okay, i have read others post about building credit but they are all coming from a bad credit history, i am 18 and want a credit card is this how i build credit? My goal is to be able to finance a car on my own at the age of 21. i am very fiscally responsible and dont spend more than i have.
2007-02-22 10:24:10 · 6 answers · asked by jkruze8806 1 in Business & Finance ➔ Credit
Not only do small banks like US bank offer secured credit cards, so do most nationwide banks like Bank of America and Citibank. If you're a student, a student credit card is easy to get. If not, go the secured route. Keep good on the account and you'll get your security deposit back in about a year (assuming you don't have any bad credit).
Make sure that if you don't pay off your balance in full each month, you need to keep your average daily balance below the 30% mark of your total credit limit, else you're actually hurting your credit. Best advice is to pay it off in full every month. You don't want to pay the bank any more money than you have to.
A phone or utilities does not build your credit, nor does having a CD. Credit is for when you BORROW money. Having a utility in your name, you are not borrowing money.
It is important to have a good credit score. If your credit score is 720+, you will get the best possible terms than most institutions have to offer.
2007-02-22 10:35:32 · answer #1 · answered by E A 1 · 1⤊ 0⤋
You should have no problem reaching your goal with wise actions starting now.
You want to start with 2-3 credit cards, with small limits that you can manage. When I was 18 I opened 3 cards and at 20 I bought my first house-- with the best mortgage rates available.
Try getting just one credit card for right now. If you have 0 credit you may need to use a "no/bad" credit card place. I reccomend Orchard Bank Visa/Mastercard (you can apply online.) The limit will be about $400 and there will be a $50 or so annual fee.
Stay below 25% of the limit and pay on time for 6 months. Then look for a card offer with no annual fee and get a second card.
Keep both cards open and in good standing until you are ready to get that car at 21. Don't open and close a bunch of cards (you want the same accounts open long term for best effect) and stay below 25% of your limits (They DO ding you for using more than that!)
Also, saving a small down between now and then makes it MUCH easier to get a good rate. Pull your reports and scores before you apply and make sure everything looks good. Capital one, lending tree, etc, often give you a 6-7% or so car payment even with fair/good credit and you can take a blank check from them to the dealership. Then if the dealerhsip gives you a higher APR, you have a backup option.
2007-02-22 18:52:50 · answer #2 · answered by Anonymous · 1⤊ 0⤋
If you are fiscally responsible, you should be able to save enough for a very good car by the time you're 21. REALLY responsible people don't borrow money. BTW, borrowing money IS spending more than you have. We (& our 17 y/o son) follow the advice of Dave Ramsey. We do NOT borrow money - EVER. Our son works full-time, attends a local college, lives at home, pays cash for everything - including his reliable, but not brand new car. He is even funding a Roth IRA this year. Money put in retirement accounts & well-invested when you are this young can grow to 100s of 1000s by the time you need to retire. Here's my (abridged) fiscal responsibility reading list:
2007-02-22 18:36:23 · answer #3 · answered by Tom's Mom 4 · 0⤊ 0⤋
i think the best way is getting a secured credit card, preferably by a credit union. I am 19 and have had this credit card for 6 months and already have a beacon score of 700. It helps!!! I have done it all myself and you can control what limit you set because it's secured!!
2007-02-22 18:45:02 · answer #4 · answered by a_fuller05 1 · 1⤊ 0⤋
Some ways to build credit is to open a CD at a bank, or even having a phone under your name. You could also try getting store cards from stores like; target, kohls,victoria's secret etc. I didnt have any credit and target gave me the target red card, and t-mobile qualified me for two lines. Since I have been making my payments on time now I have good credit.
2007-02-22 18:32:14 · answer #5 · answered by g-na 3 · 1⤊ 1⤋
Head to "US BANK" with some money and fill out papers to open a "secured credit card".
Say you have $500.oo, you will get a credit card with $500.oo limit. Each month your will get your bill and each month YOU MUST pay it off in full. Your $500 sits in the bank like an insurance policy to the bank. You don't pay your bills, they get to keep it. SO SIMPLE.
Pay off your credit card each month for one year then you get to up your limit and get your $500.oo back. Thus the credit cycle has begun!
Pay off the card IN FULL each month and life will be good !!
2007-02-22 18:28:59 · answer #6 · answered by Kitty 6 · 1⤊ 0⤋