I want to buy a car, How can I build my Credit?

Question

I'm 18, barely got my credit card 3 months ago so i dont even have a credit score.
Today I went to a dealership to see if i could buy a car(planning for later) and they told me that since i'm 18, and i got innexperience credit no-one would give me a car loan

So they said to get more credit cards to build up my credit...spending more money?! geesh i want to save money for my car.

I want to buy a 25k year model car(2008 wrangler) in 6 months from now

What can I do in that time to get me the car i want?

bills
co-sing with my mom on her new car? - looking into it
paying my credit card


i allready got me a savings and checkings account, no late payments on anything

Answer 1

Well, first it takes a while for your credit history to develop, 3 months isn't going to cut it. One poster already explained what makes up your credit score, I'm going to go over it again:

1.Payment history-35%
2.Total debt owed vs. available credit- 30%
3.Length of time establishing credit- 15%
4. Types of credit established- 10%
5. Inquiries and new accounts- 10%

All these factors come into play. Since you've had the account < 6 months, #1 and #5 I mentioned above is affected. It takes at least 6 months to a year for payment history to reflect on your report. The dealership is right to an extent about getting more credit cards to build credit. That's where #4 comes into play. A good score shows a mixture of different types of credit, not just one credit card. Here's another thing that you might want to take into consideration:

1. LTV (loan to value).
2. Term requested.
3. Age of vehicle.
4. Miles on vehicle.
5. Down payment amount.
6. Time at job.
7. Time at residence.
8. Monthly income before taxes.
9. Credit score/profile.

These are factors that are taken into consideration when applying for a car loan.

If you haven't been at your job for a while, and have a good down payment, without a credit score on a NEW vehicle? Now you can see why it might not be possible to do it by yourself. Now, your mom might be able to co-sign on the car, that's a possiblity. But also keep this in mind. You're 18, and you're trying to get a jeep. The insurance alone will eat you alive unless you add the car to your parents policy, and still the insurance will be high. just a thought.

My suggestion would be to do this. Apply for a secured credit card. How it works is that a deposit, usually tied to a savings account is used as collateral in order to establish a credit line the same amount of the deposit. For example, you deposit $300, you would get a $300 credit line. Now this can work to your favor, because since the deposit is lined to a savings account , you could use this not only to save up for a car, but to build credit at the same time. You can increase the credit limit by adding to the deposit which will help your credit (see #2) because you want to have a large cushion of avaiable credit, versus the debt you owe. A good way to use the card would be to make a small purchase($20/month) that can be paid off on time while adding to the deposit every month. Usually a year after paying on time and keeping the balance manageable, the card either converts to a regular card, or a better card's offered, and most importantly the deposit is no longer needed and is given back to you with interest. That deposit could be your down payment right there. By that time, the other card would have reported and you would've built more credit, which will take some time, more than 6 months.

Answer 2

Since you are 18 you are old enough to learn from a wise woman:

TRY to never BUY a car on credit. Buy a used car and pay cash. During the next three years save the car payments you would have spent and buy your new car then and pay cash!

Buying a car that is 2 years old is a better investment! Still a lot of good use in the car and less cost!

AS for improving your credit, if you have a family member who has a credit card with 9 years of good credit history and not too high a balance, ask them to add you as a second signature, which means you have now acquired 9 years good credit history.

WARNING... make sure the person really had GOOD history!!! But this will help you if you MUST finance!

PS Most 18 year olds wreck their first car in the first 3 years...you will have a better insurance rate on an older car AND you will be less upset when you have the money to BUY a new car saved!

Be safe!

Answer 3

Go to a credit union and have a talk with them. They'll give you an honest answer. If you have a job and can afford a car, you should be able to get one. The question is going to be, what's the finance rate and terms.

That said, you should figure that a car should cost about the equivalent of six month's salary. Unless you're making $50,000 a year, I wouldn't pay $25,000 for a car. Read, "The Millionaire Next Door" to learn more. Personally, I always buy cars that are about three years' old. They have the best price and the most years left. No, it's not a shiny new car, but then again I don't freak out when someone dings the door in the parking lot.

Answer 4

Don't spend a lot on your credit cards. just buy small items less than $20. Pay it off entirely within 30 days.

They need to see activity on your credit card. The amount doesn't matter. Definately don't carry a balance over to the next month. You will have decent credit within 6 months.

You are smart to want to save money and build credit. A lot of people your age run out and spend up their credit cards and spend the rest of their life paying it off.

Stay out ot that trap. Use your credit. Don't let creditors use you. Ever...

Answer 5

Secured credit cards are a great way to rebuild your credit. Most secured credit card companies require a deposit equal to the credit line your are seeking. Make sure they report your payment monthly to the major credit bureaus. Making your payments on time monthly will increase your credit rating. You will also get you deposit returned to you after one year, turning your secured credit card into a unsecured credit card.

Answer 6

well, tbh, i would discourage taking out a loan for any automobile purchase. you will regret it about 6 months into your investment, guaranteed. but, if you insist (and cannot save up the cash), i would still stay from CC's. a friend of mine built their credit from 0 to excellent following an easy system...

they went to bank A and took out a loan for $1k, after 3 months, they went to bank B and took out another loan for $1k and used that to pay off loan A, then 3 months later bank C for loan B, etc... basically, our credit system rewards those that borrow and pay-off frequently.

overall, stay away from debt and dont believe the BS about credit scores. americans are brainwashed. but, if you proceed, be careful and good luck!

Answer 7

Get a small bank loan. Keep it in your account, then when the time come to pay them back just give it back plus interest. Do this a couple of time and it will build up your credit score. (If you always pay it back on time)

Answer 8

you have to start getting a balance on your credit cards. once you get the bill, pay part of the balance immediately with a balance still on the credit card. always pay more than the minimum. and you will be on your way.

Answer 9

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