Question
21 years old and would like to start building my credit? Very confused?
I am very responsible with my bills, rent, and have never overdrawn my bank account. I got my bank account when I was 16, and have always kept it well above the minimum balance, I got my first apartment where I was on the lease when i was 18, was never late on rent, and my good renters history got me into my current apartment. And I had to pay huge up front deposits to get hooked up to utilities because I had no credit, and those deposits have all been refunded because I haven't ever been late on my bills, and the same deal with my cell phone contract, all the deposits have been paid back because I have never been late on my bills. I also pay my car insurance in full on time every 6 months. But even though I have been very financially responsible, I have absolutely no credit. I have never had a credit card or purchased anything on credit. How do I go about building credit? I own my car free and clear because I paid in cash I had saved up (and it is a very nice, reliable car, so I don't need a new one at this time). And I don't need anything like a new TV or furniture that you would buy on credit. I was wondering, will having one low-limit credit card that I pay off at the end of each month work to build my credit? I have heard you must be carrying a balance your paying on, on a minimum of 2 credit cards to start building credit that way. I don't want to carry a balance on a credit card (I would never buy anything so expensive in the first place I didn't have the cash in hand to fully cover it), and I don't want to be responsible for 2 cards either. Is their any other way? I know it isn't so important now, but when I get older, I am assuming i will need credit to purchase a house, or possibly a new car when mine finally breaks down ect.... People who know about this stuff, help?
3 weeks ago - 4 answers
Best Answer
Chosen by Asker
There are several thigns you can do. Start with a secured credit card; take out "credit builder" or "passbook" loan with credit unions or a local bank. Get your credit score and make sure you remove any inaccuracies. Get a department store credit card. You want to responsibly use these credit lines. So pay them off every month, just make small purchases. For the credit builder or passbook loans from the banks, don't spend that money, deposit it back into the savings account and use the money to repay the loan over a year. The loan is only to establish credit with the credit union or bank so you can go to them later for a car loan or mortgage. Make sure they report your payments to the credit reporting agencies (EquiFax, TransUnion, Experian) before you take out a passbook loan with them. No sense in getting one if they won't report your good payment history.
Source(s)
by Gambit1
3 weeks ago
Asker's Rating: 
Other Answers
in order to build credit you must borrow money. a good solid credit score is built by multiple loans, all with good history and by using different types of loans. there are 2 basic kinds of loans. Installment loans (fixed APR for a fixed # of months) and revolving loans (credit card, open ended in # of months, rate subject to change). you will need both kinds of loans and more than one of each.
by Laura-belle- 3 weeks ago
The only way to "build" credit is to borrow money and make payments on time. The only way to keep a high score is to keep borrowing money and keep making payments on time. It's a terrible financial plan. It keeps you in debt. The credit card, like the fico score was designed by banks to do nothing but get and keep you in debt. If you are responsible with your money and live on less than you make. Pay as you go and save up an emergency fund. You will not have any payments. You will have money and not have to worship at the alter of the almighty fico score.
by heybulldog- 3 weeks ago
Get a credit card from local bank and pay it in time. You also can use this service to avoid common mistakes while buiding credit and pre-estimate future scores for different scenarios of payments - buildcredit.ifastnet.com
by Michael- 3 weeks ago