A question about credit?

Question

If i hear correctly you do not get credit until your 18 am i right? also how much credit do you start off with? is it really bad credit that you have to build up, or is it good credit, or perfect credit? please explain in detail!

Answer 1

I will address each question separately.

1) Age

In most states you do have to be 18 before you can open a credit account without a co-signer. In some states you have to be 19. The reasoning being that credit cards are bound by a contract . In the eyes of the law 18 (or 19) is when the state views you as an adult. Contracts are voidable if you are not at or past the age of majority.

2) Amount of Credit

It really depends on your history, score and the banks willingness to take a default risk on you. The companies who tend to market to younger people (e.g., Capital One) will start a new person up with around $500. Increases come gradually if you pay the bill and are responsible.

My bank, US Bank started me out at 19 with $1000 and now at 22 I have $12,500 worth of available credit. I paid all my bills on time and never even came close to my limit.

My brother on the other hand, maxed his $1000 initial limit out, they dropped his limit to $500, charged him a bunch in over limit fees and jacked his interest rate to like 30%.

My sister ruined her first credit card, it was charged off and now she can't get credit for the life of her.

You are rewarded for good behavior and punished severely for bad behavior.

3) Score

Your score is comprised of many factors including, debt/available credit ratio, credit history, inquiries (requests for credit), payment history, etc.

So, if you have none of the above, then you technically don't have a credit score yet. However, if you have student loans or other loans you have a score based on that.

Answer 2

You start off with bad credit, well actually it is no credit. To begin building it, seeif you can take a loan out at your bank or get a SECURED credit card. Make on time monthly payments and it will start to raise your credit rating. Stay away from regular credit cards- they are really bad until you are finnacially able to take on the payments, and even when you do use them, only charge as much as you can pay back immediately.

I suggest that you dont rush to stores and try to get thier credit cards because every time they run your credit it brings your score down.

Pay all of your bills on time. I am assuming that you are going to be leaving home soon. Make sure your electric, cable and phone bill are paid on time because they report to the credit agencies. Pay your car note on time, rent and insurance.

If you keep up with that, you should be fine. Bottom line would be if you dont have cash to pay for it now, dont buy it. Use layaway or installments.

Answer 3

u have no credit, so ur trying to build credit! u need to detemine ur montly gross income and calculate about 40% (include rent/mortgage) and that should be the limit for credit u should have.

for example if ur income is 2000 per month, 40% of that is $800, this is the max for rent and debts on ur credit report that u pay per month. (credit cards, car, etc)

40% debt-income ratio is a good number and some creditors look at that when u apply for loans.

u dont necessarily have to be 18 to get credit but that is the minimum age for some creditors. u may have to get a co-signer b/c they cant come after u if u r delinquent (by law)

there r banks that offer programs to help people build credit and maintain good credit! check with ur bank or credit union to see if they can help u with this.

also see if seminars or workshops in ur area to explain the importance of credit!! good luck.

Answer 4

okay this is what I did. I got a student credit card when I was 17 in my mom's name. and when I bought my first car All I had was that one credit card so they said I was a "ghost" or they couldn't really determine what type of credit risk I was because I didn't have any. So if you get any type of credit just keep that **** good because if you don't then you will regret it in the future. When you start out of course you start out with none, and you dont have " bad" credit you just dont have any and companies won't know what type of "person" you are when they analyze your report. Hope this helps.

Answer 5

by the law you have to be 18 to apply for any credit. if you don't have any credit yet, your credit is good. your payment history will tell over time what is your credit score. to have excellent credit score you have mix different kind of credit like credit cards- they call revolving charges, installment loans like car payment and mortgage payments later. your credit score is base on mixing all type of credit and the way you use your credit and of course your payment history. try to never be late with your payments more than 30 days- after that your lender will report your late payment with credit agency. your credit will be built over time- the longer you have credit , the more trustworthy you going to be to everybody who you want to get credit from.

Answer 6

You have to be 18 to be able to receive your first credit card, because you have to be in a legal age to be in a legal contract.

i received my first credit card through my bank. it is good to open a checking and savings account as soon as you can because most bank will base your credit limit on how you use your checking account and debit card.

credit score is developed to rate on how credit companies can trust you. low credit score means you have a bad reputation on borrowing money and higher credit score means you are a good loaner and the risks of you not paying your debt is lower.

lenders will give you lower interest rates when you have a good credit score so it is good to start early and keep your score in a average level.

FICO score is derived on the ff. criteria:
* 35% punctuality of payment in the past
* 30% capacity used: the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
* 15% length of credit history
* 10% types of credit used (installment, revolving, consumer finance)
* 10% recent search for credit and/or amount of credit obtained recently

Answer 7

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Answer 8

Read some credit tips and articles on this site

Answer 9

you have to build credit