Best way to build up credit-worthiness? (1 Viewer)

[Mark Larson]

So what do you think is the best (easiest and/or cheapest) way to build up your credit-worthiness when you're still in college?
The credit card things that require a checking account and some $$$ every month are too expensive. :b

 

[Eric Kahn]

I did not have any credit till at least 2 years after I had left college, I did not finish college unfortunatly, i had no checking acount, credit card, or loans in collage, not even a student loan.

in 1982 the credit card companies would laugh at a college student trying for a credit card unless mommy and daddy wear rich and co-signing

my first loan was a student loan to go to truck driving school in 1985, my second loan was a car loan in 1985 also for 3100 dollars and my parents had to co-sign

building good credit takes time, never miss a payment, never pay late, Don't bounce checks, watch out for the 90 days same as cash people, they will screw your credit up faster than a major bank if you are one day late

Rent to Own places really do not help your credit rating no matter what they promise, they carry their own accounts and are not considered credit givers and the ammount you will overpay for everything at one of those places will make charging the item on a 25% credit cards and making minimum payment for 2 years seem like a bargain

 

[ken thompson]

Go get a bank loan of some amount you are comfortable with . Say $10,000. Tell the loan officer you are going to put the money into a CD with their bank and use it as collateral on the loan. Since the loan will cash secured, the interest rate on the loan will be no more than 1%-2% over the rate you will earn on the CD. Make the payments on the loan as you would any loan. At the end you will have a fully paid loan on your credit report and you are on your way. Not to mention the $10,000 CD you have at the end. This will cost you about $150 per year in interest on average. Only a little more than a typical annual fee on a credit card. Not too bad. You are building your credit and building some savings at the same time. Not the ideal way to save since it costs you a little money in interest expense but you'll achieve your goal

 

[Jeff Braddock]

I assume if you are like most college students, you get inendated (s/p?) with preapproved credit card applications. Just get one of them and cut it up when you recieve the card. Contrary to popular belief, you do not have to carry a balance on a card to enhance your rating. Just having a card and not being a late pay or a no pay looks good. Also, if you do have a loan, if you make 6 payments (I think that's the right number) towards it, it will be reported on your credit history. In short there are no overnight ways to have the credit that you partents have. Just try to stay out of debt as long as you can, but when you HAVE to take out a loan or something, pay it off quickly and don't be late. Just my 2 cents.

 

[ace peterson]

Yes, I agree. Just get any credit card, it doesn't matter what one (even a Sears card or Target card). Just as long as you have the balance paid each month you will get good credit. Also pay all your monthly bills on time (phone, cable, rent, utilities, etc). If you dont have cable, maybe you should get it!?? Good luck.

 

[Matt Stryker]

Credit cards are the way to go. I never would recommend getting into debt, but they are an invaluable tool to have as well as the easiest and cheapest way to build credit. I recommend the Amex Blue for students; they are very helpful as far as service, online payment, and they give you a pretty high limit for a student.

 

[Dave Poehlman]

I remember I got my first credit card while I was in college. I was probably 18 and it was a measley department store card. But, I would occasionally go to their caffeteria and charge a lunch. And then pay it off the next time I got paid. With that good payment history, I was able get a few more cards and eventually persue the American dream of living in debt.
Seriously, the most important thing is to keep a good payment history. And never use a card for convenience sake... only when you need it.

 

[DaveF]

Spend less than you earn, and pay on time.

 

[Mark Larson]

Excellent ideas all round here guys, I'm very interested in the 10 000 loan thing. Has anyone else tried something like that?

 

[Mark Larson]

And this thread is going straight to the printer!

 

[Kevin P]

And never use a card for convenience sake... only when you need it.

I tend to disagree with this. I use my credit card for convenience all the time. "When you need it" implies using it to buy things you couldn't otherwise afford, which is bad unless it's an emergency.

As far as convenience goes, I tend to use my card to charge items say over $20, to buy gas (pay at the pump) or when eating at a restaurant, things like that. Then when the bill comes, I pay it off in full. I always have enough money to pay the card off (having a low limit helps here). If I were to use a check card or checks to make the same purchases, I'd have to make a lot more entries in my check register. With the credit card, it's one entry per month, when I pay the bill, and I don't have to carry a ton of cash with me.

Building a good credit history is easy. Get a card, use it (but don't go over the limit), and pay the bills on time.

KJP

 

[Ted Lee]

hey mark!

as a side not, try not to over-extend yourself either. it sounds like you're just starting, so that shouldn't be a problem.

but, if you start going hog-wild and obtaining cards left and right, eventually that'll raise a red flag with the creditors. to them, it'll seem like you're desperately trying to obtain more cred...which usually means something bad is going on.

anyway, all the suggestions already given are pretty good. i'd get just one maybe two at the most. keep those for a while, then move on to more if you feel the need.

i've only got two cards myself. one is a citibank and one is an amex blue card. i always pay off the balance in full each month, so i guess it looks pretty good.

oh yeah...i got a best-buy card so i could get a discount on the tv i was buying. those fools gave me something like a 5K limit...boy that was tempting....through sheer force and will i walked out of there with only a $500 dollar sony...

remember...the easiest trap in the world is to buy now and pay later - maintaining a high balance on your card. as long as you keep that in check and pay off the card as quickly as possible, your credit will be fine.

 

[Adil M]

I have a check and credit card and am a skimper and have the money in the bank to buy what I want.
Unfortunately I have made many expenditures on my card for my mother and gotten in pissing matches w/ her about paying off my card.
I'm a stubborn ass and wouldn't pay it either and probably have bad credit now due to last four months of overdue and not paid till recently credit. In case you were wondering she has had bad credit.
Question:How do you find out if you have bad credit?
Does a moderate income, plus being a student, plus having a good stock portfolio affect my credit? I think these are in my favor. Sort of worried about my credit now?:frowning:
I've had credit increases in the past. My credit limit is a measly 1100, but I have always received thos preapproved platinum/titanium/gold/silver card letters.

 

[Mark Larson]

You could go to Link Removed and check out one or two of the links. You can get online credit reports for less than $10. It's easy to say you should pay off credit cards ASAP... here's something: nothing can get rid of debt faster than dedicating max part of your income to it! That means PAY OFF those cards!

 

[ken thompson]

Credit cards are certainly great to have. I would say almost necessary for many reasons, but I would not use them to build credit. They may help in building credit somewhat but if you are not disciplined you will be doing more harm than good. I would say Mark in your situation get a credit card or two, charge mayby $200 on each one and then forget you have the cards. Make the minimum payment each month and just leave the balances there. Time is what builds credit. Keeping everything current is what builds good credit. Trust me with my advice about taking out a loan and using the money as collateral. You will not be sorry. So long as you make the payments obviously. The bank will certainly want the CD to be equal in duration to the loan so you will likely be looking a five years on each. This will keep your monthly payment on the loan around $200 per month. You will not be committed for the full five years either. If after a year you want out of this arrangement just tell them you want to payoff the loan with the CD. They will do it and you'll net a little cash.

 

[ChrisMatson]

My brother does financing for a large car dealership. He tells me time and time again that you shouldn't open too many credit cards--"potential debt" is bad.

Pay all of your bills on time--at least a minimun payment. This includes phone, cable, electric, doctor's offices, etc...

And of course, don't rack up credit card debt that you can't pay off.

 

[Randy Tennison]

As a person who got into credit debt out of college, my best advise is "DONT USE CREDIT CARDS!"

If you want to establish a credit file, get an American Express Green Card. Sure, it has an annual fee, but the best thing is that you have to pay the balance each month. If you don't mega finance charges. So, you won't be tempted to "just buy this one thing" 23 times, as I did. The annual fee is much less than the finance charges you would spend in a year with a department store card.

Don't get into a credit card contest (as I did), and stay away from debt. Remember, Gilligan said it best:

"Neither A Borrower, Or a Lender Be. Do not forget, stay out of debt!"

 

[Ron Alcasid]

Take out a small loan, like $1000. Then pay the loan back with the loan money.

 

[Danny R]

FYI: When major creditors such as banks pull your credit report, they see a list of every account opened in the last 7 years, along with your complete payment history, current balance, maximum balance, and credit limits. Thus they can quickly see how much debt you are in and your minimum monthly debt payments.

Unfortunately short term loans often don't even make it to your credit report, and even if they did aren't relevant since they aren't open now and say little about how you can handle your credit at that moment.

Credit is a very complex formula. What loan officers MOST want to see is someone who NEVER makes late payments, and has a low debt:income ratio.

Having a credit card that you pay off each month is probably the best method. But make certain you have the discipline to pay it off, or you can get yourself into trouble and pay a fortune in interest charges.

 

[Craig Chatterton]

One thing I learned in my quest to be debt free (four months away!) is once you pay off your credit cards, CLOSE them. This is often harder than it sounds because you wouldn't believe how much CC companies will try to keep you with them (especially since you've proven you're a good customer by paying your debt).

But leaving the cards open leaves them on your credit report and that *potential* debt will count against your debt to income ratio.