Credit questions

[Fudgie]

Ok, so I'm 20 and I've decided that I'm going to get a credit card to build up my credit score. I've never had one so I have NO credit at all.

 

I'm planning to go through my bank to get a card when I'm 21 (I need a co-signer to do it now) and I'll get one that's simple with no frills (rewards/rebates), just one with a low APR and grace period. (My bank's is 45 days). I plan to make purchases on the card that I would have normally paid off with my debit card and then I'll pay off the credit card in full in the grace period so NO interest. I'll build my credit that way.

 

Is that good? Any advice for me?

 

I also went to the official annualcreditreport site (the one that some government sites referred me to) and you can check your credit score once a year for free. I wanted to make sure that my credit was indeed nonexistent and that I hadn't had my id stolen as a kid. (I don't think I have). It's just something I was worried about.

 

I went to the site to do it and the agency wouldn't take it, saying that it just wasn't viewable online due to one of many reasons...fraud alerts, incorrect info, lots of reasons.

 

What does this mean? Do you think I'm ok? I'm not sure if they would show a report of nonexistent credit either. I just want to make sure my id wasn't stolen and used when I was little.

[iBroken]

I can speak to this since I work with credit cards.

 

Firstly, its likely that you will have to provide a form of a security deposit to get your first credit. So if you want a $500 VISA, you will have to give your bank $500 that they will hold on to for about 3 years. You can always request that they review it after a year of activity on your card.

 

If you go with a card, be sure to pay your balance off in full monthly. But if you do this before you cycle (get a statement), you do not establish money. So lets say today, you went and bought new shoes. You charged your card, came home, signed into internet banking and paid the VISA card right away. Well technically, thats not borrowing. Its best to use the card, get a statement and then pay the balance before the PAYMENT DUE DATE.

 

As for free credit reports? Im always weary about that. In canada, we get our credit reports straight from the source. If we want score information, we have to pay. We dont have companies who can offer my report for free. If they did, I would wonder how safe my information is.

 

Its best that you go straight to the credit bureau agency and request a free copy of your report. If you have NO credit history today, there is no sense in paying for a FICO score cause you already know your score is 0.

[eikal]

I strongly recommend against using a credit card. Having NO credit score is a good thing, it means you have no debt!! I say just keep using your debit card. Cash > Debt.

[renaissancewoman101]

You need to have some semblance of a credit score if you want to buy a house down the line, or even to take out a car loan.

[iBroken]

I strongly recommend against using a credit card. Having NO credit score is a good thing, it means you have no debt!! I say just keep using your debit card. Cash > Debt.

 

^ Thats the worst advice EVAR. Sorry to say. But you can get away with that since you are only 18

 

No credit equals no car, no mortgage, no lending. That also makes for a boring relationship with your financial institution. They like an exciting, jam packed relationship with lots of accounts and business!

[george237]

I strongly recommend against using a credit card. Having NO credit score is a good thing, it means you have no debt!! I say just keep using your debit card. Cash > Debt.

 

Unless you want to buy a house or a car. You need credit to make those purchases. Keep you balance less then 20% of your limits and you will establish good credit.

[ToBeOrNotToBe]

I wouldn't ever consider getting a credit card. I think a Debit card would be a nice idea. You could just set up a checking account or account of some sort at your local bank. Then register to get a Debit card.

 

Its just like a credit card but your using money you already have instead of paying it off later. Its never a good thing to spend money you don't have. If you don't have enough money in your account then the card would simply decline.

 

Online banking and things in the same category are never a good idea. Even though they may seem secure there is always a possibility of someone hacking them.

 

Also I highly doubt that someone stole your identity as a child, however it is wise of you to be concerned and watchful about such things.

 

But yeah I don't think a credit card is a good idea for anyone. A Debit card could offer you most of the same advantages with less hassle but you would have to learn to balance your account like you would a checkbook.

 

Good luck (Oh wow you already have a Debit card rofl missed that. I would just stick to using the Debit card...)

[Fudgie]

Oh crap, I had no idea about the deposit.

 

My other question is...what exactly is APR? And when they say it's variable (between 7.99% - 19.99%...) does that mean that I will likely NOT see my APR go past 19.99%?

 

This is all confusing. Thank you so much for your answer though! I am trying to find out as much as I can.

 

The wiki about the site I used is here: link removed

 

It really is legit. 3 USA credit agencies own the site and it's supported by the Federal Trade Commission. I wouldn't use anything else. The thing is, you can only get 1 free report from each agency per year.

 

I just kind of flipped when I saw that it told me I couldn't access it online for "security reasons". I really hope it's just because I'm a) 20 years old (not 21) and b) I have zero credit...not because it's ALL messed up because I got my ID stolen or something.

[george237]

I never had to pay a deposit and 20%apr is going to most likely be the rate you will get since you have no credit.

[eikal]

^ Thats the worst advice EVAR. Sorry to say. But you can get away with that since you are only 18

 

No credit equals no car, no mortgage, no lending. That also makes for a boring relationship with your financial institution.

 

And people wonder why we are in so much debt. I think i will be just fine without a car loan, a mortgage, or any other debt. You know all the rich people, they do not go out and by a brand new 2010 car, they instead go out and buy a 2007 for a LOT cheaper in CASH. Members of my family have NO debt, they EASILY saved up money on a 60K a year income and payed CASH for a house after a couple years of saving. No mortgage for them, it's called managing money properly. They were able to put away 20k a year because they had no debt to be paying off, sure they were a little cheap for those couple of years and didn't do alot of spending, but now they dont have to pay off a mortgage for the rest of their lives.

 

Just my two cents.

[Cheeks18]

Not being rude, but I find it funny the two 18 year olds are against the credit card idea....

 

I got one when I was 18 and I havent missed a payment yet, I took a loan out on a motorcycle last summer...Def would not have been able to do that without having some form of credit before....BEING SMART WITH A CREDIT CARD=GOOD IDEA

[Fudgie]

I've had a debit card since I was 17. I changed banks when I was 18 so I could use the local bank at my college. I use PNC now and I love it.

 

I'm really good with my debit card and haven't ever overdrawn it. I use Paypal online to pay for stuff safely. I do use online banking but only to check my balance, not to actually pay bills.

 

I just think it's time for me to get credit. I would never EVER use it for big purchases that I do not have the money for in my account. I am used to saving up and THEN splurging.

 

I just want to buy my usual "small stuff" on the credit card, then pay off in full without interest. That way, I can build up my credit score without hefty fees or being in debt.

[Cheeks18]

Oh yea cause now a days everyones got a 60k a year job.....

[iBroken]

If your ID was stolen, its not likely that people are applying for credit in your name. You have no credit and therefore, its going to be hard for you to get that first credit card.

 

In Canada, we only have 5 banks up here, and all banks require the 100% deposit for a first card. While I do work for an institution in Canada that supports our Banks in the US, I dont know if the banks down there have the same requirement. Its best you speak to your bank about what you need to get a first credit card.

 

APR = Annual Percentage Rate. Variable just means the different levels. So they offer between 7.99% to 19.99%. If you open an account and get 7.99%, that should be your APR until you or the bank changes your rate (with sufficient notification of course).

[Cheeks18]

I've had a debit card since I was 17. I changed banks when I was 18 so I could use the local bank at my college. I use PNC now and I love it.

 

I'm really good with my debit card and haven't ever overdrawn it. I use Paypal online to pay for stuff safely. I do use online banking but only to check my balance, not to actually pay bills.

 

I just think it's time for me to get credit. I would never EVER use it for big purchases that I do not have the money for in my account. I am used to saving up and THEN splurging.

 

I just want to buy my usual "small stuff" on the credit card, then pay off in full without interest. That way, I can build up my credit score without hefty fees or being in debt.

 

Hey you know if you have a paypal account you can get a credit card through them with no problem??? Just saying....I have one..

[Fudgie]

My family did this too. We live very well in the regard that we don't have any debt. I even have my school stuff paid for by them. They were all about "Saving, saving, saving".

 

They were the ones who suggested I get a credit card through the bank and use it how I have already described to build up credit in a safe way.

 

"Small stuff on credit card. Pay off RIGHT away. Big purchases on the debit card. Don't buy something if you don't have the money RIGHT THEN to get it."

[george237]

I bet they are still cheap to this day, which is fine for some but most want to live for today not save every penny hoping it will turn to gold in the next decade. With the average home price over 100k it is going to take you a long time to save up to buy that in cash.

[iBroken]

Again, ill let this slide cause you are only 18 And because I work in a bank and have worked in the credit card industry for 5 years.

 

Heres a secret. All those rich people who have loads of money? And pay "cash" for their cars? They put it on their credit card first. Yes. And all those rich people? They all for the most part, have platinum and gold credit cards that they use for EVERYTHING. And then when they get their bills? They pay the whole balance in full each month They dont use a debit card unless they need to take out cash for a small purchase. Rich people only pay with plastic and then have their financial advisors pay their visa balance from their account each month.

 

So dont get yourself a credit card. You are 18. Keep us posted on how long it takes for you to save up to buy a brand new car without any credit.

 

If you are only 18, you likely make minimum wage. Since a new car (of decent quality) costs at least $15,000 - I say 3 years before you drive off the lot.

 

Im an expert in credit - If you want some sound credit advice, feel free to ask away. When I was 18, I had no one to teach me those things and learned the hard way.

[eikal]

Oh yea cause now a days everyones got a 60k a year job.....

 

You can do it with 20k a year, live like crap for a couple years and save your money. Go rent a little apartment for dirt cheap. If you dont have kids and are on your own your way ahead of everyone else and can pack away money like it's your job. That means you CANT be going out and buying a 52" HDTV and buying a new car, buy a P.O.S. car and deal with it for a few years and before you know it you'll be sitting on a hefty some. I read a book that said "If you live like NO ONE else now, you can live like NO ONE else later. FYI Age discrimination is pretty lame.

[Fudgie]

If your ID was stolen, its not likely that people are applying for credit in your name. You have no credit and therefore, its going to be hard for you to get that first credit card.

 

In Canada, we only have 5 banks up here, and all banks require the 100% deposit for a first card. While I do work for an institution in Canada that supports our Banks in the US, I dont know if the banks down there have the same requirement. Its best you speak to your bank about what you need to get a first credit card.

 

APR = Annual Percentage Rate. Variable just means the different levels. So they offer between 7.99% to 19.99%. If you open an account and get 7.99%, that should be your APR until you or the bank changes your rate (with sufficient notification of course).

 

I guess I am just being a nervous Nelly about the whole ID theft thing. I think about it and I just start sweating. I don't want my credit to be short/frauded before I even got to building it up.

 

When I am 21 (so I don't need a co-signer) I will go into the local branch and see what they can do for me. I am just finding out more info now. I turn 21 in the fall.

 

Hey you know if you have a paypal account you can get a credit card through them with no problem??? Just saying....I have one..

 

I believe they offer a "debit" card. It allows you to access funds from your paypal account like a debit card..pay for stuff, access ATMs. It works like a credit card, but it's not a real credit card.

 

At least, that's what I've gleaned from it.

 

I never keep money in my paypal account. One fraudulent chargeback and it's gone.

[Mercurial Girl]

If your ID was stolen, its not likely that people are applying for credit in your name. You have no credit and therefore, its going to be hard for you to get that first credit card.

 

In Canada, we only have 5 banks up here, and all banks require the 100% deposit for a first card. While I do work for an institution in Canada that supports our Banks in the US, I dont know if the banks down there have the same requirement. Its best you speak to your bank about what you need to get a first credit card.

 

APR = Annual Percentage Rate. Variable just means the different levels. So they offer between 7.99% to 19.99%. If you open an account and get 7.99%, that should be your APR until you or the bank changes your rate (with sufficient notification of course).

 

Hmm...my first credit card was when I was 19, I got an RBC student visa classic II with no deposit (though I wasn't a student, buahahaha!). It had a $1000 limit with 19.99% interest...youch that's high. I did have to pay for the card though, $25 I think.

 

Maybe things have changed in the past few years but I never had to put down a deposit.

 

You may very well have a credit score too. If you've paid monthly cell bills or maybe utility bills, depending on where you live and if they report your payments.

[itsallgrand]

Well another option is to go through a credit union, or caisse populaire.

 

I found it much easier to get credit through a credit union than with the banks. That isn't to say that you shouldn't have credit with a major bank - I think you should - but for beginning, and for some types of credit building and loans, credit unions/caisse populaire is better IMO.

 

It depends what you plan on doing, how fast you need service, how extensive and how far reaching you need your institution to go, etc.

[annie24]

I strongly recommend against using a credit card. Having NO credit score is a good thing, it means you have no debt!! I say just keep using your debit card. Cash > Debt.

 

well, i disagree because to buy a house or a car, you need to show you have a history of good credit.

 

A good way to go would be to make a small purchase every month and pay it off. Do this for a few years, you will have great credit.

 

I have a Sony Rewards card, I love it.

 

My first credit card had a $300 secured limit from bank of america. (i hate them, by the way). but i had $300 in an account, and that's how i secured my card. it's a good first step.

[Fudgie]

I don't have a credit for sure because nothing is in my name..because, well, I don't have credit.

 

My phone bill is in my Dad's name but he doesn't see it or pay it, I do. The only reason it's in my dad's name is because I couldn't get a postpaid plan with T-Mobile because I had/have no credit.

 

I make the payments on time which helps HIS credit, not mine.

[avman]

Lets stop picking on people because of their age ok? Everybody needs to be able to ask questions without feeling picked on just because they don't necessarily have all the life experience that some others do. That's the only way to learn things is to ask about it.