Building credit

[david-b]

Hey all;
This is way off topic, but I'm looking at building up my credit. I'm 22 and I've got decent credit, but not great. There's no problems with it, it's just a little lower than I would like it to be. I just opened up my first credit card (Guitar Center FTW!) and I want to get a VISA or something. But I want to build up my credit so when I get my condo, I can get a loan or what-not. So what's the best way to get a good credit score pretty quick?

I heard it's not best to pay off a credit card right away. I put $770 on my GC card when I applied and the bill should be coming in soon. I could pay it off right away, but should I do payments? I've got 12 month no-interest. Ideas?

What else can I do? Should I do? Thanks!

['97ventureowner]

Your credit score is based on a number of factors including length of time credit has been in use, types of credit,and negative effects such as late payments/judgements. It is good to have a "mix" of credit such as revolving credit( i.e. credit cards) and installment loans( i.e. car loans, personal loans.) and mortgage loan( although for many the last one may not be plausible in the present time).The longer you have a positive credit record ( no late payments, bankruptcy, judgement) the better your score will be.You really can't get a good credit score in a hurry, things like this take time. Paying your bills on time, not exceeding your credit limits, and not having too big of a balance can help you obtain a better score on your credit report.

[Killa]

My brother build his first credit from best buy. by buying any a $700 laptop and paing $27 a month. For me I borrow bank money with my dad cosign for buying this mustang.

[david-b]

I don't have any loans, no car loans, school loans... nothing. All I had before was some credit that somehow my parents built for me, and then a cell phone. Now I got the GC card, going to get a VISA, and I'm thinking like a Best Buy card or something. Would have been better to have when I worked there, but whatever.

So paying off right away isn't the best to do then right? Anything else?

[Blackcrow64]

You could pull a Brian and build a ridiculous car off of a credit card and spend the next year paying it all off. I'm sure I built a shitload of credit doing that and paying wayyyyyy over the minimum payments each month. If you pay over the minimum then that is supposed to help your credit out also. Like if I would get my monthly statement and the minimum payment would be like 300 dollars, then I would pay like 1300 instead... I always paid way more than the minimum so it would look better for my credit...

[david-b]

I'm not even going to ask how much you have on your cards if you're paying $1300 a month.

Cool. Good things to know. I just want to be able to take out a loan for a condo, possible next summer without having a co-signer. It doesn't make a difference either way if I have one or not, but it would be nice to not have to ask my parents to do something for me. I need someone to move in with now.

[Blackcrow64]

Originally Posted by david-b

I need someone to move in with now.

I've got the same problem... lol But I need to figure out where to move to and crap. Need a good job and such lined up first I figure...

[david-b]

Originally Posted by Blackcrow64

I've got the same problem... lol But I need to figure out where to move to and crap. Need a good job and such lined up first I figure...

Chicago... I'll get you a job at my old Best Buy for a temp. Actually if you were up here already I could've gotten you a freelance job making powerpoint presentations at Bud.

[rodknock]

Another way to do it is to go to the bank and ask if they have credit building accounts. Basically you give the bank say 500 bucks and then take out a loan for 500 bucks. Every month they make the paments for you out of the account that you supplied the money for. I know my credit union does it. Its an option if you have the spare cash.

['97ventureowner]

Originally Posted by Blackcrow64

I've got the same problem... lol But I need to figure out where to move to and crap. Need a good job and such lined up first I figure...

Another thing to add about having good credit is that many things in life are now based on how good your credit is. Many employers now look at a potential employees' credit rating when doing background checks for hiring, insurance companies also assess a policyholder's credit to see if they are a good "risk. And landlords also look into potential renter's credit to see how good of a tenant they might be.
The main thing to remember about credit is that when trying to establish a good credit rating creditors look at how well you pay your bills on time, some also care how much you pay,(the minimum , another amount, or the whole bill all at once.)How long you've have established credit,( I have a couple of credit cards that I've had over 20 years and that is a definite plus on my record.) And the types you have,(make sure you have a good record of a mix of credit types I listed in my first post.)And don't charge too much so that your debt to income level is too high,(also do not exceed your credit limit(s) )
One other thing I'd like to add is to make sure you check your credit report from the 3 credit reporting agencies at least once a year. There is a fairly new law that allows you to do so for free and pay special attention to any errors. I volunteer as a credit counselor for a non profit agency and when I go over client's credit reports, many are riddled with errors. Some errors can greatly affect how your report appears to potential creditors, and you have a right to fix the errors. One problem is that some creditors, especially credit card companies do not report your information to all 3 agencies and this can affect some people seeking credit if the creditor only pulls one report, and you are missing information that should be there.

[david-b]

Ya my job did a credit check on me. The background check interview guy (also Jesse Jacksons ex bodyguard) was like, ya you're credit is a little low, but not bad.

[Killa]

other way to build credit is thru the bank, they will let you borrow a thousand, but it will be in your bank account and you cant use it until you pay them off. usually you will have credit after 6-7 month, but I would recomment go up to a year payment plan.

[ned032002]

I was always told that it's better to have a credit card w/ a $2000 limit but w/ only $250 charged to it, because since the credit is available to you but your not spending it, it shows that you aren't loose w/ money and are more likely to pay your bill on time. I had the hardest time getting a credit card, I tried at several places and never had any luck until I got a letter in the mail for a Capital One card, I filled it out w/ the usual doubt in mind that I won't get it and BAM I got it. So I've been using that for about 7 months and I've never maxed it out ($500) and I make about 3x the minimum payment. So I don't know my score but would like to find out.

['97ventureowner]

Originally Posted by ned032002

I was always told that it's better to have a credit card w/ a $2000 limit but w/ only $250 charged to it, because since the credit is available to you but your not spending it, it shows that you aren't loose w/ money and are more likely to pay your bill on time. I had the hardest time getting a credit card, I tried at several places and never had any luck until I got a letter in the mail for a Capital One card, I filled it out w/ the usual doubt in mind that I won't get it and BAM I got it. So I've been using that for about 7 months and I've never maxed it out ($500) and I make about 3x the minimum payment. So I don't know my score but would like to find out.

That is a good way to build your credit and show the creditors you are a creditworthy risk, by not having a high balance. Years ago that meant you had a lot of room to charge, and many creditors were wary when they saw that, times have changed. Another way they have changed is the availability of credit,( in fact it's kind of opposite to what you went through to get a card.) Twenty years ago when I was first starting out building my credit history, it was very hard to get a card. Most people filled out an application and waited, sometimes weeks to get an answer. Nowadays we are deluged with offers in our mail,( on average I get at least one offer a day, sometimes 2 or more,)and you can get an "instant answer" whether it be on the phone or online. Some of the practices that creditors have today could be considered predatory. They like to go after the college age crowd to get and keep new customers. They offer premiums to apply and many do not realize what they are getting into and the consequences it can have further down the road.
One minor issue with Capital One is that they are one of the companies that do not report to all 3 credit reporting agencies. In fact there have been many complaints against them for not being timely in reporting customer's payment histories to the reporting company. This can be harmful to someone trying to build a good credit history by paying their bill on time and if it doesn't show up on the report, it can have an effect on their credit score, and whomever looks at the report may not get the total picture because of the missing info. If you discover, by checking your report, that this is happening to you, the best thing to do is to contact the company and ask them to update your file with the reporting agencies.

[ned032002]

Last night after I read this thread I went to Equifax and looked at my credit report and it was just what I expected. All three bureaus and my CapitalOne info but also one of the bureaus had my wifes Old Navy card listed as my cc. The one thing I didn't get is my credit score, after paying $12.95 you get to view your report but you don't get your score...you have to pay more money for that. I am actually disappointed that I didn't get what I thought I was getting especially since the info they gave me was not worth the $12.95.