Getting car loan on no credit?

What to look out for? PayPal has credit, and I'll be getting a $2000 refund in a month. Whhat if I brought something and paid it off there?

 

Bad credit is better than no credit

 

I would just put small purchases on the card, pay it off at the end of the month. Don't "carry" a balance. Most credit checkers will know you're using your card even if you have a $0 balance at the end of the month. I'd do that, then just get a regular card (like a good cash-back card), and then you won't need to get any more credit. I wouldn't try to open up a ton of new lines of credit IMO. But that's where all this stuff gets murky for me. I just try to keep it simple. Best words of wisdom I've seen are "only apply for credit when you need it."

 

Keeping it simple has worked for me.

I'm 24 and hover around an 800 FICO score. Sometimes a few points over, sometimes a few under. One of my credit cards (through Barclay's) gives me the score every couple months.

I didn't build credit until 19. At which point, I bought my first vehicle (before that my uncle gave me a car he was retiring, so it cost me nothing). I could have paid cash, but split it 50/50 between cash and a loan. About $4000 of each. Did a two year loan. Credit union told me my job history alone would have been enough if I had still been at my last job, since I had three years there. But, I had just left for a new much higher paying job so a few months of history looked bad to them. My father cosigned for me. I made basically double payments and paid the loan off in a year. Roughly the same time, I got a credit card through the same credit union. Had a tiny $500 limit, so I'd use it for gas and food and pay in full every month. Balance was typically below $100.

At this point, I am on my third vehicle loan. First two paid in full. This will be my last. I will hold onto this truck until I can comfortably replace it with cash. Reliability and resale heavily factored into my decision to go for a Tacoma. I also have a second credit card. The original now has somewhere around a $5k limit and I just use it for auto-pay stuff (cell phone, cable, Netflix, etc.). The other is what I use for everything--somewhere around a $7k limit, I think. They keep upping it. I always pay balances in full every month. Sometimes twice if I feel utilization is getting high. I try to keep the two below 10%. If I wouldn't have money in my checking to cover the credit card balance, I'm not swiping the card.

I'm certainly not perfect financially. I'd like to have a larger savings than I do and I wish I didn't have a vehicle loan, for instance. But, I think I've done about as well as someone my age could hope to as far as a credit score is concerned. My only negative according to TransUnion is "amount of time accounts have been established." Can't do much about that. Hopefully my actions and their outcome helps anyone in their late teens/early 20s make decisions to build up their score.

 

The Boxer engine is fantastic, it's the turbo ones that you have to be careful of. Even then, it's almost always the fault of the owner. They require meticulous maintenance--can't skimp on oil changes, need to keep an eye on the banjo filter, etc. If the turbo goes, the shrapenal will often make its way through the engine and take it with it.

Beyond that, people will often tune them without modifying them to support the extra boost. Also bad news.

If you get a naturally aspirated boxer, the earlier ones were known for bad head gaskets, though the 6-cylinder models are basically immune to it. The turbos can go 200k safely IF they were maintained. That's the catch. You have Outback XTs and Forester XTs out there that are purchased by owners who treat it like any other vehicle or you have boy racers who buy WRXs, tune them, and drive them hard. There aren't many out there in between.

I'd put the EZ30, EZ30R, and EZ36 right up there with the 1GR-FE in terms of reliability. The DOHC 2.5s are fantastic apart from head gaskets. The early SOHC 2.5s are probably the worst of the bunch, but they have been phased out in favor of the "FB" engines.

 

Whhat happens if you. Have a line of credit and never use it?

 

Whhat happens if you. Have a line of credit and never use it?

 

Nothing. Its about the same as having a credit card that has a 0 balance.

 

https://blog.mint.com/credit/how-credit-card-inactivity-impacts-your-credit-scores-042012/
The conclusion of the article is that you should use it every now and then. The banks know the difference between using it and paying off the card every month (i.e. $0 balance) vs. not using it at all. It's better to use it for small things and pay it off.

Another useful article regarding credit utilization and the "zero balance".
http://www.bankrate.com/finance/credit-cards/does-card-inactivity-hurt-credit-score.aspx

 

Another thing for you guys to keep in mind when you're building your credit - don't ever close a credit card (assuming it doesn't have an annual fee). When you close a card, you may think that you're being smart and proactive, but what you're doing is lowering your overall credit available and wiping out some credit history. Your best bet is to just leave the card open and unused.

 

Sounds good. Thanks guys!