Sorry 3Z3VH, but I'm gonna have to set it straight
Quote:
|
Originally Posted by 3Z3VH
If you are starting from having no credit whatsoever, like I did, the best thing you can do is get a secured credit card (Where they have $300 or so of your money in a savings as collateral on your credit card) for 6 months, and pay off your full balance every month MINUS $5 or so.
Why ? Having a credit card that gets paid in full every month never shows up on a credit rating. It essentially has no activity on that account.
Leaving $5 or so in there every month shows the card is getting used, and that you have the money to pay off all your bills without any problems. Sure, you will pay an extra couple pennies in the end, but that is a VERY small price to pay for a good credit score.
|
I agree with you - getting a secured credit card is an excellent - and sometimes the only - way to start building credit. However, you do not need to carry a balance on the card to have it report as active. As long as you charge something on it each month, you can pay it off in full each month and it will still report.
Quote:
|
Originally Posted by 3Z3VH
After 6 months, all that data bacomes legitimate. If they see you haveing a credit card for 3 months, it doesn't mean a thing. 6 months seems to be the lucky number, and then you start to see the credit applications roll in. What I did at that point is sign up for any card that had no startup, annual, or any other fees beyond your monthly percentage rate. Even if the rate sucked major ass, I still took the card. This raises your total credit dollar amount, without costing you a ton every year in fees.
|
After six months of continous reporting on your credit report, you'll actually get a FICO score. Prior to that, they credit reporting agencies don't score you due to a lack of history. That's why it's the "magic" number
You can certainly sign up for additional cards as you see fit - however, in my experience, I would stay away from Capital One cards if you are still building your credit. Nothing against the company, it's just they don't report your limit to credit reporting agencies, and often times if you carry a balance the agencies will assume you are maxed out.
Quote:
|
Originally Posted by 3Z3VH
The credit dollar amount is what qualifies you for larger purchases like cars, and motorcycles and such. Once you get into that range, if you get a couple LARGE dollar item things on credit, your total credit worth rises quickly, which is what leads you to looking good when it comes time to negotiating a first-time mortgage.
|
I've been in the banking/lending/mortgage industry nearly seven years and I've never heard the term "credit dollar amount." What qualifies you for larger purchases like cars and mortgages is your history (sometimes lenders will have specific requirements you must meet - such as a minimum number of tradelines or a minimum amount that you've had history) combine with other non-credit factors - i.e. Debt to Income Ratio, Loan to Value Ratio, etc. In fact, if you aquire a large amount of debt (such as a relatively expensive vehicle) it will actually damage your debt to income ratio, thereby reducing your chances of getting approved for other large ticket items.
Just thought I'd throw that out there