Building Credit...

[Korgoth]

So anyway, a while back I went to buy a car. Nothing to expensive, I was looking to spend up to $6,000 but no more. My father went with me, I found one that suited me, pretty low mileage, in good shape, all for around $4,000.
I only had around $1,000 in the bank. I figured I could get a loan for the rest but nope, I don't have any credt (not bad credit, just no credit at all really), and my dad couldn't co-sign on a loan for me because he had just filed bankruptcy recently after a nasty divorce.
So what I want to know is, whats the best way to build up good credit? I don't want to go the credit card route because I don't want to be paying off a $500 dollar loan for 10 years, and I really don't know how else to go about building a line of credit.
So any of you guys out there been in a similar situation? If so, how did you handle it?

 

[Maskirovka]

unfortunately the best way is to get a credit card :\

but basically any time you're paying a monthly bill that's in your name you're building credit...so getting a cell phone or having the electric bill in you name builds credit. but any late payments or problems of any kind almost always lower your credit rating.

 

[Korgoth]

oh, ok thanks! Didn't know that just anything like that would build a credit line. I really don't want a credit card though

 

[LittleB]

Get a credit card, buy something for like 300, and pay it off every month, but pay more then you are supposed to. This will help your credit alot. I'm only 20 and don't have credit either Since I don't have any credit, none of the card companies are approving me! So my mom said I should start with a store credit card, they'll approve me easier. So I'm waiting to see if Walmart approved me.

If you wanna do anything in life, you gotta have credit. It's good you're getting a cheap car. Don't get a new car like every other young person out there (atleast that's what they do here in southern california). Save you money for a house. A house is the best investment anyone can make.

 

[Baal]

Get a credit card, buy something for like 300, and pay it off every month, but pay more then you are supposed to. This will help your credit alot. I'm only 20 and don't have credit either Since I don't have any credit, none of the card companies are approving me! So my mom said I should start with a store credit card, they'll approve me easier. So I'm waiting to see if Walmart approved me.

If you wanna do anything in life, you gotta have credit. It's good you're getting a cheap car. Don't get a new car like every other young person out there (atleast that's what they do here in southern california). Save you money for a house. A house is the best investment anyone can make.

Haha, my sister's ex-boyfriend was like that. He bought a brand new Volkswagon Jetta, even though he had a decent car already! It was old, but he wasn't having any problems with it at all. It was fine, actually, more than fine in my opinion since he is only a college student. Then once he got thiis new one, he couldn't afford to drive it because he was leasing it and had to pay so much per KM after he went over his limit for the month. It was retarded...

 

[Fat Tony!]

Do you really badly need the car right at the moment, it might be better to save up for one instead.

 

[Korgoth]

Well no I don't need the car at the moment. My deal is, I want to move out of my house and get a cheap/nice apartment (my friend pays about 350 a month utilities included for a nice one bedroom apartment) But I don't want to move out until I have a vehicle. I would have way to many bills to try and handle right now if I moved out and paid about 350 a month rent/util. plus another 150 a month car payment plus about 60-80 a month or more for insurance.
I've thought about just saving up for my car, but eventually i'm going to need credit.
I'll probably save around 75% total cost of the car and see if I can get a loan for the remainder.

 

[DreamThrall]

I know you said you didn't want to get a credit card, but hear me out...

My wife and I are young newly-weds... she's 19 and I'm 21. We've been married for a little over a year and a half, and we just bought a car with a $13,000 loan all on our own. We're also getting a good interest rate - 4.74%! We started out by getting a credit card - the military "Star" card. You won't be able to get this or use it unless you've got access to a military base, but the idea remains the same. The STAR card is great because we can only use it in certain places on base - the gas station, the military clothing store, the exchange (think target/walmart for military folk), so it wasn't like we could go too nuts with it. Try going and getting a card at Target, or any store you shop at often enough for it to be useful. If you get approved, you probably won't get a very high credit limit (maybe $100-300 or so?), but it will be a good start. It will be useful, but you won't be able to go overboard with it. I know there are also several credit card companies or banks that have special cards just for teenagers/students which you might want to check out as well. If you get one through your bank, having a job that will pay you through direct deposit may help as well. Just one thing to be sure of - read all the fine print! There are many cards that you have to pay about $100 JUST TO GET STARTED!, and then another $70something a year just to have it! Also, watch out for the different between the introductory interest rate and what it goes up to after the introductory period. I know this sounds like a lot, but if you go to your bank I'm sure they'll be able to help you out a lot. They may even be able to give you some other options to help you build credit.

If you really REALLY don't want a credit card, try this:

You said you already have $1000, right? Go to your bank and take out a $1000 loan. See if you can do it for like, 6 months. As long as you don't use that $1000 and don't mind paying a little interest, that should give you a little bit.

 

[Fat Tony!]

Couldnt you just buy a really shit car . Or a bike ( not a pushbike).
But getting 75% sounds quite good .

 

[Korgoth]

Hey thanks for the info dreamthrall! I'll check out what you've said. I just got an application for a credit card from my bank but i'm worried, I work through a temp service... I dunno how that will affect me. Within a year though i'll be able to get full time employment at the factory i work at though. So it might be a while :/

 

[A2597]

I hear ya, I have no credit record either, need a credit card.

your best bet, use it ONLY to buy gas, and keep recipts, and ALWAYS PAY ON TIME.
KNOW when the bill is due, if you don't get a bill in the mail, CALL the card company, and WIRE the money to them directly. (It's a nasty trick. they mail the bill out late, you of cource are then late on the payment, they jack the rate up to 26%...)

 

[DreamThrall]

No problem

I work through a temp service... I dunno how that will affect me. Within a year though i'll be able to get full time employment at the factory i work at though. So it might be a while :/

That could be tricky... You might just be able say that you've been working through that temp service for x number of months/years... but if you still haven't moved out of your parents' house, at least you've got a stable record of residency ;-)

You might just have to deal with getting a comparatively crappy APR rate - I would recommend doing that to start out, and doing something like A2597 suggested - VERY limited use so that you keep the balance down and don't end up getting shalacked too hard with the interest. Then, look around every 6 months or so for a better deal.

But once again, definately talk with someone at your bank first. Don't get your financial advice from some schmuck on a gaming forum ;-)