Establishing Credit?

**vitalogist** · 03-30-2012, 12:38 AM

Maxing out your card but paying it all every month is a great way to establish credit, quickly. Just make sure you pay it all. Your history will reflect in every transaction. If you don't want to do that, follow your parent's advice, slowly and sure.

**disneysteve** · 03-30-2012, 05:26 AM

The secured credit card is a good way to get started. DO NOT max it out. Make small charges, not exceeding 30% of your credit limit, and pay it off in full on time every month.

As for the car, get over it. Unless yours is dead, it doesn't need to be replaced. I'm 47 and earn a 6-figure income. I drive a 1998 and my wife drives a 2000. A 2001 would be an improvement for either of us. When you save up enough to buy something newer (not new, just newer) for cash, then maybe you can consider it. Until then, keep what you've got.

Definitely stay away from Rent a Center. That is right up there with check cashing places and payday lenders. Predatory lending to the poor.

**kork13** · 03-30-2012, 05:32 AM

Originally posted by vitalogist View Post

Maxing out your card but paying it all every month is a great way to establish credit, quickly. Just make sure you pay it all. Your history will reflect in every transaction. If you don't want to do that, follow your parent's advice, slowly and sure.

For your own sake, I strongly recommend that you ignore the highlighted part. Maxing out a credit card will actually HURT your credit. It translates into a credit utilization ratio (credit used divided by credit available) of nearly 100%. You shouldn't go above 30%, though below 20% is better.

All you need to do is to have a credit card, use it regularly (staying below 30% of your limit), and pay it off in full every month. It'll take time, but your credit will build up over the course of a couple years.

**phantom** · 03-30-2012, 06:06 AM

Please excuse me if I'm wrong, but it sounds to me as if you're interested in building credit in order to obtain things that you can't really afford yet, and I would strongly caution you against that. I would continue to live as humbly as possible until you actually finish your degree and find a job in your field. Then build up your lifestyle gradually. It's easier to deal with a lower standard of living when you haven't spoiled yourself. Once you start buying yourself really nice things, it will be harder to get along without them. Wanting to move up is a great goal. You just have to be carefully that you're actually moving up, not just using credit to make it feel like you've moved up.

If you use debt responsibly, your credit will build up gradually on its own. I would suggest using that secured credit card just like you currently use your debit card, check book, or cash. Put all your normal purchases on it and pay it off completely whenever you get a bill. If your credit limit on it is really low, you might even pay it off more frequently. The thing you really want to establish is a pattern of owing money and paying it on time.

When you do decide to buy a new car, try to pay cash rather than financing it if you can. If you're tempted to finance, make sure you fully understand what you're getting yourself into. A monthly payment of a couple of hundred dollars a month can sound much more reasonable than it really is. Whatever monthly payment you're offered, multiple that by the number of months, and ask yourself if you're really willing to part with that much money just for the sake of having the car you want.

**greenskeeper** · 03-30-2012, 01:45 PM

I got my first and only credit card upon graduating college. Yeah, I survived school without being a swipe junkie.

As for the car, keep driving it. Whatever the payment would be for the car you're interested in is, set that aside in a savings account. Before you know it you could pay cash for the car, or a down payment for a house

**dczech09** · 03-30-2012, 04:08 PM

Avoid rent a center at all costs. Do not max your credit card as it will have the opposite effect of what you want.

Secured credit cards are great for starting out, so definitely do that.

Also I wanted to point out that I went through four years of college without a credit card and car loan. You should do that too. Believe me, college is exactly when you do not need those things.

Stay in your current car and do not look to upgrade yet.

**Truvidien** · 03-30-2012, 08:14 PM

Thank you all for the replies!

I do like the idea of not having a car payment. Gives me extra money to work with or put into my savings account. Which is what I always do. I just feel like I'm wanting a newer vehicle but at the same time I don't wanna nickel & dime myself and not be able to do anything else. So I've been keeping my options open. I'm making sure if I were to look for a newer vehicle that I am looking at it in the long run and not just a impulse buy.

I'm really strange, I look at life and wonder why people would stay in the same field for so many years of there life when one person could do so much. So it's hard for me to stick with one thing and run with it. But thinking to myself coming up on 24 I need to do something quick. Before it's to late. Sorry.

Anyways, I'm thinking of just buying stuff with it then paying it all off on time. Not going to the maxing direction since with my luck I'll need something and I won't be able to use it.

What I was wanting to do was save as much money as possible this year and until June of 2013 go to the dealership and put down a large sum on a vehicle. It's either that or keep saving and continue to do what I do day in and day out.

**snafu** · 03-30-2012, 09:59 PM

I too agree with the advice given and hope you will save yourself a ton of grief. When you eventually put your plan into action, I hope you will remember the auto depreciation rates. I suggest you try to find a vehicles that meets your needs that is at least two years old as the 1st two years are the biggest depreciation. Do some research to make sure the vehicle brand/model you select is well rated by Lemon Aid type publications.

**disneysteve** · 03-31-2012, 10:31 AM

Originally posted by Truvidien View Post

What I was wanting to do was save as much money as possible this year and until June of 2013 go to the dealership and put down a large sum on a vehicle.

I have a better idea. Continue to save this year and until June 2013. Then go to a dealership (or a private party) and buy a car that costs however much you've managed to save. Put down 100%

and drive off debt-free.

**stazstaz** · 03-31-2012, 03:24 PM

You can kill two birds with one stone by getting a car loan (either from the bank or fro the dealership if you want to buy a new car) and you'll build credit as you make payments every month. Just remember to make your payments each and every month; if you forget it could have a huge impact on the credit you're trying to build up.

**Truvidien** · 03-31-2012, 06:43 PM

Originally posted by stazstaz View Post

You can kill two birds with one stone by getting a car loan (either from the bank or fro the dealership if you want to buy a new car) and you'll build credit as you make payments every month. Just remember to make your payments each and every month; if you forget it could have a huge impact on the credit you're trying to build up.

I'm not even sure I could pull a car loan actually.. I've got no credit at the moment. Perhaps when I start to establish some? Going into the bank and asking for a loan and getting denied sucks haha. As far as driving it off the lot debt free is out of the picture for me. So I've just been browsing around online looking at different vehicles and trying to get within a certain price range.

**disneysteve** · 04-01-2012, 08:07 AM

Originally posted by Truvidien View Post

As far as driving it off the lot debt free is out of the picture for me.

Why couldn't you pay cash for a car? How much do you expect to have saved by June 2013?

**stazstaz** · 04-01-2012, 12:32 PM

Originally posted by Truvidien View Post

I'm not even sure I could pull a car loan actually.. I've got no credit at the moment. Perhaps when I start to establish some? Going into the bank and asking for a loan and getting denied sucks haha. As far as driving it off the lot debt free is out of the picture for me. So I've just been browsing around online looking at different vehicles and trying to get within a certain price range.

There's a lot of dealerships that will give you loans if you have bad credit or no credit at all, and it's a great way to start building credit for the future.

And banks are always looking to lend money to brand new customers, isn't that hard to get a loan for a car if you have a decent paying job even if you have no credit. It's definitely worth a shot and if you do get denied go straight to the dealership, they can set you up with monthly car payments until your loan is paid off. Be sure to compare dealerships though, some will give you a high interest rate if you have no credit (close to 10%) but you can get it lower at others.

**Truvidien** · 04-01-2012, 08:44 PM

Originally posted by stazstaz View Post

There's a lot of dealerships that will give you loans if you have bad credit or no credit at all, and it's a great way to start building credit for the future.

And banks are always looking to lend money to brand new customers, isn't that hard to get a loan for a car if you have a decent paying job even if you have no credit. It's definitely worth a shot and if you do get denied go straight to the dealership, they can set you up with monthly car payments until your loan is paid off. Be sure to compare dealerships though, some will give you a high interest rate if you have no credit (close to 10%) but you can get it lower at others.

My interest rate is 22%. That's what the dealer told me when I went to Kia. So right now other than a car being like 12k I cannot afford it. I pay for online schooling. Paying my parents rent. Insurance from work. (Right now at 7-Eleven) I may have a new job lined up for me doing landscaping. Which I really hope goes through. I'm not even sure if I could drop from 22% to 10% in one year? I'm still waiting for my secured card to come in. So I can get started.

@DisneySteve 2000-2500? Maybe higher than that? Basically.. For the one car I am really interested in it for me to be able to afford it. (IF I stayed at the same job) would need to be: 10% interest rate, 2000$ down. Within 84 months. That's if I went with a brand new standard Forte. So, really hoping this landscaping jobs goes through. I'll get paid more than just minimum wage.

Which 84 months is a long ass time..

Establishing Credit?