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

[Ted Lee]

craig is right about how companies try to keep you.

i was closing one of my cc's and they xferred me over to the "closing guy". he started offering me all sorts of stuff...by the time he was done he was offering no annual fee and deducted about 10% off the interest rate.

but i figured having three cards was too much so i closed it anyway...

 

[DaveF]

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.

Oh good heavens no!!! (!!!) I don't know how that will affect your credit rating, but it's an excellent way to throw money away. There is no need to pay 20% interest (loan sharks are cheaper), in perpetuity, in some attempt to build credit.
As far as credit cards go: credit history seems to be pretty meaningless currently (for getting credit cards; it's important for buying a house). Everyone is inundated with credit card offers. My card limit increases every year, even though I've never come close to the limit I had six years ago. I've now got a "Platinum" card, despite my meager (grad student) income -- just because I've had the card for so long. And interest rates are irrelevant if you pay the balance in full each month.
As for loans: don't take out loans for the sake of building a credit history. Get loans only if you need them. If you want a better interest rate, pay more up front (e.g. buying a home), or have a parent co-sign (assuming they trust you).
Open a savings account. Save.
Start retirement savings: an IRA kept in a CD at the minimum; invest in your 401k at work.
To rephrase the "Build it, and they will come", Spend wisely, and the credit will come.

 

[SteveA]

Mark, I used the exact method described by Ken to establish a credit rating 10 years ago. I got a 1-year loan for $1000 from a bank and secured it with a $1000 CD. At the end of the year, I had paid only about $100 in interest, but I had a credit reference. It helped. Having a credit card and paying off the balance each month is probably a simpler method, though.

 

[Mark Larson]

Well folks, i looked into the loan thingy (seems the easiest and most fool-proof method)
If i take out a $ 2 000 loan for 24 months, and secure it with a CD for 30 months, i have to pay $ 93.01 for 24 months, and the total cost will be $ 170.xx.
The loan rate is 10.75% ( ) and the CD rate is 3.07%.
Seems a bit much actually. :b
I might wait a bit, and use a small CD i already have as collateral. Then i can get 6.07% rate. But of course i am limited by the actual amount of money i can put into the CD.
Excellent advice though. I love discussing money!!
PS: I can't believe we're discussing saving money in the HTF!!! I hope we aren't thrown out!