Best thing you can do is use it and never miss a payment. It takes a good 3 years of solid account history before the credit line has full effect on your credit score, having multiple lines of credit helps as well but the biggest thing is to never miss a payment even if it's just the minimum payment.
How to build credit with a credit card
- Thread starter Nick1994
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Originally Posted By: madRiver
Originally Posted By: Jarlaxle
Cancel it and get your money back. Debt is stupid.
I presume you are a renter? You either rent or get mortgage and payoff. I am living in a nearly paid off home at age 44 because of 3% down loan at age 21 on a starter property in the right town sold 2.5 times price and then in normal home.
I dumped my house a few years ago and will never hang that millstone around my neck again.
Originally Posted By: Jarlaxle
Cancel it and get your money back. Debt is stupid.
I presume you are a renter? You either rent or get mortgage and payoff. I am living in a nearly paid off home at age 44 because of 3% down loan at age 21 on a starter property in the right town sold 2.5 times price and then in normal home.
I dumped my house a few years ago and will never hang that millstone around my neck again.
Originally Posted By: Jarlaxle
Originally Posted By: madRiver
Originally Posted By: Jarlaxle
Cancel it and get your money back. Debt is stupid.
I presume you are a renter? You either rent or get mortgage and payoff. I am living in a nearly paid off home at age 44 because of 3% down loan at age 21 on a starter property in the right town sold 2.5 times price and then in normal home.
I dumped my house a few years ago and will never hang that millstone around my neck again.
Yeah, some people think they are a financial geniuses because they happened to buy before the housing bubble got going.
Big deal, properties were dirt cheap in the early to mid 90's.
Originally Posted By: madRiver
Originally Posted By: Jarlaxle
Cancel it and get your money back. Debt is stupid.
I presume you are a renter? You either rent or get mortgage and payoff. I am living in a nearly paid off home at age 44 because of 3% down loan at age 21 on a starter property in the right town sold 2.5 times price and then in normal home.
I dumped my house a few years ago and will never hang that millstone around my neck again.
Yeah, some people think they are a financial geniuses because they happened to buy before the housing bubble got going.
Big deal, properties were dirt cheap in the early to mid 90's.
Originally Posted By: Nick1994
You guys have a lot more experience than I do with credit stuff. I'm 21 and trying to build credit, I always get denied for a regular credit card so I applied for a Bank of America secured credit card and was approved, got the card last week. I put $400 in for basically the deposit. I'm unsure of how much to put on this every month? Some people say 30% others say 50%. I'll be paying it off every month and will never carry a balance. I'm considering upping the limit already, I've just got to put more in for the deposit, no big deal.
What percentage of it do I use? Any other tips?
Thanks.
There are a few factors involved in becoming credit worthy, some of those are:
-- length of being in the credit market. for this, you get line of credit or loans as soon as you are able to;
-- payment history. for this, you make sure you are not late on meeting your obligations
-- credit to income ratio. for this, you make sure that you maintain credit that is proportional to your income. Your balances, and available credit, shouldn't be too high or too low for what you make.
But remember, when you are profitable to a bank by paying them fees and interest, you are unprofitable to yourself.
You guys have a lot more experience than I do with credit stuff. I'm 21 and trying to build credit, I always get denied for a regular credit card so I applied for a Bank of America secured credit card and was approved, got the card last week. I put $400 in for basically the deposit. I'm unsure of how much to put on this every month? Some people say 30% others say 50%. I'll be paying it off every month and will never carry a balance. I'm considering upping the limit already, I've just got to put more in for the deposit, no big deal.
What percentage of it do I use? Any other tips?
Thanks.
There are a few factors involved in becoming credit worthy, some of those are:
-- length of being in the credit market. for this, you get line of credit or loans as soon as you are able to;
-- payment history. for this, you make sure you are not late on meeting your obligations
-- credit to income ratio. for this, you make sure that you maintain credit that is proportional to your income. Your balances, and available credit, shouldn't be too high or too low for what you make.
But remember, when you are profitable to a bank by paying them fees and interest, you are unprofitable to yourself.
Originally Posted By: Alfred_B
-- credit to income ratio. for this, you make sure that you maintain credit that is proportional to your income. Your balances, and available credit, shouldn't be too high or too low for what you make.
Got curious, took a look. Not a lot of consensus but around 25% of annual income was mentioned.
Debt-to-limit ratio was something I was reminded of. If you carry a high ratio then you look bad. If you have a $5k limit and routinely have $4k on the card then you are at 80% and thus "look bad". On this board I was advised to stop using credit cards before applying for a mortgage, as this ratio does not take into account the fact you pay off completely every month. IOW, if you have a $5k limit, routinely charge $4k every month, and religiously pay $4k every month, you still look like you are at 80% ratio, and thus might have a poor score (or not as high as it could be).
In that case I'd think you'd want several times higher than what you routinely charge every month, for an ideal limit.
-- credit to income ratio. for this, you make sure that you maintain credit that is proportional to your income. Your balances, and available credit, shouldn't be too high or too low for what you make.
Got curious, took a look. Not a lot of consensus but around 25% of annual income was mentioned.
Debt-to-limit ratio was something I was reminded of. If you carry a high ratio then you look bad. If you have a $5k limit and routinely have $4k on the card then you are at 80% and thus "look bad". On this board I was advised to stop using credit cards before applying for a mortgage, as this ratio does not take into account the fact you pay off completely every month. IOW, if you have a $5k limit, routinely charge $4k every month, and religiously pay $4k every month, you still look like you are at 80% ratio, and thus might have a poor score (or not as high as it could be).
In that case I'd think you'd want several times higher than what you routinely charge every month, for an ideal limit.
Originally Posted By: totegoat
Not a good idea to use a high limit card on the web or at fuel pumps. Use the email transaction feature for a $1 or more.
Can you clarify? I don't get why it'd be bad to use a high limit card at the pump; and I don't know how I'd email payments either...
At the moment I have a single card which I run everything through. I don't think it's high limit but it's way above what I rack up per month.
Not a good idea to use a high limit card on the web or at fuel pumps. Use the email transaction feature for a $1 or more.
Can you clarify? I don't get why it'd be bad to use a high limit card at the pump; and I don't know how I'd email payments either...
At the moment I have a single card which I run everything through. I don't think it's high limit but it's way above what I rack up per month.
Originally Posted By: supton
Originally Posted By: Alfred_B
-- credit to income ratio. for this, you make sure that you maintain credit that is proportional to your income. Your balances, and available credit, shouldn't be too high or too low for what you make.
Got curious, took a look. Not a lot of consensus but around 25% of annual income was mentioned.
Debt-to-limit ratio was something I was reminded of. If you carry a high ratio then you look bad. If you have a $5k limit and routinely have $4k on the card then you are at 80% and thus "look bad". On this board I was advised to stop using credit cards before applying for a mortgage, as this ratio does not take into account the fact you pay off completely every month. IOW, if you have a $5k limit, routinely charge $4k every month, and religiously pay $4k every month, you still look like you are at 80% ratio, and thus might have a poor score (or not as high as it could be).
In that case I'd think you'd want several times higher than what you routinely charge every month, for an ideal limit.
Credit to income (as in overall credit card utilization as a percentage of one's limit) is different than debt to income. IMO the lower credit card utilization the better, but that can be achieved by prepaying a credit card before the statement closes as well.
Debt to income of 25% is more in line with overall payments versus income. Debt to income doesn't factor into your score, but is reviewed when applying for a loan to determine is the application has the ability to make the payment.
Originally Posted By: Alfred_B
-- credit to income ratio. for this, you make sure that you maintain credit that is proportional to your income. Your balances, and available credit, shouldn't be too high or too low for what you make.
Got curious, took a look. Not a lot of consensus but around 25% of annual income was mentioned.
Debt-to-limit ratio was something I was reminded of. If you carry a high ratio then you look bad. If you have a $5k limit and routinely have $4k on the card then you are at 80% and thus "look bad". On this board I was advised to stop using credit cards before applying for a mortgage, as this ratio does not take into account the fact you pay off completely every month. IOW, if you have a $5k limit, routinely charge $4k every month, and religiously pay $4k every month, you still look like you are at 80% ratio, and thus might have a poor score (or not as high as it could be).
In that case I'd think you'd want several times higher than what you routinely charge every month, for an ideal limit.
Credit to income (as in overall credit card utilization as a percentage of one's limit) is different than debt to income. IMO the lower credit card utilization the better, but that can be achieved by prepaying a credit card before the statement closes as well.
Debt to income of 25% is more in line with overall payments versus income. Debt to income doesn't factor into your score, but is reviewed when applying for a loan to determine is the application has the ability to make the payment.
Originally Posted By: supton
Originally Posted By: totegoat
Not a good idea to use a high limit card on the web or at fuel pumps. Use the email transaction feature for a $1 or more.
Can you clarify? I don't get why it'd be bad to use a high limit card at the pump; and I don't know how I'd email payments either...
At the moment I have a single card which I run everything through. I don't think it's high limit but it's way above what I rack up per month.
Believe totegoat is referring to fraud. Alerts are offered by some cards so you'll get a text or email when there is a charge over $X, although the couple of times I've had fraud on a card, the initial charge was under $1.
You might want to consider some credit card diversity to max out points (5% cash back on gas and such).
Originally Posted By: totegoat
Not a good idea to use a high limit card on the web or at fuel pumps. Use the email transaction feature for a $1 or more.
Can you clarify? I don't get why it'd be bad to use a high limit card at the pump; and I don't know how I'd email payments either...
At the moment I have a single card which I run everything through. I don't think it's high limit but it's way above what I rack up per month.
Believe totegoat is referring to fraud. Alerts are offered by some cards so you'll get a text or email when there is a charge over $X, although the couple of times I've had fraud on a card, the initial charge was under $1.
You might want to consider some credit card diversity to max out points (5% cash back on gas and such).
OP, just be very careful.
I got my first credit card at 19 (in college), while not working. I got several more cards in college, and graduated with ~$12,000 in credit card debt. Over the following 5 years I charged myself up to about ~$24,000 total. At my peak I had over 15 active credit accounts, and carried high balances on 4 or so at any given time. I was paying an avg. of probably 13-15% interest.
Over the past 7 years, I've paid off most of that debt. I'll be debt free (other than my mortgage) in about 18 months.
My advice: Get 2 credit cards. Only two. No more, no less. One MasterCard, one Visa. Use them both every month, pay them both off every month. NEVER carry a balance. If you find good deal on a third card, pick it up but then cancel one of the older ones so you only have two active at a time.
After college, you can look into getting more cards, financing a vehicle, eventually buying a house, etc. But for now - two cards.
I got my first credit card at 19 (in college), while not working. I got several more cards in college, and graduated with ~$12,000 in credit card debt. Over the following 5 years I charged myself up to about ~$24,000 total. At my peak I had over 15 active credit accounts, and carried high balances on 4 or so at any given time. I was paying an avg. of probably 13-15% interest.
Over the past 7 years, I've paid off most of that debt. I'll be debt free (other than my mortgage) in about 18 months.
My advice: Get 2 credit cards. Only two. No more, no less. One MasterCard, one Visa. Use them both every month, pay them both off every month. NEVER carry a balance. If you find good deal on a third card, pick it up but then cancel one of the older ones so you only have two active at a time.
After college, you can look into getting more cards, financing a vehicle, eventually buying a house, etc. But for now - two cards.
Originally Posted By: danthaman1980
OP, just be very careful.
I got my first credit card at 19 (in college), while not working. I got several more cards in college, and graduated with ~$12,000 in credit card debt. Over the following 5 years I charged myself up to about ~$24,000 total. At my peak I had over 15 active credit accounts, and carried high balances on 4 or so at any given time. I was paying an avg. of probably 13-15% interest.
Over the past 7 years, I've paid off most of that debt. I'll be debt free (other than my mortgage) in about 18 months.
My advice: Get 2 credit cards. Only two. No more, no less. One MasterCard, one Visa. Use them both every month, pay them both off every month. NEVER carry a balance. If you find good deal on a third card, pick it up but then cancel one of the older ones so you only have two active at a time.
After college, you can look into getting more cards, financing a vehicle, eventually buying a house, etc. But for now - two cards.
Canceling a card every time a new one comes along is a bad idea for your credit score. It keeps you age of credit down (not only are you lowering the average age when you get the new card, but it extra negative since you are closing another account that you have an established history with), and will likely keep your credit card utilization higher than it needs to be. It's a better idea to throw the old card in your desk and forget it or charge something to it once a year to try to show you are still using it (so the company doesn't cancel your card). Can also cut it in half and tossing it in a desk if needed to avoid temptation.
OP, just be very careful.
I got my first credit card at 19 (in college), while not working. I got several more cards in college, and graduated with ~$12,000 in credit card debt. Over the following 5 years I charged myself up to about ~$24,000 total. At my peak I had over 15 active credit accounts, and carried high balances on 4 or so at any given time. I was paying an avg. of probably 13-15% interest.
Over the past 7 years, I've paid off most of that debt. I'll be debt free (other than my mortgage) in about 18 months.
My advice: Get 2 credit cards. Only two. No more, no less. One MasterCard, one Visa. Use them both every month, pay them both off every month. NEVER carry a balance. If you find good deal on a third card, pick it up but then cancel one of the older ones so you only have two active at a time.
After college, you can look into getting more cards, financing a vehicle, eventually buying a house, etc. But for now - two cards.
Canceling a card every time a new one comes along is a bad idea for your credit score. It keeps you age of credit down (not only are you lowering the average age when you get the new card, but it extra negative since you are closing another account that you have an established history with), and will likely keep your credit card utilization higher than it needs to be. It's a better idea to throw the old card in your desk and forget it or charge something to it once a year to try to show you are still using it (so the company doesn't cancel your card). Can also cut it in half and tossing it in a desk if needed to avoid temptation.
Originally Posted By: Nick1994
You guys have a lot more experience than I do with credit stuff. I'm 21 and trying to build credit, I always get denied for a regular credit card so I applied for a Bank of America secured credit card and was approved, got the card last week. I put $400 in for basically the deposit. I'm unsure of how much to put on this every month? Some people say 30% others say 50%. I'll be paying it off every month and will never carry a balance. I'm considering upping the limit already, I've just got to put more in for the deposit, no big deal.
What percentage of it do I use? Any other tips?
Thanks.
The easiest way to build credit is have your parents cosign your credit cards.
I did for my 2 daughters when they were entering college, after graduated their credit scores was above 750-760. The older one had car loan with Honda at 0.9% interest rate couple years ago, younger one had few cash back credit cards by herself without problem.
They followed my footsteps, paid off credit cards balance every month with auto payment.
You guys have a lot more experience than I do with credit stuff. I'm 21 and trying to build credit, I always get denied for a regular credit card so I applied for a Bank of America secured credit card and was approved, got the card last week. I put $400 in for basically the deposit. I'm unsure of how much to put on this every month? Some people say 30% others say 50%. I'll be paying it off every month and will never carry a balance. I'm considering upping the limit already, I've just got to put more in for the deposit, no big deal.
What percentage of it do I use? Any other tips?
Thanks.
The easiest way to build credit is have your parents cosign your credit cards.
I did for my 2 daughters when they were entering college, after graduated their credit scores was above 750-760. The older one had car loan with Honda at 0.9% interest rate couple years ago, younger one had few cash back credit cards by herself without problem.
They followed my footsteps, paid off credit cards balance every month with auto payment.
Nick1994
$100 site donor 2024
Just wanted to update this thread.
My credit score went from 580 1 year ago to 730 now. In February I bought my car and financed 2/3 of it through Chase, 4 year loan. My Bank of America secured credit card has gradually had the credit limit increased, now at $1,800, I was refunded my $400 limit a couple months ago.
I am planning on refinancing my car in February to a lower interest rate and shorter term.
Any other suggestions are still appreciated, I'm still new to this.
My credit score went from 580 1 year ago to 730 now. In February I bought my car and financed 2/3 of it through Chase, 4 year loan. My Bank of America secured credit card has gradually had the credit limit increased, now at $1,800, I was refunded my $400 limit a couple months ago.
I am planning on refinancing my car in February to a lower interest rate and shorter term.
Any other suggestions are still appreciated, I'm still new to this.
I was in a similar boat. I started building credit at 21. Looking back, I should never have gotten any credit cards to begin with. But I did build credit by getting a card, having a little history with it, paying on time, etc, then getting a better card, then a better card, and so on.
Originally Posted By: Nick1994
Just wanted to update this thread.
My credit score went from 580 1 year ago to 730 now.
Any other suggestions are still appreciated, I'm still new to this.
Excellent.
Just keep doing what you're doing, and you can eventually have even better credit numbers.
BC.
Just wanted to update this thread.
My credit score went from 580 1 year ago to 730 now.
Any other suggestions are still appreciated, I'm still new to this.
Excellent.
Just keep doing what you're doing, and you can eventually have even better credit numbers.
BC.
Originally Posted By: Nick1994
Just wanted to update this thread.
My credit score went from 580 1 year ago to 730 now. In February I bought my car and financed 2/3 of it through Chase, 4 year loan. My Bank of America secured credit card has gradually had the credit limit increased, now at $1,800, I was refunded my $400 limit a couple months ago.
Any other suggestions are still appreciated, I'm still new to this.
Call up BOA and request a credit line increase. They will probably ask what your salary and rent/mortage is, exaggerate the former, downsize the latter, a lot. Also, try applying for another major cc card. Store cards and gasoline cards are a waste of time and limited to that particular merchant.
Then go back re-read "Oldtoms" post earlier in this thread.
I understand the need for a high credit score these days, but personally after having been down the cc debt road and back I love paying cash for almost everything these days, even though I could easily charge it with any of several cc cards. I hate getting bills in the mail, I want to pay for it and be done.
Just wanted to update this thread.
My credit score went from 580 1 year ago to 730 now. In February I bought my car and financed 2/3 of it through Chase, 4 year loan. My Bank of America secured credit card has gradually had the credit limit increased, now at $1,800, I was refunded my $400 limit a couple months ago.
Any other suggestions are still appreciated, I'm still new to this.
Call up BOA and request a credit line increase. They will probably ask what your salary and rent/mortage is, exaggerate the former, downsize the latter, a lot. Also, try applying for another major cc card. Store cards and gasoline cards are a waste of time and limited to that particular merchant.
Then go back re-read "Oldtoms" post earlier in this thread.
I understand the need for a high credit score these days, but personally after having been down the cc debt road and back I love paying cash for almost everything these days, even though I could easily charge it with any of several cc cards. I hate getting bills in the mail, I want to pay for it and be done.
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