How should I start building credit?

david12795

david12795

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First of all, I'm 19 years old. Its been half a year since I've started college (graduated high school in may 2010). Its not until yesterday until i heard from my brother and girlfriend that they said theyre gonna start getting a credit card. I go "How come? you have a debt card already." Then they told me its a good way to start building "reputation" if you want to get a house, car, etc. when you're older. Apparently, I didnt know this. :shock:


I know some of this should be part of my research. but i couldnt help but to ask which credit card you guys recommend so i can start building credit.

im interested in discover since they offer 5% cash back :D (its too bad i JUST bought a netbook the other day, boo)
 
Get a credit card. Buy something on it that you have the funds to cover entirely. Pay off the entire credit card balance as soon as you get the bill. Repeat. Treat it like a debit card for a while, and only buy things you can cover in cash immediately.
 
[quote name='CoffeeEdge']Get a credit card. Buy something on it that you have the funds to cover entirely. Pay off the entire credit card balance as soon as you get the bill. Repeat.[/QUOTE]

+1 Buy, pay off, repeat. You'll start getting offers out the rear end.

NEVER carry a balance that's more than you can afford to pay off at the end of the month or over a couple months. You'll get yourself into a LOT of trouble - real quick.
 
dont worry about that. ill definitely keep a tab. which ones would you guys recommend other than discover?


also, i have a question, do credit cards in general have an interest fee? like say i used $100 on my credit. will they had a x% onto that bill?
 
Student... Do you have student loans? Those will work to establish credit after you graduate. Also CD collateralized loans are good credit builders. If your parents have good credit, they can add you on their cards as authorized users and NEVER give you access to the actual card/account. Personally, accessing more than one store card or manufacturer line of credit is risky as you are first branching out. I fondly remember having roomies charge whimsically with no real source of income but their parents to bail them out. Choose wisely my friend, if you want to plat your credit score it starts now!
 
[quote name='david12795']
also, i have a question, do credit cards in general have an interest fee? like say i used $100 on my credit. will they had a x% onto that bill?[/QUOTE]
All cards have an interest rate, but they only charge interest on the balance you carry that you don't pay off at the end of the month. That's why you should always pay your bill in full every month.
[quote name='CoffeeEdge']Get a credit card. Buy something on it that you have the funds to cover entirely. Pay off the entire credit card balance as soon as you get the bill. Repeat. Treat it like a debit card for a while forever , and only buy things you can cover in cash immediately.[/QUOTE]
Fixed
 
Yep, paying off a credit card in full each month is a great way. Get something that has a good rewards program so you can earn cash back or other rewards. I love the Amazon.com Visa personally as I buy a ton from them, have a Kindle etc.

Also, if you're in an apartment and have your name on the lease and on the utility bills that will help with your credit score as well as long as you're never late on payments.
 
[quote name='vrblknch']Student... Do you have student loans? Those will work to establish credit after you graduate. Also CD collateralized loans are good credit builders. If your parents have good credit, they can add you on their cards as authorized users and NEVER give you access to the actual card/account. Personally, accessing more than one store card or manufacturer line of credit is risky as you are first branching out. I fondly remember having roomies charge whimsically with no real source of income but their parents to bail them out. Choose wisely my friend, if you want to plat your credit score it starts now![/QUOTE]

nope do not have student loans. i go to a cc and commute with parents. plus i got tons of financial aid money and scholarship money so i dont have a job right now. ill be sure to spend wisely, meaning ill only spend what i can afford to pay off.



[quote name='Ugamer_X']All cards have an interest rate, but they only charge interest on the balance you carry that you don't pay off at the end of the month. That's why you should always pay your bill in full every month.

Fixed[/QUOTE]

definitely, ill treat it like a debt card. im only in on this to build my credit and get some rewards.


[quote name='dmaul1114']Yep, paying off a credit card in full each month is a great way. Get something that has a good rewards program so you can earn cash back or other rewards. I love the Amazon.com Visa personally as I buy a ton from them, have a Kindle etc.

Also, if you're in an apartment and have your name on the lease and on the utility bills that will help with your credit score as well as long as you're never late on payments.[/QUOTE]


any difference between a master and a visa? i did not know amazon offers a visa. i shouldve thought of this waaaay before when i bought 2 wiis and a ps3 :bomb:.

nice i like that apartment/credit card, its killing two birds with one stone. ill make sure of that once i transfer.

[quote name='hpbbes']Just don't take a cash advance on your credit card because the juice starts running immediately.[/QUOTE]

cash advance? as in loans? i dont think i will need that. :)
 
Well to get the best credit, u should check gamestop, they give u crap credit for your trade ins, but if u have the gamestop card, they give u a higher percent over the credit given normally....
 
OP, you need to read the fine print on the discover card. Typically certain categories of goods only qualify for the 5% bonus. For most purchases it's 1%. The ONE TIME you don't pay your bill in full, or the one time you go over your limit, is going to negate any "cash back" you might have gotten. I would not get drawn in to a cash back card unless you know you'll stick to the terms.

You may want to check that your discover card doesn't carry an annual fee. A good number of cash back or rewards cards do.
 
[quote name='dmaul1114']Also, if you're in an apartment and have your name on the lease and on the utility bills that will help with your credit score as well as long as you're never late on payments.[/QUOTE]

Utility bills / lease will not affect your credit...

that is unless you don't pay them..... which is not the way you want them to affect your credit.

[quote name='RandyTsai']DON'T!!!!

LISTEN TO MY GOD DAVE RAMSEY

http://www.daveramsey.com/category/show/[/QUOTE]

ok... yeah yeah dave ramsey... he has some good stuff but realisticly... everyone needs to establish credit. Try to buy a car with no credit... well you'll pay 3-4 times the interest rate as someone with good credit... that is if you get the loan at all. The key is to learn to use credit to your advantage and to nurture it.

To the OP... well as a 19 yo without credit... you can go with a credit card like capital one possibly by yourself but if you want a better card you're more than likely going to have to have a cosigner in today's environment. (ie. parent)
 
[quote name='Afflicted']Utility bills / lease will not affect your credit...

that is unless you don't pay them..... which is not the way you want them to affect your credit.



ok... yeah yeah dave ramsey... he has some good stuff but realisticly... everyone needs to establish credit. Try to buy a car with no credit... well you'll pay 3-4 times the interest rate as someone with good credit... that is if you get the loan at all. The key is to learn to use credit to your advantage and to nurture it.

To the OP... well as a 19 yo without credit... you can go with a credit card like capital one possibly by yourself but if you want a better card you're more than likely going to have to have a cosigner in today's environment. (ie. parent)[/QUOTE]

save up and buy a car from private owner or public auction

why get a car loan when your end up losing about 25 % -50% in deprecation + interest after the loan is done.
 
I remember someone telling me before that if you leave a small balance on your credit card. Like say a hundred or two and let it collect interest but still paying at least the minimum or more, that it'll build credit even more. As oppose to paying off 100% of the amount by the end of the month. Can anyone tell me if this is true or not?
 
[quote name='supraazn']I remember someone telling me before that if you leave a small balance on your credit card. Like say a hundred or two and let it collect interest but still paying at least the minimum or more, that it'll build credit even more. As oppose to paying off 100% of the amount by the end of the month. Can anyone tell me if this is true or not?[/QUOTE]

Yea, this is what I was always told as well throughout college. We had requests for our credit resports and did in dept analyses on them, and the ones who kept a small balance had way better credit ratings.
 
[quote name='RandyTsai']save up and buy a car from private owner or public auction

why get a car loan when your end up losing about 25 % -50% in deprecation + interest after the loan is done.[/QUOTE]

Well people don't always want to buy a used car... nor do they want to spend all their savings on one purchase... there is nothing wrong with having good credit, the thing you have to remember is Dave Ramsey is someone who says he filed for bankruptcy. So while he has some good tips on getting out of debt... he also was someone who got in way over his head in debt... in other words he's not the poster child for good credit use.

[quote name='supraazn']I remember someone telling me before that if you leave a small balance on your credit card. Like say a hundred or two and let it collect interest but still paying at least the minimum or more, that it'll build credit even more. As oppose to paying off 100% of the amount by the end of the month. Can anyone tell me if this is true or not?[/QUOTE]

if you get your credit report it will say that you have credit from x company and show that it was either paid on time for whatever month or how many months it was paid late...

there are little things that affect your credit such as having a credit card from a store (which will drop your credit slightly), having your total revolving credit near the max (which will drop your score) etc...

will carrying a balance on a credit card build credit quicker... shrug

but the thing is... building and nurturing credit is a lifetime project... there's no reason to carry a balance on what is one of the most expensive ways to get credit for a slight gain if any. I can tell you tho. In my credit history I've purchased one new car (paid it off early) and financed one small purchase when I was 19 to build credit and the rest has been from credit cards (paying them in full every month) and while I've never purchased my actual credit score, everytime I apply for a credit card I am approved for just under the maximum amount. In other words... don't waste your money paying interest to a credit card company.
 
I signed up for a credit card in college because they were giving away a free basketball. Ended up ruining my credit because I bought things I couldn't pay for and didn't have the guts to tell my parents. My mom found out when some collections agency called her. Not that I charged thousands or anything. I think the limit was $800 and a Sega Dreamcast was one of my purchases. :D My credit got so bad that I had to pay an annual fee when I applied for my next card.

Fast forward 7 years later and my credit score is now over 800 which is maybe in the top 2% or so I hear. What did I do? Absolutely nothing except pay my credit card bills on time. I never had one missed payment and I only have 2 credit cards.

To anyone who has ruined their credit, don't fret because you can get your score back up. And if you have no credit history, all you need to do is have a lengthy history of paying bills on time. When I'm ready to buy a house, I'm pretty much guaranteed the lowest rates.
 
[quote name='Afflicted']Utility bills / lease will not affect your credit...

ok... yeah yeah dave ramsey... he has some good stuff but realisticly... everyone needs to establish credit. Try to buy a car with no credit... well you'll pay 3-4 times the interest rate as someone with good credit... that is if you get the loan at all. The key is to learn to use credit to your advantage and to nurture it.
[/QUOTE]

False. All bills affect your credit score. I have never had a true credit card in my name yet I have purchased a home (fairly expensive one at that; only based on my score) and I bought a Honda Accord; I didn't not pay either off at time of purchase. All I have done is pay bills on time that were in my name. Yes, one of those bills was student loans.
 
This thread is becoming riddled with misinformation. I suggest you purchase Debt free by 30 or another related book and proceed cautiously from there. As a credit professional, I assure you there are tons of great resources available and contrary to what someone like Dave Ramsey suggests, there is a such thing as "good" debt... especially if you want to max out your credit score. Also notice how everyone who tells you to buy only in cash, save and never utilize credit are usually speaking as folks who have at some point done just the opposite, trashed their credit, declared bankruptcy, and are now singing a different song.
 
[quote name='Afflicted']Well people don't always want to buy a used car... nor do they want to spend all their savings on one purchase...[/QUOTE]
Someone who spends the entire savings on anything is doing it wrong. It's about managing your money properly; putting away that little bit extra in addition to your savings so that you can buy a car. If your heart's set on a new car, so be it. You'll just have to save up a bit more.

Financing a car is a fool's game. Sure, your good credit means you're paying less than the guy with a lower score, but you're paying a whole lot more than the guy who paid with cash.
 
OP, I recommend http://www.clarkhoward.com/ or listening to his radio show. Good money advice in general, not just on building credit.

Listen to everyone telling you about paying off balances.

I only have one card, but I have more on it than I should (thank goodness it is the only real debt I have besides student loans. I am paying double on it to eliminate as much interest as possible, but it is best to avoid that to begin with by not over-extending yourself. I am fortunate because I can pay double, and still save 10% of my income, but it wasn't always like that. Having to pay credit card debt really affects decisions in everything you do, including working at a job you hate, negatively affecting your savings, and lifestyles changes. No debt means more freedom to switch up things in your life when you want to.
 
[quote name='Allnatural']Financing a car is a fool's game. Sure, your good credit means you're paying less than the guy with a lower score, but you're paying a whole lot more than the guy who paid with cash.[/QUOTE]

It is a fool's game monetarily. But at the same time life is pretty boring if your a miserable, miserly person who pinches every penny. It's better to do something with your life, make decent money and not have to obsess over maximizing savings.

Buying a new car is a nice luxury. I don't mind throwing away some money on interest for 3 or 4 years out of every 10 years when I have a new car and payments. I'm still maxing out my retirement accounts, have more than 6 months expenses in a savings account etc.

It's extremely important to live within your means--and better to live well under them. But that doesn't mean you have to be an uber cheap ass all the time and never spend money on things you enjoy like owning a new car rather than a cheap used one (a nice used one most people still can't afford to pay for with cash, especially early into their careers) etc.

Cars and mortgage are fine debts to have as long as the payments are under your means and you can pay the minimum payments (and ideally above) each month while you're still maxing out your retirement accounts and not dipping into savings etc. Got to live a litte. Can't take your money to the grave with you.
 
[quote name='dmaul1114']It is a fool's game monetarily. But at the same time life is pretty boring if your a miserable, miserly person who pinches every penny. It's better to do something with your life, make decent money and not have to obsess over maximizing savings.

Buying a new car is a nice luxury. I don't mind throwing away some money on interest for 3 or 4 years out of every 10 years when I have a new car and payments. I'm still maxing out my retirement accounts, have more than 6 months expenses in a savings account etc.[/QUOTE]
I don't know why you think saving for a luxury (like a new car) equates to being miserly, miserable, and boring. I'm at that stage in my life where the car I drive just doesn't matter to me. If you want to drive that new car, more power to you. I just don't see the point in paying two people for it (the dealer and the bank).
 
It's just most people don't have enough savings to go buy a decent car new. Most people don't have $15-20,000+ laying around at any point in their lives that's not part of their rainy day fund and most extra money that's not spent gets put in retirement accounts, kid's college funds etc. as it should.

So car loans are thus a necessity for most who don't live in areas with public transit options etc.. Even for a decent used car you're usually looking at least $8-10K which most people will still need a loan for.

Of course if one can afford to buy a new car (or a reliable used car) with cash while still maxing out retirement accounts and not dipping into their emergency savings fund, then of course that's the better option financially. But, most people just don't have that luxury of having that kind of cash laying around nor the means of saving that much up as often as a car needs replaced.

Anyway, I'm not a huge car guy. I don't buy pricey cars, my last two have been a 1999 Subaru Impreza and a 2008 Mazda 3 (would still be driving the Subaru if the transmission hadn't been dying). But I do like having a new one, and being a college prof I'll probably never make enough to even buy cheaper compact cars like those with cash. But I can get 3-4 year loans and pay them off early and not be out too much interest.

Life's to short to obsess over money. Just something I've never cared that much about, else I wouldn't have done 11.5 years of college and grad school to become a prof in the social sciences! :D
 
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[quote name='vrblknch']This thread is becoming riddled with misinformation. I suggest you purchase Debt free by 30 or another related book and proceed cautiously from there. As a credit professional, I assure you there are tons of great resources available and contrary to what someone like Dave Ramsey suggests, there is a such thing as "good" debt... especially if you want to max out your credit score. Also notice how everyone who tells you to buy only in cash, save and never utilize credit are usually speaking as folks who have at some point done just the opposite, trashed their credit, declared bankruptcy, and are now singing a different song.[/QUOTE]
As a credit professional
Click to expand...


Don't trust this person. Also, check out that sweeping generalization at the end.
 
[quote name='CoffeeEdge']Don't trust this person. Also, check out that sweeping generalization at the end.[/QUOTE]

Don't trust me HOW? I've been a mortgage UWer/banking professional for almost 10 years. I see anywhere from 5-15 credit reports a day... so I got a dustpan for your sweeping generalizations. ROFL.
 
[quote name='lordopus99']False. All bills affect your credit score. I have never had a true credit card in my name yet I have purchased a home (fairly expensive one at that; only based on my score) and I bought a Honda Accord; I didn't not pay either off at time of purchase. All I have done is pay bills on time that were in my name. Yes, one of those bills was student loans.[/QUOTE]

Hate to be the one to point it out to you... but a student loan is not a utility bill.... Also I see quite a few credit reports from people on a weekly basis... have NEVER seen a utility bill reported unless it was in collection. As for purchasing a home... well most places will finance a home if you have a 620ish or so score so long as you have the DTI. And a few years ago didn't even have to be that high...

[quote name='Allnatural']Someone who spends the entire savings on anything is doing it wrong. It's about managing your money properly; putting away that little bit extra in addition to your savings so that you can buy a car. If your heart's set on a new car, so be it. You'll just have to save up a bit more.

Financing a car is a fool's game. Sure, your good credit means you're paying less than the guy with a lower score, but you're paying a whole lot more than the guy who paid with cash.[/QUOTE]

The other thing you forget is that most insurance companies are now starting to use people's credit score to help determine their rates... not to mention that some employers also check.
 
[quote name='dmaul1114']It's just most people don't have enough savings to go buy a decent car new. Most people don't have $15-20,000+ laying around at any point in their lives that's not part of their rainy day fund and most extra money that's not spent gets put in retirement accounts, kid's college funds etc. as it should...Even for a decent used car you're usually looking at least $8-10K which most people will still need a loan for.
[/QUOTE]
People who can't afford to set aside a few hundred dollars each month for a couple of years can't afford to take on a car payment either.

[quote name='Afflicted']The other thing you forget is that most insurance companies are now starting to use people's credit score to help determine their rates... not to mention that some employers also check[/quote]
I know. It's getting to a point where you need credit. Don't misunderstand, I'm not against all credit. I do have a Visa which I use on a regular basis. It's for my convenience, and like many of you it's paid in full each month. House loans are acceptable too given that houses usually appreciate in value. Cars are a different matter entirely. Why spend more (via interest) on something that will always be worth less down the road.
 
[quote name='Allnatural']People who can't afford to set aside a few hundred dollars each month for a couple of years can't afford to take on a car payment either.
[/QUOTE]

I agree if you're talking crappy, old used cars for $5K or less. People can save up and buy those.

Most people outside of the lower class don't want to drive that kind of crap and want either new cars, or reasonably new used cars, and for most it's more feasible to get a 4 or 5 year loan than to save up for 4 or 5 years as a lot of times a new car purchase is the result of the old one dying etc.

I'm not arguing that your way isn't better monetarily. It is of course as it's always great to avoid loans and paying back interest on anything.

Just saying I don't see anything wrong with car loans or mortgages as those are two types of debt (along with student loans) that I think are reasonable as long as people are buying things they can easily afford to pay more than the monthly minimums on while still maxing out retirement accounts etc.

You disagree as you don't give a crap about cars, and that's fine. I make ok money and like to have new cars even if I'm not buying expensive models. Part of being ok successful financially is being able to enjoy luxuries like that without having to save for years etc., while still maxing out my retirement accounts. But I'll unfortunately probably never be rich enough to buy a $18-25K new car with cash while still maxing out my retirement accounts and enjoying traveling etc., and don't see much point as long as I can get low interest and pay it off early.
 
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[quote name='Afflicted']Hate to be the one to point it out to you... but a student loan is not a utility bill.... Also I see quite a few credit reports from people on a weekly basis... have NEVER seen a utility bill reported unless it was in collection. As for purchasing a home... well most places will finance a home if you have a 620ish or so score so long as you have the DTI. And a few years ago didn't even have to be that high...[/quote]

Fully aware of that. Thanks for pointing it out. Because it was different than rent and utilities, I made a reference to it. :roll:

My score is alot higher than that and I bought my home after the market crashed i.e. when it required a lot more to obtain a mortgage loan; I am on a 30 year fixed with a fairly good rate... only based on my credit score. Also my car loan is 0 interest for 5 years fixed; you had to have a certain score to qualify for the 0 interest loan. Again, the only true credit I had prior to my home loan was my student loans. Never owned a credit card.
 
Try for the Sony Rewards card. I got approved for a $500 limit(at 25% interest:shock:) and I have jack shit for a credit score.

Just do as others already said on here, buy only what you can afford to cover and fully pay off at month's end on your new card to start building interest.
 
[quote name='lordopus99']Fully aware of that. Thanks for pointing it out. Because it was different than rent and utilities, I made a reference to it. :roll:

My score is alot higher than that and I bought my home after the market crashed i.e. when it required a lot more to obtain a mortgage loan; I am on a 30 year fixed with a fairly good rate... only based on my credit score. Also my car loan is 0 interest for 5 years fixed; you had to have a certain score to qualify for the 0 interest loan. Again, the only true credit I had prior to my home loan was my student loans. Never owned a credit card.[/QUOTE]

and what I was saying is that you had used credit even tho at the start of your post, you claimed that you only had rent/utilities... it's just not correct to try to tell people that paying rent/utilities will help their credit score when it doesn't. Not paying them will hurt you.
 
[quote name='Allnatural']I know. It's getting to a point where you need credit. Don't misunderstand, I'm not against all credit. I do have a Visa which I use on a regular basis. It's for my convenience, and like many of you it's paid in full each month. House loans are acceptable too given that houses usually appreciate in value. Cars are a different matter entirely. Why spend more (via interest) on something that will always be worth less down the road.[/QUOTE]

of course... when you have car dealers offering 1.99 - 0% financing... people with good credit during a good economy can make more than they pay in interest by leaving their money in the banks.
 
[quote name='Afflicted']of course... when you have car dealers offering 1.99 - 0% financing... people with good credit during a good economy can make more than they pay in interest by leaving their money in the banks.[/QUOTE]

Also, I think when you are young and transitioning, it makes alot of sense to take out a loan for a car. When I was coming out of college I had basically nil in savings (nothing in debt either). I got a pretty good job out of college and not having a reliable car would have negatively affected my career. It would take a couple of years to save up for a decent car. Do you put your career on hold just so you can buy a car with cash?

Another thing is you never really know what will happen. What if you have a rash of medical bills that taxes your "emergency savings account" and then your car dies? Unless you live in a city you need a car, not much you can do if life happens and drains your accounts. You try to plan for all contingencies but the truth is if everything hits the fan, it's very unlikely you'd have enough in savings to cover everything.
 
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one of the best things about being in college is that you have access to student credit cards to companies that would otherwise be a little difficult to obtain.

for example, you can get an american express blue for students, all they need to do is verify your college status. for someone with no credit, no college, no high paying job, AMEX will typically decline you quickly.

if you feel that you are too prone to spending, you can call and voluntarily reduce your credit limit. I had mine at $300 for awile
 
I've got a somewhat related question -- everyone who's had to review it has told me I have excellent credit, but that it's 'limited'. I've had a credit card for nearly 10 years, student loan for 6, and apartment lease for 5. When I bought my truck, my father cosigned with me, and I ended up with an interest rate of 7.9%. Three years later, I'm still paying on it at what I consider a pretty terrible rate, but they blamed it on my limited credit. Is there any way to expand my credit? I've since opened another credit card through the same company as my loan, and just recently paid off my student loan. Are there any other tips on what to do for a better rate? With 4 years left on my truck payment, I'm looking for anyway I can to reduce the interest.
 
Wait for a deal to come along...

I opened up a discover card few months back as they had $150 free after you purchase $800 in the first 3 months. Like someone said before, the 5% cashback is in certain categories... i think it's groceries this month.

Amazon card isn't bad either if you buy a lot from them. (get around 3% rewards on anything off amazon)
 
try look at http://www.mint.com. They have credit card offers based upon your financial situation.

I just recently signed up, but I think it is a pretty good website in terms of handling a credit card.
every week i get an email that tells me of the balance in my bank account minus the amount of debt on my credit card. This way I know whether i'm in debt or not.
 
[quote name='RandyTsai']save up and buy a car from private owner or public auction

why get a car loan when your end up losing about 25 % -50% in deprecation + interest after the loan is done.[/QUOTE]
Because you can get a 0% interest, 60 month loan while having $0 down (excluding a $1,000 recent grad rebate) and get a brand new car out the door for the cost of taxes and title.
 
[quote name='pjb16']Because you can get a 0% interest, 60 month loan while having $0 down (excluding a $1,000 recent grad rebate) and get a brand new car out the door for the cost of taxes and title.[/QUOTE]

And your $20,000 car that you paid $0 down for will be worth $15000-$17500 the second you drive it off the lot. What you "save" in interest, you lose immediately in depreciation. Not only that but odds are if you get in a wreck, you're going to be upside down on the car loan. That's certainly no incentive to buy a new car.
 
[quote name='mtxbass1']And your $20,000 car that you paid $0 down for will be worth $15000-$17500 the second you drive it off the lot. What you "save" in interest, you lose immediately in depreciation. Not only that but odds are if you get in a wreck, you're going to be upside down on the car loan. That's certainly no incentive to buy a new car.[/QUOTE]

Plus the fact with these 0% 60 month loans, people tend to pick a car at the top end of their payment spectrum, the don't get 0% on an affordable car, they see 0% and try to find the nicest car they can get, then default on that 0% loan.

People who tell you that you NEED credit are full of shit, cash works just fine and if anyone tells you that you need a credit report to get insurance, walk in with a year or two premium in cash and see if they accept that, if they don't, walk out and go to the next place.
 
[quote name='Vacabck']Plus the fact with these 0% 60 month loans, people tend to pick a car at the top end of their payment spectrum, the don't get 0% on an affordable car, they see 0% and try to find the nicest car they can get, then default on that 0% loan.

People who tell you that you NEED credit are full of shit, cash works just fine and if anyone tells you that you need a credit report to get insurance, walk in with a year or two premium in cash and see if they accept that, if they don't, walk out and go to the next place.[/QUOTE]

Unless you plan on never buying a house, buying a shitty house, or being extremely rich, credit comes in handy.
 
[quote name='confoosious']Unless you plan on never buying a house, buying a shitty house, or being extremely rich, credit comes in handy.[/QUOTE]

Self control, financial planning and saving can get you pretty damn far. Just because the bank never held the title, doesn't mean that you gotta live in a dump. You can ask my parents about that, I wish I would have listened more carefully to them. They were never extremely rich, my dad worked two jobs and my mother worked every overtime hour she could. House appraised recently at just under 280k and a bank never helped them once when they built it 20 years ago.
 
[quote name='Vacabck']Plus the fact with these 0% 60 month loans, people tend to pick a car at the top end of their payment spectrum, the don't get 0% on an affordable car, they see 0% and try to find the nicest car they can get, then default on that 0% loan.

People who tell you that you NEED credit are full of shit, cash works just fine and if anyone tells you that you need a credit report to get insurance, walk in with a year or two premium in cash and see if they accept that, if they don't, walk out and go to the next place.[/QUOTE]


*yawn*

http://www.ehow.com/how_5705560_insurance-rates.html

Sure they'll take your money if you pay in cash.... but they'll take more of it than if you had that nice 750 credit score....

back in the day... a cell phone company wouldn't give you a phone if you had no credit.


the thing is... its very easy to have a good credit score... and it's free! (actually if you play your cards right, you can actually make money while building great credit.)
 
[quote name='mtxbass1']And your $20,000 car that you paid $0 down for will be worth $15000-$17500 the second you drive it off the lot. What you "save" in interest, you lose immediately in depreciation. Not only that but odds are if you get in a wreck, you're going to be upside down on the car loan. That's certainly no incentive to buy a new car.[/QUOTE]
No, you buy a new car (via loan) because you need a car and want something that you can claim to be reliable for a number of years without much hassle or worry. You don't do it to "save" on interest or because you didn't want to pay cash for it.

Not everyone is looking to sell their car 3 weeks after getting it. I don't care about it depreciating the 1st 25% within a mile of driving off the lot when I'm going to keep it for 10+ years.

There are also ways to protect yourself from being upside down on a loan should you get in an accident.
 
[quote name='Vacabck']Plus the fact with these 0% 60 month loans, people tend to pick a car at the top end of their payment spectrum, the don't get 0% on an affordable car, they see 0% and try to find the nicest car they can get, then default on that 0% loan.

People who tell you that you NEED credit are full of shit, cash works just fine and if anyone tells you that you need a credit report to get insurance, walk in with a year or two premium in cash and see if they accept that, if they don't, walk out and go to the next place.[/QUOTE]
I tend to doubt most all of that actually, unless you have some verifiable proof, as it is usually returning customers and/or people who have good credit that even qualify for 0% interest loans.
 
I worked in the finance department at a car dealership for a few summers while in college, so I learned a thing or two about credit.

First of all, it only helps your credit if the lender reports to the credit agencies. There are three: 1) Equifax, 2) Transunion, and 3) Experian.

Lots of different types of loans, paid off on time every time, is what looks great. So if you make 100k a year, and have a home loan, a car loan, and student loans that you pay on time everytime you should be good.

Another big factor is your debt/income ratio. I've never been late on anything, but I don't make a lot and have a shit ton of student loans so my debt/income ratio is not that great. This plays a role.

Start with a credit card but BE careful. It hurts spending cash, it DOES NOT hurt spending credit, and that lack of pain will make you psychologically lazy financially. It will seem like you're not really spending, but you are.

Never, ever, ever, spend more on a credit card than you can afford to pay off in full at the end of the month. There is no good debt, but lots of advisers will say the best debt is student loans, mortgages, and then car loans.

NOBODY will say that credit card debt is good. They will fuck you.
 
[quote name='Afflicted']*yawn*

http://www.ehow.com/how_5705560_insurance-rates.html

Sure they'll take your money if you pay in cash.... but they'll take more of it than if you had that nice 750 credit score....

back in the day... a cell phone company wouldn't give you a phone if you had no credit.


the thing is... its very easy to have a good credit score... and it's free! (actually if you play your cards right, you can actually make money while building great credit.)[/QUOTE]

Like I said, if they pull that crap, go to the next insurance agent that'll take it and give you what you want, it's not that hard. Plenty of insurance agents around there, and I know that mine didn't do a credit check.

And you are correct, it is very easy to have a good credit score, but it's not free and it's actually easier to screw it up, otherwise these credit businesses wouldn't be in business. They don't make their money off the folks that pay everything off monthly.

I am not anti-credit, I just dispute the NEED for credit.
 
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