No credit

Forum|Forum|7 years ago
August 17, 2018
3 replies
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Hey I have no credit but I'd like to get some but I'm scared if I get a credit card I'm going to get myself into trouble any suggestions?

GabiU

I was scared to get my first credit card too but I knew I had to start somewhere. Last year I got one from the same bank as my debit card and only use it for small or 'fun' purchases ie gas, going out for dinner, etc. I have it auto-debited to pay whatever I spent every first of the month. (The minimum payment each month is $15, but I like to pay in full so I don't fall behind).
The analogy I heard was a credit card is like a safe, so if you have a credit limit of $1000, the banks like to see that you'll borrow 20-30% ($200-300) and put it back. Sometimes I've spent more than that but that's why I like to pay in full each month. Its a good habit to keep because if you don't pay in full, the credit card company will add interest to whatever you didn't pay back so you'll end up paying more money to "borrow" it.

Maybe others have alternative ideas of how they see it?
I hope this helps! (#plug...I have the app Mint as well which categorizes payments and shows you what you spend the majority of your money on. I spend it on Food & Dining...whoops :smileyvery-happy: )

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JOSEPHDAY19

credit can be very daunting, alas credit cards are not the only way to build a credit history. You can also enlist into an auto loan, if you have small debts out there you want to pay off you may want to think about possibly a personal loan, you could also look into personal lines of credit, where they are revolving lines of credit(like a credit card), but instead of carrying the card around with you you're pulling cash off of an account. Most lenders (mortgage loans, auto loans, etc) are going to be looking for 3 open lines of credit.

Working in a financial institution, I always recommend you go talk to your trusted representative and have that conversation with them. If a credit card is what you're wanting you may look into a "secured" visa card, where you fund your credit limit and over the course of time and establishing good history the initial funding is returned to you and your card is graduated to an "unsecured" visa card.

My advice is to request a low limit If you don't go for a secured credit card, I keep mine at $400 so I can pay it off if I ever max it out, my banks increased it several times to over $1000 and I just call and ask them to put it back to where it was, that may help you with over usage.

hopefully this was helpful!

Buildingup715

I’ve been following this advice for almost a year and brought my score up to 654. I started out barely over 500.
You need to have 2 revolving cards (start with secured if needed), like Capital One, Discover or Credit One. Then one retail account (Finger Hut has high approvals with lower scores and covers the “retail” aspect of a well rounded profile), or even Target will work etc. You may be better off with Finger Hut so you don’t get a hit with an inquiry and not get approval.... Especially if you have no credit now.
Then one installment loan (car loan or mortgage) OR better yet, a Self Lender account since you probably don’t have enough credit to get a good car loan.
Self Lender is like a forced savings account that reports your payments to all 3 credit bureaus. You can choose the $25 a month for 2 years and get that back in 2 years, minus the minimal fee.

With those card accounts you want to ONLY want to use 1%-3% of your limit to gain the most points according to the new FICO algorithm. NOT under 30% like previous thought! So on a $200 limit use no more than $6. A Starbucks treat once a month will do. Or whatever you fancy. Then pay off each card, IN FULL each month.

You have these cards/accounts purely to gain a correct profile mix, positive payment history and excellent utilization. Make them work for you. You will see your score rise, credit line increases and Capital One & Discover “graduates” your cards to unsecured with responsible use. Then you will be setting yourself up to get Great interest rates on loans in the future.

Wish I would have learned this YEARS ago!!

Buildingup715

I should have also put on my original reply that I have 4 collections that are on my report. (Medical stuff). If they were not there, my score would probably be much higher!