How can i build good credit, without getting a credit card? October 18, 2009
Posted by Banking in : Credit , trackback
I just turned 18, and i am not at all interested in getting a credit card right now. Do you have any other suggestions that could be helpful?
By: Megan
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By: Megan
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…Mortgage….car loan….neither of which you’re going to get when you’re 18….Creditors view 18-21 year olds as extreme credit risks. A secured credit card is your best (and probably only) option.
To help build (or rebuild) a good credit history, it can be beneficial to get a secured credit card, the kind where you put up a security deposit and your credit limit is equal to that. Carry a small balance and pay it off over time. You can use this to gradually rebuild a history of on-time payments that will be reported to the credit bureaus. Your best bet is to get one through a credit union, as they have the best deals for secured cards.
Building credit takes time, it will take at least 24 months of consistent on time payments to establish a good credit rating.
You will have to start building your credit with secured credit. Go to the bank you do business with an open a savings account, save until you have $1,000 dollars in your account, tell them you want a secured loan against the account. Set the loan up to be repaid in 12 months. Take the money the bank gives you ans put it in your account to pay the loan off.
This will help you to start to build credit, in order to build credit you have to borrow and repay money, either by personal loans or revolving credit, like a credit card. Credit cards are not evil if used properly. Get a card, never charge more a month than you have the cash on hand to pay off and make sure and pay the card off in full each month.
i dont think its possible to do that :S
Start a consistent savings plan. As little as $25-$50 a week.
With a credit account, you are spending money you DON’T have.
With a savings account, you are building an asset. You can spend money you DO have.
Haven’t had credit cards in over 20 years. More money is available because I’m not giving all the interest money to the bank. I get to keep it. I save my money and pay cash for what I want or need (except cars and mortgage). In my opinion, a person who has the discipline to save money is a better credit risk that one who has no savings but does pay their debts. One who has no savings is living from paycheck to paycheck. Lose the paycheck and the debts go unpaid.
Wouldn’t it be great if everyone went to a cash only system. The FICO scoring system would collapse. They wouldn’t be able to manipulate our credit profiles to justify high interest rates.
Credit cards helps building your score.
There are some other things that will help building moderate credit and will help help you getting credit card later.
1. Open bank checking/savings account in your name. It does not improve your score but shows your financial maturity of handling money matters..
2. Get phone connection/utility bill in your name and pay it always on time. Payment history is one of the most crucial factor in building credit score.
3. If you take any installment loan like auto loan, that will also help you building your score.
You will get more information in the articles below
I think no, i am not agree
yes, agree with that
I think yes, agree with that
You can do several things. If you have a bank account, either checking or savings, go to the bank and ask them for an installment loan. They will ask you what you have for collateral. Put up $500.00 or so dollars and leave that on deposit for your collateral. Then ask for a $200.00 installment loan, that you want to use to buy some books for your college class (the bank doesn’t need to know exactly waht the money is for, but don’t tell them you are going to fly to Disney World for a vacation). You will also have to have verifiable income to get this loan (because you have to be able to pay it back). Once you pay back the loan, (on time, preferably all payment made 10 days before they are due), then ask for a credit card with the bank (most banks issue them). Or, you can apply with one of the major credit card issuers, like Chase, Capital 1, etc.
Or, as others have suggested, you can get secured credit card, but the up front fees are very expensive.
If you are in the market for a car, ask one of your parents to co-sign for you.
These are three ideas for you to start to establish credit.
If you aren’t interested in getting a credit card, as you said. You may want to re-consider, but you don’t have to use the credit card. However, I would think that getting a secured credit card would be the last way to establish credit.
Getting a loan that is secured by cash, or having a co-signer on an auto loan would be preferable because the fees associated with getting a secured credit card.
Good luck to you!