SitePoint Sponsor

User Tag List

Page 1 of 2 12 LastLast
Results 1 to 25 of 33

Thread: Credit

  1. #1
    SitePoint Guru SharifTK's Avatar
    Join Date
    Jan 2004
    Location
    New York, NY
    Posts
    621
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)

    Credit

    This is more like a financial question, I didn't know where to ask so I'll just post here.

    How important is credit to a person? And to a small business (and its owner)?

    I am only 17, but I am thinking of finding some way to establish a credit line. I figure by the time I am 21, my credit will be excellent if I start now. I'm very good at managing money, and responsible so I am not too worried about debt (although the temptation to charge my mother's card until it has a hole is there).

    I am wondering if I can establish credit now (being under 18). If so, how?

    Also, what does it take to improve your credit?
    SK

  2. #2
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    You are really wise to begin establishing credit at a young age! You can certainly have a decent credit rating by the time you are 21, although the scores take 'account age' into consideration so you'll be limited a bit.

    Still, if you can get a co-signer you can get a joint credit card account and that will open a credit history file for you. Then, use the account as much as you are comfortable with and be sure to have a perfect repayment history.

    www.artofcredit.com is a terrific resource, btw.
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  3. #3
    SitePoint Guru SharifTK's Avatar
    Join Date
    Jan 2004
    Location
    New York, NY
    Posts
    621
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Ya I figure I'm going to need credit to a lot of things in the future... home ownership, car loans... all that.
    SK

  4. #4
    King of Paralysis by Analysis bronze trophy
    Join Date
    Jul 2004
    Location
    Ottawa, Canada
    Posts
    5,840
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Credit is the lifeblood of any person or business.

    Just don't get confused and think the fact that you have good credit will result in your companies having good credit, that's only in the case of sole proprietorships or if you guarantee the loans yourself.

  5. #5
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by tke71709
    Credit is the lifeblood of any person or business.
    Isn't that a little strong?
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  6. #6
    SitePoint Guru SharifTK's Avatar
    Join Date
    Jan 2004
    Location
    New York, NY
    Posts
    621
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    If my parents get me a credit card under their accounts... will it establish a line of credit for ME?
    SK

  7. #7
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    If it's a JOINT account (which isn't exactly the same as them getting you a card for their account) it will, yes. If your parents are willing to do this, just ask them to ask their credit card company if it will report to your credit file. They will tell you whether it will or not....
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  8. #8
    SitePoint Member Host Capacity's Avatar
    Join Date
    Oct 2005
    Posts
    7
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    The easiest way to start with credit is with a store card. But and it is a big but. Don't use it when you get it. They have really high interest that is why they give them out alot easier than banks.

    Once you have had it for a little then apply for a bank credit card like visa etc. Then ditch the store card they are just too dangerous and a waste of money. After that you are away.

  9. #9
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    That is not good advice for two reasons:

    1 Credit scores are affected by credit USE, not how many credit cards you have. If you don't use it, you'll wont have any repayment history and it wont help build your credit much.

    2 The age of an account is a BIG factor in credit scores. DONT EVER get cards then ditch them without using them - it's a total waste and it will LOWER your score because the average age of your credit accounts will forever be lowered by that card. A better approach is to get a card, put a small purchase on it, then pay it off over a long period of time. Buy something for $100 and pay 10/month for 12 months, which builds history. Then KEEP the card (find ones with no fees!!).

    Gas cards are good for this technique.

    SharifTK: You are young and new to credit. I think that getting single card through your parents is a great idea, and is a good place to start. Give it a few months, and then try something else. Go slow, and pay on time
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  10. #10
    SitePoint Guru SharifTK's Avatar
    Join Date
    Jan 2004
    Location
    New York, NY
    Posts
    621
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    I'm not looking for a credit card to go crazy with, just something to build credit. I am gonna call a company my parents have a card with and ask if I get an additional card in their accounts, will it start credit for me.
    SK

  11. #11
    SitePoint Wizard silver trophy
    beley's Avatar
    Join Date
    May 2001
    Location
    LaGrange, Georgia
    Posts
    6,117
    Mentioned
    3 Post(s)
    Tagged
    0 Thread(s)
    I would recommend against getting a credit card if you're wanting to build credit. Small loans actually help more than credit cards to build a positive credit history. Having a credit card is good, but they're very tricky. Having too much credit is bad, but having the cards maxed out is bad too. It's hard to find where you need to be to make the credit agency happy. They don't even like it when you close credit card accounts.

    I built my credit by getting small signature loans from my local bank. They started really small, and I always paid them off quickly, paying extra payments when I could.

    The one thing to remember is NEVER get 30 days behind on ANYTHING. That will post to your credit report for 7 years. Also remember that inquiries count against you - trying to get too many credit cards, for instance, will hurt your credit score.

  12. #12
    SitePoint Addict
    Join Date
    Dec 2003
    Location
    los angeles
    Posts
    288
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    As everyone has said, credit is very important. Make sure you always pay on time. Start with a small credit card (store card or even visa or discover is fine). Use the card once a in a while (or once a month is good) and always pay it off at the end of the month.

    Get the card on your own (not with your parents). Actually, I know this is going to sound bad, but actually avoid getting listed on any of your parents accounts. I had a friend who was listed on his mom's account. When she declared bankruptcy and couldn't pay the bill, they went after him and his credit. I know this isn't supposed to happen and most people's parents are responsible, but best to just have your own credit and take care of it on your own (as long as you are responsible).

    Be very careful because if you screw up your credit your going to have a rough time in life... higher car payments, higher mortage payments (if you even qualify), etc... In the end it'll cost you a lot of money.

  13. #13
    Word Painter silver trophy Shyflower's Avatar
    Join Date
    Oct 2003
    Location
    Winona, MN USA
    Posts
    10,053
    Mentioned
    142 Post(s)
    Tagged
    2 Thread(s)
    Quote Originally Posted by Host Capacity
    The easiest way to start with credit is with a store card. But and it is a big but. Don't use it when you get it. They have really high interest that is why they give them out alot easier than banks.

    Once you have had it for a little then apply for a bank credit card like visa etc. Then ditch the store card they are just too dangerous and a waste of money. After that you are away.
    If you don't use a credit card, it doesn't help build your credit to have one. In fact it can act adversely when applying for a loan. Financial institutions look at 0 balances as a negative, since the cardholder has the ability to go out and max the card at anytime, decreasing his/her ability to make payments on other loans. In addition, store credit cards usually charge exhorbitant rates.

    If you want to start building credit, start with getting a checking account and you can probably get a debit card to go along with it. This will give you some experience at managing funds and be a help when you begin charging/ paying back.

    When you do get a credit card, only charge what you could payback if it was necessary to pay your bill in full, yet don't pay off your entire balance every month. This generally does not increase your credit worthiness. Most credit providers want to see that you are able to consistently make payments.

    In addition, don't pay just the monthly minimum. Decide what you can pay over the minimum and pay that amount. This shows the credit provider that you (and not they) are in control of your finances, which is - believe it or not - what they want to see from you.

    Finally, as a divorced woman, joint accounts are a joke. While I was married I paid the bills but since my husband was the main breadwinner, he got the credit. After my divorce it took me years to build up credit of my own. I would assume that it would be the same for a young person starting out.

    I might add that if you have and maintain a checking account, rather than getting a credit card, your first avenue in obtaining credit may be through your bank. After you have kept your account in good-standing for a year or so, approach them for a small loan and let them know that you are getting the loan as a means of developing a good credit history. This is the way many start-up businesses go about establishing credit.
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

  14. #14
    SitePoint Wizard silver trophy
    beley's Avatar
    Join Date
    May 2001
    Location
    LaGrange, Georgia
    Posts
    6,117
    Mentioned
    3 Post(s)
    Tagged
    0 Thread(s)
    Linda made some good points. I'd like to add that you don't have to get a credit card - a lot of department stores and websites are now offering 12-months same as cash financing. If you ever miss a payment, they'll charge you back interest but it's a great way to build credit for free as long as you are very consistent and make every single payment on time.

    We do one same-as-cash financing a year. When we pay one thing off, we'll go to the next thing on the list. We could just buy them outright - refrigerator at Home Depot... bedroom furniture from Ashley. We could have written a check, but I've found that buying one item same-as-cash and paying it off really helps your credit. They report monthly to the credit agencies and it has helped me get my score up.

    I ruined my credit several years ago when I started my first real business. I was 19 and we invested a LOT in the business (everything we both had in savings, a big SBA loan and a big personal loan). My partner and I both quit our jobs and when the business didn't grow as fast as needed, we were left with a lot of personal bills we couldn't pay because the business couldn't pay our salaries. I maxed out credit cards, got personal loans, and made a lot of late payments.

    I'll tell you from experience, never do that. I pulled through, and got back current - but my credit was ruined. I still am fighting to get my credit score up, after 6 years! Fortunately a lot of it will fall off my report next year (7 years) but even now I've gotten my score back up to 650 which is pretty respectable. I did it by getting a small credit card and doing one same-as-cash financing at a time.

  15. #15
    King of Paralysis by Analysis bronze trophy
    Join Date
    Jul 2004
    Location
    Ottawa, Canada
    Posts
    5,840
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by dhecker
    Isn't that a little strong?
    Try buying a house someday without credit and you'll see if the statement was strong :P

  16. #16
    SitePoint Wizard silver trophy KLB's Avatar
    Join Date
    Nov 2003
    Location
    Maine USA
    Posts
    3,781
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by tke71709
    Try buying a house someday without credit and you'll see if the statement was strong :P
    Indeed. You can not easily make big purchases like a home without an established and good credit history. At least not without having higher interest rates.

    One credit card that you keep and manage well can do a lot to establish a good credit history. The catch is keep it under control. If say your buying a new computer, and have the cash to pay for it, buy the computer on your credit card and then use the cash to pay off the card. Most of the time you want to keep the credit card's balance paid off, however, once in awhile run a balance for a couple of months. Just remember that carrying a balance costs money. As with all bills, whatever you do, never pay the credit card bill late even if they say you can. Also like others said, don't hop from card to card. Also don't spend beyond your means. Credit cards can be a dangerous trap.
    Ken Barbalace: EnvironmentalChemistry.com (Blog, Careers)
    InternetSAR.org
    Volunteers Assist Search and Rescue via Internet
    My Firefox Theme: Classic Compact
    Based onFirefox's default theme but uses much less window space

  17. #17
    SitePoint Wizard silver trophy
    beley's Avatar
    Join Date
    May 2001
    Location
    LaGrange, Georgia
    Posts
    6,117
    Mentioned
    3 Post(s)
    Tagged
    0 Thread(s)
    Quote Originally Posted by tke71709
    Try buying a house someday without credit and you'll see if the statement was strong :P
    If you can pay cash it wouldn't be a problem

  18. #18
    SitePoint Zealot chihpih's Avatar
    Join Date
    Apr 2005
    Posts
    185
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    its true - you cannot have a lot of open credit cards! i just pulled up my credit report a few weeks ago and got in touch & closed many of the cards i no longer use.
    LED Scroller Generator | Arcade Top List
    Myspace Layouts |
    Looking for quality Myspace link exchanges, PM for more info

  19. #19
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    This is all interesting information - but lets remember the original post was for a 17 year old kid who wants to start building credit. This is respectable, and he should just take some simple steps towards this instead of jumping into the complexities of credit building.

    A joint credit card with his parents, used wisely and responsibly is an easy and safe step! Plus, it's available to him now.
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  20. #20
    Word Painter silver trophy Shyflower's Avatar
    Join Date
    Oct 2003
    Location
    Winona, MN USA
    Posts
    10,053
    Mentioned
    142 Post(s)
    Tagged
    2 Thread(s)
    Quote Originally Posted by dhecker
    This is all interesting information - but lets remember the original post was for a 17 year old kid who wants to start building credit. This is respectable, and he should just take some simple steps towards this instead of jumping into the complexities of credit building.

    A joint credit card with his parents, used wisely and responsibly is an easy and safe step! Plus, it's available to him now.
    The point is, a joint credit card isn't going to build up his credit no matter how any of the parties uses it. The credit card company looks at the chief breadwinner as the payor. Unless this 17 year old has 14,000 in income per year (in the US anyway), he doesn't qualify to get a card on his own and the credit card company will not look at him as the person to whom they are extending credit. They will look at the person who qualifies for the credit.

    What SharifTK asked wasn't how to get a credit card. He asked how to establish credit beginning now, and except for the advice to get a joint card or a store card, he has received some excellent advice from several people who have experienced the necessity to establish or re-establish credit.
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

  21. #21
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Linda,

    I have to respecfully disagree with you on that point (very respecfully, because I always find your posts to be helpful and nicely written!).

    I have intimate knowledge of the credit scoring criteria (because I have done multiple projects with Experian and ChoicePoint) and I had my credit thrashed due to a medical nightmare myself! I avoided bankruptcy but had to fight my way from a <600 FICO to a 700+ over a 5 year period. So, credit issues are quite personal to me

    FICO scoring is always changing slightly and can be mysterious but there are some consistent factors that can be regarded as fact (and verified easily):

    While a joint account will score marginally lower than an individual account (very slightly!) it will still score equally in the categories of aging, pay history, high credit, d/e ratio, file lifespan, and a few others. So, a joint account is an absolutely effective way to build credit for a young person.

    It can also bring an artificially long age (on TransUnion) to the account, because the actual age of the account will be reflected on 1 of the big3 CRA's. So, a 17 year old could potentially have an account that is 20 years old, which would MAX the file-age score for that person and jump-start their credit score.

    In addition, parents usually have higher credit limits than kids, and the high credit criteria (on all 3 CRA's) would benefit greatly.

    These are major factors for FICO scoring, so a joint account can get a lot of bang for the buck when it comes to building credit.

    To say that a joint credit card doesn't build credit simply isn't true!
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  22. #22
    SitePoint Zealot amberstar702's Avatar
    Join Date
    Jun 2005
    Location
    "Viva Las Vegas"
    Posts
    176
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    My son - who is much older than 17 - has one credit card with no late payments ever and great history on it. Payments always over minimum. Also he has a home and mortgage payments are always on time. When he decided to refinance the mortgage, he had no problem doing so but they gave him a score of 760 which they said would have been much higher IF HE HAD MORE CREDIT HISTORY. He has no car loan and pays most things in cash. They would have liked to see him with more credit cards or loans that he is paying off on time. Strange..........

  23. #23
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    760 is pretty good, though
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+

  24. #24
    SitePoint Guru SharifTK's Avatar
    Join Date
    Jan 2004
    Location
    New York, NY
    Posts
    621
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    A little confused at the moment. I am definetly going to all my local banks to see which will give me a checking account at my age that will establish credit for me. (QUESTION: If my parents co-sign a checking account for me, will that count as individual credit for me or for them too?)

    I'm not in a rush to get a credit card, although it would save me from carrying cash when I'm out but if it helps me build better credit, I will do it.

    So my question is... will getting a credit card co-signed by parents work as well as if I was over 18 and got one by myself?
    SK

  25. #25
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
    Join Date
    Apr 2003
    Location
    Denver, Phang-Nga, Thailand
    Posts
    4,379
    Mentioned
    0 Post(s)
    Tagged
    0 Thread(s)
    Individual accounts (your own account) count slightly higher than joint accounts (like if you parents added you to their account) in general, but not by much.

    However, you will probably get a low credit limit if you get your own card. The 'high credit' (limit) is a major factor in building credit, so in this case the joint card would be better.

    Better yet, get the card through your parents but don't use it. As long as THEY use it it'll still get reported to your credit (make sure it's a JOINT account, and not a guaranteed individual card). Then, wait a bit and apply for your own card, and use that yourself. That way you are only using one card but you have two active credit lines.
    The fewer our wants, the nearer we resemble the gods. Socrates

    SAGEWING LLC - QUALITY WEB AND MOBILE APPS. PREMIUM OUTSOURCING SERVICES.
    Twitter | LinkedIn | Facebook | Google+


Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •