my first credit card !!

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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 1:21 pm

clone wrote:
So I'm a little late in getting started on building my credit. I'm 22, yet I've never had a credit card
I've always hated to pay more for things I already bought and have been even more risk averse with credit cards as a general rule.

I got my first when I was 27 not because I wanted but because a bank offered me a lower rate on my mortgage by moving me to a line of credit which came with a direct access credit card... bought a car with it once which was kinda neat playing big shooter and throwing it on the table and all, the crash of 2008 and identity theft killed that party though as daily limits were introduced that made the cards near useless.

high school is where society indoctrinates it's future consumers into believing and embracing the mythical "value of a credit score"

my class was given the example of a family that had always paid cash that finally decided to buy a car but couldn't because they'd never had a credit card nor established a rating..... this stupid superficial story was meant to teach future consumers that we need to establish a credit score, we can't exist without it..... literally you as a future consumer need to pay interest or else the bank won't love you and won't give you money for a reasonably interest rate unless you pay them first for years.

use the credit card for the insurance it offers and always pay it off not down..... if you can't pay it off then you shouldn't be spending it.

I'm surprised that just 4 years after the credit crash this type of discussion is even being had.


But what if you're buying a house? How long would it take to live a much-lowered quality of life to save up hundreds of thousands of dollars if you couldn't get a reasonable loan because you have no credit score? Of course you would still be paying considerable interest on the loan if you did get one and did have a credit score, but that's the price of your years spent NOT living poorly to save up money.
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mph_Ragnarok
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 1:29 pm

mph_Ragnarok wrote:But what if you're buying a house? How long would it take to live a much-lowered quality of life to save up hundreds of thousands of dollars if you couldn't get a reasonable loan because you have no credit score? Of course you would still be paying considerable interest on the loan if you did get one and did have a credit score, but that's the price of your years spent NOT living poorly to save up money.

I can tell you right now that if you look at the mortgage rates advertised on bank & credit union web sites, the only way you'll get the advertised rate is with a credit score of 740 or higher. Scores under 740 cause Fannie & Freddie to either increase the rate or the out of pocket fee for the loan. No banks and few credit unions are in the business of making mortgage loans they can't sell and a portfolio loan will cost you a point or two more on the rate than a saleable loan, drastically increasing the lifetime interest costs.

Even with the market declines, the thought that the average person can somehow amass sufficient savings to buy a $150,000 (or more) home in anything less than a lifetime are ludicrous, especially at today's deposit rates.
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Captain Ned
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 2:33 pm

Fastest way to build credit is to repeatedly get a high balance on your credit card and pay it all off. Doing this over the course of a year can skyrocket your credit card.

My card has a $1000 limit that I try to get at least $700 on each month, before paying it off in full.

Use your credit card for everything from gas to snacks to major bills, and pay the statement balance every single month. You'll be glad you did in 10 years. And you wont pay a cent in interest.
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 2:40 pm

A lower credit utilization increase your credit score, not a higher utilization.
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 2:49 pm

grantmeaname wrote:A lower credit utilization increase your credit score, not a higher utilization.

All depends on whose black box we're talking about and no one gives enough detail about their black box to make such blanket statements.
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 3:01 pm

I use credit cards 95% of the time. I use two actively - an AMEX (that is accepted in most places I roam) and a Visa (for those rare non-AMEX occasions). I also have a Mastercard sitting somewhere that I use from time to time just so they don't close it. I've been told that having a high credit limit but low balance is good for credit score, and mine is pretty stellar, so maybe those folks were right.

Oh, and I pay mine off twice a month on a regular basis, and never carry a balance. To me it's plastic cash that doesn't take much space in my wallet, gives me fraud protection online, and offers me all sorts of perks such as points, car rental accident coverage, extra warranty on purchases...


I understand that some people may have trouble dealing with pocket-burning credit cards, but I'm not one of those folks, so for me it's great
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 3:20 pm

Captain Ned wrote:All depends on whose black box we're talking about and no one gives enough detail about their black box to make such blanket statements.

I've never seen anything suggesting that higher utilization raises your credit score. FICO acknowledges that utlization is part of its formula and suggests paying off debts to raise your credit score, which seems to say that lower utilization is preferred to higher scores. It's not exactly controversial in the personal finance blogosphere either... it's one of those pieces of seemingly correct received wisdom that's continually repeated.
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Re: my first credit card !!

Postposted on Wed Jun 06, 2012 5:50 pm

clone wrote:my class was given the example of a family that had always paid cash that finally decided to buy a car but couldn't because they'd never had a credit card nor established a rating..... this stupid superficial story was meant to teach future consumers that we need to establish a credit score, we can't exist without it..... literally you as a future consumer need to pay interest or else the bank won't love you and won't give you money for a reasonably interest rate unless you pay them first for years.


The variables that they look at is debt to credit ratio, length of the account, and payment history (i.e. on time payments). The amount of interest you've paid has little bearing on the score.

I've had a credit card since I was 17, and never had any problems, because my parents drilled it into to me to pay off balances every month. I've got 4 open accounts, where 2 of them sit in a drawer.. I keep them around because I've got high limits and I've had them for years, and there is no fee on those accounts. The other 2 accounts I've got, are both rewards (one is a Costco Cash back Amex, the other is a frequent flyer mileage card). I've heard Chase Sapphire has the best rewards program, and if you can use a credit card to pay your rent or mortgage, you'll be able to rack up points ridiculously quickly. (I can pay rent and property taxes on my credit card).
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Re: my first credit card !!

Postposted on Sat Jun 09, 2012 3:35 am

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