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So, with perfect credit, it's a lot easier to buy things that you want.

Here's a few rules that I'm going to follow, and if anyone else has advice, I'd love to hear it.

#1 Don't buy things you can't afford, ever.

#2 Pay EVERY single bill on time, always.

#3 An easy way to establish credit for yourself in the first place, take out a loan for $10,000, have a parent co-sign, and then pay it back on time, in full.


Of course my dream is to be be able to buy houses, planes, yachts and cars by simply writing a check for the full amount. In the meantime however, credit is a good thing if you use it correctly.
 

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10bv01 said:
Of course my dream is to be be able to buy houses, planes, yachts and cars by simply writing a check for the full amount. In the meantime however, credit is a good thing if you use it correctly.
That's a nice dream. Haha. Remember your old buddy from MFG when you get to this dream. I'll be waiting for a check in the mail.

I've already dug myself into the credit hole.... I bought a Xbox 360 on a credit card. I payed half of it off so far. :(

I just HAD to have it. It's so hard to pay off more than you have to when the minimum payment is only 15 bucks a month...
 

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- Do NOT accept a credit card offer you get in the mail. If you feel you need a credit card at some point, shop for the right card. Consider fees, rebates, rewards, miles, and most of all interest rate.

- Don't accept a higher interest rate because you intend to pay off the balance every month. If you could do that, you wouldn't need credit.

- Don't pay an annual fee or one-time fee. Creditors make their money off interest; they don't need another $50 per year and if you shop around, you'll find a card with no fees.

- Keep your revolving balances under 50% of your available credit. This means if you have a card with a $1500 limit, don't let your balance get over $750 except in an emergency.

- Call your credit card company every six months or so to request an interest rate evaluation. They'll consider your payment history, usage, and balances. If you call twice a year, you're likely to see your rates come down. They'll also likely offer a limit increase. If you can handle the higher monthly payments, go for it. Otherwise, ask them if they'd mind just leaving it where it is.

- Don't open another credit account just because the new company offers you XX% interest and 0% on balance transfers. If you get an offer, call your current company and tell them what's up. I had a friend who called his company 'for payoff and account closure information' after he got a 0% balance transfer offer. He ended up getting 0% on the current balance with his old credit card.
 

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Like many of us out there, I learned all that from experience and now find myself wishing I had an economics teacher on a soap box when I was in school.
 

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I'm a Financial Advisor for a major bank in Canada, but as we have Equifax here too, I assume it's all the same credit rules:

First off, our Visa customers are a combined $5 billion+ in the hole and we profit immensely off them. My advice though, for anyone, is don't ever borrow off a visa and pay that ridiculous interest rate. Pay your balance off in full every month. If you can't afford to pay if off in full then you are spending in excess of your means. The only types of debts a financially healthy person should take on are: mortgage, car loan, one-time large expenses (ie: wedding). If you rack up credit card debt buying x-boxes and various other bling you are heading straight for financial ruin. I've seen it happen all-too much. Banks don't look kindly on people applying for their second or third consolidation loan.

Do not apply for any credit you don't need, including all the mail-in offers. Your wallet should have one Visa card, one Mastercard, and maybe an Amex, nothing more.

Applying for a loan with a parent as a co-signor for the sole purpose of "building" credit is ludicrous. I constantly get idiot kids coming to me with that proposal. First off, don't apply for credit you don't need. If you're applying for $10K to buy a car, fine. Secondly a loan is installment debt, which is reported less often to the Bureau and affects the secondary I rating, as opposed to R rating.

Revolving credit, such as a credit card, does far more to build credit. Trades are reported to the Bureau constantly and, provided you pay in full and on time you can quickly build and maintain an R1 rating. My suggestion to build credit from scratch is try to get a minimum limit credit card ($500) and if you can't be approved for that, try for a secured credit card. Use it for day to day purchases, don't spend outside of your means, and pay the sucker off in full every month. Give it a year and you'll have beacon score in the 700s and can apply for a higher limit/unsecured card.
 

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Discussion Starter #7
I wouldn't consider myself an idiot, I was just repeating what my economics teacher told me. To be honest, I'd rather not even deal with it if I don't have to. Thalo you made a good point, I don't need to establish credit until I actually need to use credit to buy something; I don't see myself needing it for at least 5 years.

Rule #1 is still big in my book, don't buy things you can't afford.

Thalo, correct me if I'm wrong, didn't the credit card companies come up with the name "deadbeat" for everyone who paid their bills in full every month.
 

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kryptonkid07 said:
10bv01 said:
Of course my dream is to be be able to buy houses, planes, yachts and cars by simply writing a check for the full amount. In the meantime however, credit is a good thing if you use it correctly.
That's a nice dream. Haha. Remember your old buddy from MFG when you get to this dream. I'll be waiting for a check in the mail.

I've already dug myself into the credit hole.... I bought a Xbox 360 on a credit card. I payed half of it off so far. :(

I just HAD to have it. It's so hard to pay off more than you have to when the minimum payment is only 15 bucks a month...
Yeah... I bought my APR chip on my credit card... hmmm
 

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10bv01 said:
I wouldn't consider myself an idiot, I was just repeating what my economics teacher told me. To be honest, I'd rather not even deal with it if I don't have to. Thalo you made a good point, I don't need to establish credit until I actually need to use credit to buy something; I don't see myself needing it for at least 5 years.

Rule #1 is still big in my book, don't buy things you can't afford.

Thalo, correct me if I'm wrong, didn't the credit card companies come up with the name "deadbeat" for everyone who paid their bills in full every month.
I don't know. At the bank we use "deadbeat" to describe a different type of person, but I imagine people who pay their bills in full aren't their best customers. Credit card companies have revenues coming from merchants who use their affiliated POS terminals, so as long as you do a lot of transactions you're making them profit anyway.

If you have no credit established yet, you'd be smart to at least start with a low limit credit card now, if you can. Go secured, if you have to, and at least that way you wouldn't be spending more than you have anyway. Most banks should give you a decent rate of interest on your security deposit also. It can take a year or more to establish a good rating, so if you foresee yourself needing a mortgage in a couple of years, might as well start your credit off now.
 
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