brother even tho he's dead had an account. sometimes i get a call from capital one
asking for him, to raise the limit or past due charges and they are pretty nasty sometimes
the new address of the cemetery and plot number does not work either

 

I think I got my first credit card when I was 19. Now I'm 24 and my credit score is in the mid 700's with just 1 single visa. I didn't get my first car loan (Tacoma) until I was 23 years old. Long story short the credit union that lent me money for my Tacoma didn't hesitate to loan me the full amount for my taco. But I wanted small payments so I put half down. Same credit union that offered me the visa in the first place. Since then I have gone back to get my credit limit raised to few grand for fukc of it and emergencies.

 

I got my first credit card when I was 16 to buy shit off ebay. I also got another card when I signed up for it in an airport. I find it hard to believe you will have too much trouble getting a card. I have an annual fee of $75 and the card earns me air miles. Then I fill up at Shell and get bonus air miles. Try to get a card with some incentive.