Good credit? Bad credit? NO CREDIT

[Nanobyte]

I'm wondering how I can achieve good credit. As of now, I have NO credit. I have a friend who tells me I should try to get a credit card w/ a limit of $300-or-so, and use it to buy all my little things like CD's and stuff. Can you guys give me any advice?

[VulcanRider]

Most credit cards for people just starting out have a limit of $1000.00. If you're not working (i.e., can't show an income) you may need to start with a secured card, but I'd apply for a standard card first. Use it for a few things, but make sure you pay it off, or at least make the payments, on time. And don't just make the minimum payment. Credit card companies love that cause you end up paying more in interest than you originally charged.

You want to build a history of paying your debts promptly. If you keep the same card for years, and have a good history, they'll gradually up your limit. Since rates are down right now, try to get a fixed rate card. Adjustable rates look better right now, but when the economy shifts (and it will!) those get ugly fast. Just don't let your balance get out of control -- it's easy to do, and it can haunt you for a long time.

[ 09-23-2002, 12:38 AM: Message edited by: VulcanRider ]

Maintaining a good credit rating is vitally important in todays world. Always keep your use of the credit card to a minimum, and pay it off promptly, to avoid large losses to interest. (just my humble advice)

[Hexa]

Better yet .. don't use a credit card at all!@
It wil only cost ya more money in teh long run...

[AzRaeL StoRmBlaDe]

establishing good credit is simply a matter of owing money and making regular payments on the amount owed. basically credit as we know it is how much the bank will loan you based of how fiscally responsible you are, and yes a credit card with a low limit would be a good way to start out, just make sure you can pay a least the minimum amount due, each month, or it will negatively effect your credit rating, instead of helping you.

[AzRaeL StoRmBlaDe]

also make sure you get a fixed rate card, w/ no a startup or annual fees. right now you could probably get a fixed rate card of around 15%, which isnt too bad to start.
cards that are at a variable rate will go up as the prime rate goes up, so you could very well end up paying a lot more than a fixed rate card could offer.

[ 09-23-2002, 08:28 PM: Message edited by: AzRaeL StoRmBlaDe ]

[The Ornery One]

Had to do the same thing a few years ago. Started out with Sears and Target cards though, and later got a regular credit card. Helps to make only a few small purchases and pay more than the minimum amount due to get it payed off sooner as VulcanRider posted). I developed a very good credit history within a couple of years. Only thing that ruined it was a co-sign on something an ex-boyfriend bought and never payed for.

[Nanobyte]

I appreciate all this input, I'll have to take this into greater consideration now that I know more about it. And Ornery, sorry about your misfortune.

Originally posted by Hexa: Better yet .. don't use a credit card at all!@ It wil only cost ya more money in teh long run...

This is almost as bad as BAD credit. Just try going and taking out a mortgage with NO credit history. Either they will laugh you out of the bank, or they won't qualify you for enough to buy an outhouse.

Good credit is an important part of your overall financial portrait and is almost indispensable if you want to succeed in modern day America. Of course, if your carreer path tops out at "manager of the local piggly wiggly", well then it isn't all that importnat [img]smile.gif[/img]

[realbinky]

Nano, use your credit card for things you would buy ANYWAY and already have money for (ie food, gas, clothes, etc). Anything you can ALREADY afford, then pay it off each month. I do this with "points" cards to earn points on groceries and crap that I would buy in any case, but get something in return. I have financed and refinanced multiple mortgages, and have had many CC in the past. I actually got one up to 48,500 in credit line, and it scared me and I dumped them all. Now I have one card fixed at 7.99 and one at 9.9 if I need them at all. Lastly, don't be afraid to call them and ask for things: call and ask for an up in credit line after 6 months of good standing. You don't need to USE it, but if you have the higher amount, and never get in trouble, that helps. You can also talk your way into better rate deals. Like "I have your card, but I got this thing in the mail and could go to company x for a better deal, what can YOU do for me?" It always works.

Good luck!