[RRGOO7]

Hey Guys,

Im about to turn 18 and want to start building good credit early so its easier to buy a house, car, etc. I hear getting a cellphone is a good place to start. What about credit cards? I don't have a job but will be in college so essentially my parents will give me a set amount every month and what i spend will be on the credit card. I hear I have to have a job to get a credit card to prove I can pay the bill...Is there any truth to that?

Any other ideas on things i can do?

[TurboFan]

You don't need a job, you just need income. To build credit, you need to prove you can make a steady payment. You can accomplish this with a credit card (carry a small balance, around 10% of your limit, like $100-$200). Make the min payment, but DO NOT run up your balance. You'll pay $12-$30 yr in interest depending on balance and rate, but think of it as "buying" a credit history. Also, never let your balance get above 30% or your approved credit, no matter what the limit. It triggers something in the formulas and it lowers your score.

Better than a credit card would be a 0% same as cash deal on something you want. Make sure you pay it off by the end of the term (6 mos, 12 mos, whatever) so you don't pay interest. Consider a best buy card or something similar, and buy a TV or something.

Again, it's all about discipline, and it may seem counter-intuitive, but get a credit rating, you have to get credit. You'll need to start small. Stores like Best Buy and Circuit City are willing to take a risk on you to move product, and many credit card companies will take you in with a small limit.

Please exercise discipline. Your credit is hard to build, easy to destroy, and impacts so many aspects of your life. It's a great tool when used wisely, but oh so dangerous.

[RRGOO7]

thanks for the advice, i really appreciate you taking the time to answer my question...How would I go about proving my income from my parents?

[mpimping]

don't leave a balance of more than 50% of your credit line. plenty of college kids have credit cards. if u pay it on time by the time you r out of school your score should be very high.

[RRGOO7]

also this is all new to me so bare with me.....Im assuming its better for my credit to pay my bills in full correct? lets say i get a statement for 1k and I pay the 1k without a problem even when the minimum payment is like 100 or whatever.....Is that better or should i be paying only 500 or so?

[mpimping]

Originally Posted by RRGOO7

also this is all new to me so bare with me.....Im assuming its better for my credit to pay my bills in full correct? lets say i get a statement for 1k and I pay the 1k without a problem even when the minimum payment is like 100 or whatever.....Is that better or should i be paying only 500 or so?

why would u want to pay interest if u could pay it off in full?

[TurboFan]

Originally Posted by RRGOO7

thanks for the advice, i really appreciate you taking the time to answer my question...How would I go about proving my income from my parents?

You don't need to prove income for a bestbuy account or student credit card. Just claim your "allowence". For the small line you'll get, they generally don't care, esp. if you're a full time student. They will call your college / university to check.

[TurboFan]

Originally Posted by mpimping

don't leave a balance of more than 50% of your credit line. just make up your income/company, they don't check... plenty of college kids have credit cards. if u pay it on time by the time you r out of school your score should be very high.

30%. Keep it under 30%.

[TurboFan]

Originally Posted by mpimping

why would u want to pay interest if u could pay it off in full?

Because you don't build a payment history this way.

[TurboFan]

Originally Posted by RRGOO7

also this is all new to me so bare with me.....Im assuming its better for my credit to pay my bills in full correct? lets say i get a statement for 1k and I pay the 1k without a problem even when the minimum payment is like 100 or whatever.....Is that better or should i be paying only 500 or so?

as I said above...

"Make the min payment, but DO NOT run up your balance. You'll pay $12-$30 yr in interest depending on balance and rate, but think of it as "buying" a credit history"

That's how you build a payment history. You only need to do it for 6 mos, then pay the whole thing off. Better yet would be the best buy or circuit city store account.

[RRGOO7]

TurboFan i appreciate the help now i have a better understanding...

[JayeJaymes]

I was in your same exact position a year ago, the first thing i did was apply for a credit card. But to tell you the truth the credit card doesnt do much to build credit unless you use it like crazy, but its definatley a start. Now im 19yrs in college and working part time and i now have a 335i coupe under my name which is an ultimate credit builder. good luck man

[TurboFan]

Originally Posted by RRGOO7

TurboFan i appreciate the help now i have a better understanding...

[BMWE90]

You should have waited until you turn 18 to buy the 335. This way your parents can co-sign for you and you guys can make monthly payments for it. This will raise your score like you wouldnt believe.

[Comet]

Originally Posted by TurboFan

Because you don't build a payment history this way.

I always paid it off in full and when I applied for an increase on my CC limit they said that because of my outstanding payment methods, they are willing to double my limit.

[FirstClass]

How does running up interest increase your score? Wouldn't you be better off paying it off every month? You're still making payments and not losing money to interest like a fool.

[mpimping]

Originally Posted by FirstClass

How does running up interest increase your score? Wouldn't you be better off paying it off every month? You're still making payments and not losing money to interest like a fool.

exactly. unless you have 0 interest pay it off. he should get a amex but that u have to pay off or ur f-ed.. amex supposedly has the best benefits.

[TurboFan]

Originally Posted by Comet

I always paid it off in full and when I applied for an increase on my CC limit they said that because of my outstanding payment methods, they are willing to double my limit.

That's your credit card company. Your credit score is determined by Equifax, Transunion or Experian. Different story there.

[Ruff Rider]

Bought my first motorcycle when I was 16. I thought I was doing really well paying it off in under 6 months. Then I went in to buy a car and the bank said I had no credit yet. It was because I paid off the bike to fast. TurboFan is right on. You have to show you can make payment over a longer period of time. One more thing. Don't be late on any payment.

[Couch]

I would recommend paying it off each month if possible. Get no more than a $500 limit and go from there.

I would look around to see if you can find one with a 0% or low interest rate. My friends got one to pay for their wedding. But you may have to have credit established already, and other penalities may apply.

I'm not sure how your relationship with your parents is, but if it's good see if they will set you up on their account. This will also help. And then you can right them a check for what you've charged on their account. For example, I am still under my parents GM account to help them allocate points. They notice what I've charged and tell me how much I owe. Although I rarely use it.

IMO, it's a good thing for parents to start their kids off at 16 if they are trustworthy. That's when I received my first card.

[Couch]

Originally Posted by Ruff Rider

Bought my first motorcycle when I was 16. I thought I was doing really well paying it off in under 6 months. Then I went in to buy a car and the bank said I had no credit yet. It was because I paid off the bike to fast. TurboFan is right on. You have to show you can make payment over a longer period of time. One more thing. Don't be late on any payment.

Maybe that's for vehicles, but for credit card payments the same doesn't apply. I've taken enough credit classes at work to know this, as this question is brought up every time. You also may have been too young too have really established any real credit.

From 16 up until I purchased my car last year I paid off my card IN FULL every month. The credit union said I had one of the best credit ratings they had seen for a 25 yr old, let alone most people.

[dmm325]

i was also in the same situation 2 years ago when i was 18. I wanted to try and build some sort of credit. i went to my bank, or some credit card companies have student credit cards in which they only give you like a $500 limit for the first year, and then after you can try to get it raised if you so choose. I just used it to put gas in the car so that after the month, the bill wouldnt be too high and i would be able to pay it off...

You just wanna becareful as im sure people know but you dont want to get carried away with a credit card just cause you can buy now and pay later cause before you know it, you have reached your limit and your payments arent much cause of interest. i think thats a big problem with first time users.

People talking about the best buy or circuit city are right. I bought a TV with 3 years no interest and even though i could of paid it upfront, i just pay $50 a month and it will be paid off in time.

Hope this helps, dont mean to contradict anything anyone else said but just throwing in my experiences.