Credit

[Angel]

I recently got the credit bug and starting looking into my credit score since loans will most likely be a thing once I graduate college, and figured that most of us, being young adults, could benefit on a discussion of the credit game (credit here meaning credit cards, personal, auto, home loans, etc). Are you aware of your credit score? When did you decide to start building it? etcetc Additionally, to you non-US folk, I'm curious: how does credit work for you in your homeland?

I got my first credit card when I was 18 but I didn't start caring about the deeper repercussions of having a good credit score until right after I turned 20. As far as I know, 2 of the 3 credit bureaus give me a score of over 700 which is pretty healthy.

 

[Eva]

Once I started working (at the age of 19) I got my first store credit card with Kay Jewelers, after a year or so I got an actual credit card from the bank I work at. Since I work in a bank, I got into the habit of checking my score and getting a credit report yearly. Since I always managed to pay everything on time I got a good rate on a loan for college, and got my first big credit card with Discover.

My parents were the ones that emphasized on doing all that, they used to have good credit but when the economy sunk so did my dad's company, so they wanted to make sure my stuff was okay for the future. I'm on my way to moving out, and I'm in some debt but nothing overboard thankfully.

 

[ROXAS_32]

My credit is meh... last time i checked my score is around 710 (I don't check it very often because i herd it drops when you do)... I haven't applied for anything besides when i got my first personal cell phone plan... oh and a School loan or two =/... I'm trying to build it now because I'm looking to buy a new car this year...

 

[Angel]

My credit is meh... last time i checked my score is around 710 (I don't check it very often because i herd it drops when you do)... I haven't applied for anything besides when i got my first personal cell phone plan... oh and a School loan or two =/... I'm trying to build it now because I'm looking to buy a new car this year...

If you have CreditKarma you can check your TransUnion score as a soft pull, so your score won't suffer for using that to keep tabs on your credit.

 

[Dogenzaka]

Got a credit card when I was 19 and I've been using it to pay for my stuff ever since. When I graduate I will have great credit.

Keeping the balance on your credit card below I think 80% saturation or something (can't remember the exact number) will help your credit too.

 

[Hollow Bastion]

Another thing beyond just the score is the max and distribution of your credit. What's the largest you've been loaned (car loan, etc), and what is your credit report consisting of (credit cards, car loan, mortgage, etc). That'll all impact how willing banks will be to give decent rates and/or a loan in the first place.

 

[Passion]

(I don't check it very often because i herd it drops when you do)

whoever told you that is a dirty liar.

 

[Ballad of Caius]

I would like to thank the person that created this thread and those that are contributing to its discussion since, as a college student, I too have to start being keen on the world of credit, so thank you for making a thread for discussion. That aside, some banks tend to make exclusive Visa credit card accounts for college students, so I say "give it a try".

 

[Passion]

If you're in college please, for the love of god, take a personal finance course. It's amazing the things you'll learn...

 

[Ballad of Caius]

If you're in college please, for the love of god, take a personal finance course. It's amazing the things you'll learn...

Haha, thankfully, I'm an Accountancy student in the State's university (which is actually the best in terms of professors, students and accreditations). Other than that, on a daily basis, they offer VARIOUS meetings with known professionals of the media. And thank you for the suggesting (which can be applied to the thread, too).

 

[Passion]

well one of the first things you learn is credit, credit cards, and how that impacts you. it's important that everyone knows how that works and what it means to have credit.

 

[Ballad of Caius]

well one of the first things you learn is credit, credit cards, and how that impacts you. it's important that everyone knows how that works and what it means to have credit.

There are other ways to make car and house payments more "comfortable", to use a word to describe lower payments or to lessen debts, such as contributing to the principal of one's debt(s).

 

[Hollow Bastion]

whoever told you that is a dirty liar.

Eh, depends on the type of credit check done. Soft check (e.g. what happens on creditkarma.com)? Nah, no ding. Hard check (e.g. applying for a new credit card)? A light ding.

 

[A]

do I really need a credit card? I plan on paying with cash, my dad pulled out 14k cash for a new car instead of using his credit card. i was thinking about doing the same in near future with a mutual fund i have, he told me i probably shouldn't do it when i get older but i feel like the credit system is a scam. If i choose to pay everything with cash what's wrong with that.

 

[Passion]

a credit card is a loan. your credit score tells employers, banks, etc whether or not you're a responsible person (ie paying your bill on time). is it necessary? i don't know, but it helps if you have a good credit score and you want to buy a car, a home, apply for a loan...

 

[ROXAS_32]

do I really need a credit card? I plan on paying with cash, my dad pulled out 14k cash for a new car instead of using his credit card. i was thinking about doing the same in near future with a mutual fund i have, he told me i probably shouldn't do it when i get older but i feel like the credit system is a scam. If i choose to pay everything with cash what's wrong with that.

You dont necessarily need a credit card but Credit in general credit will haunt you throughout your life.Think of credit as your reputation. People aren't going to do business with some one with bad or no rep.

Problem is trying to build credit with out having a credit card can be hard. If you flat out just buy something (lets say a car), it doesn't really show off your reliability as much as if you paid something off over the course of 3-4 years.

Having a credit card is a easy way to start building your credit. Yeah it will at times feel like a scam (especially when you are paying annual payments on something that you don't necessarily use.)

Personally now if i buy something big and i have the money for it, I'll place the money in a separate account then buy it with a credit card or apply for a loan and just have the money automatically come from the account over time...

 

[Angel]

do I really need a credit card? I plan on paying with cash, my dad pulled out 14k cash for a new car instead of using his credit card. i was thinking about doing the same in near future with a mutual fund i have, he told me i probably shouldn't do it when i get older but i feel like the credit system is a scam. If i choose to pay everything with cash what's wrong with that.

Granted, this is something big to be thinking about at 19, but if you want to buy a house you need decent credit so you can get a loan for a house you want. Credit cards aren't the only way (my friend has a decent credit score just from paying off college/car loans on time), but it's the easiest and probably earliest way you can start to build strong credit.
Not to mention, you can take advantage of rewards systems this way. I used my Discover's Cashback bonus to chip in for certain Amazon purchases. No annual fee, and as long as you pay all your bills on time you end up getting a nice chunk of change at the end of each month (I average about 9 bucks a month with it).

Also, to whoever asked, federal law allows you to check your credit score for free at least once a year, I believe. And no, doing a check like CreditKarma does not hurt your credit.

 

[Hollow Bastion]

I pretty much never use my debit card when making purchases, except when I need cash back. Everything possible goes through my credit card, which has cash-back rewards tied to it, so at least there's a little bit worth doing so. It also helps by adding an additional layer between my bank account and anyone who might attempt to fraudulently use my account. Another important thing, I always pay off my credit card at the end of the month. I don't treat my credit card as an additional source of money. It's just a pass-through to my bank.

 

[Dogenzaka]

a credit card is a loan. your credit score tells employers, banks, etc whether or not you're a responsible person (ie paying your bill on time). is it necessary? i don't know, but it helps if you have a good credit score and you want to buy a car, a home, apply for a loan...

Yeah, you can argue whether or not it's necessary, but unless you want to save up for every big purchase before you make it (houses, cars, etc.) you're probably going to need credit at some point.

And if you, for example, want to wait 20 years to have the money to buy a nice house up-front, and during those 20 years you are paying rent to an apartment, you just wasted 20 years of income to something that was making no money for you during that time. However, if you had bought a house and paid it off after a few decades, things could have been different, and your property could have gained equity and stuff in the meantime, and you could have built even more credit. So building and using credit has major advantages too.