y2josh
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Post by y2josh on Dec 4, 2013 10:39:13 GMT -5
As a 31 year old man who has never had a credit card, I'm almost embarrassed to be asking these types of questions, but knowledge is power.
Can anyone explain a credit card to me, as far as what it does for your credit score etc? Someone told me that if you get one, and just automatically pay it off every month, it does nothing for your credit...
Clearly, I'm in the dark on this.
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sicko16
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Post by sicko16 on Dec 4, 2013 10:45:05 GMT -5
I don't have one personally. But I've been told if you get one, spend a bit each month and pay it back straight away it increases your credit score immensely. Unless you don't pay it back on time then I assume it would have the opposite effect
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Post by Jack on Dec 4, 2013 10:57:40 GMT -5
Ok, it depends on what kind of credit card you have. Because I am only 16, I have a flex account, which in effect is what a 'real' account is. You put whatever money you have into the bank and you simply make with-drawls, simple. Every month you get your balance through the door and you can remove/add/check how much you should have within it.
As far as I am aware with Credit score, I think if you pay what you owe every month, you have no problems. Ie, no credit issues when it comes to overwithdrawing or indeed not paying what you owe.
I kinda think that is what you were asking :3
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That 80s Guy
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Post by That 80s Guy on Dec 4, 2013 11:11:46 GMT -5
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You're not alone. I'm 33 and I've had my Debit card a little under a month now. However, I've never owned a Credit card and probably never will. The Debit is just as good, only without the atrocious fees that might plague some.
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Post by Brad on Dec 4, 2013 11:19:28 GMT -5
Yeah I'm an expert...... don't get one. They are evil. I'm still paying for my stupidity with them.
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Post by T R W on Dec 4, 2013 11:32:22 GMT -5
Having one and paying it off monthly can increase your score over the years. However only get a credit card if you are excellent at budgeting and saving and are able to completely resist impulse buys. If you aren't great at all of those things, credit cards will likely get you in major financial trouble.
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y2josh
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Post by y2josh on Dec 4, 2013 11:33:50 GMT -5
So, general consensus is to avoid them.
Those NFL Extra Rewards cards look so attractive from a bonuses standpoint!
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Post by Hulkamaniac on Dec 4, 2013 11:51:02 GMT -5
If you're 31 and have never had one, you are on the right track. Avoid them.
Sent from my ADR6350 using proboards
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Deleted
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Post by Deleted on Dec 4, 2013 12:31:32 GMT -5
So, general consensus is to avoid them. Those NFL Extra Rewards cards look so attractive from a bonuses standpoint! If you need to eventually get a loan for whatever reason, a house more specifically, you will need credit. Not having debt doesn't equal good credit. Credit scores are based on your ability to both pay off debt & the amount of credit you are capable of carrying (unpaid credit). It may sound strange, but if you have several manageable bills (technically debts until they're paid), you will have a higher score than someone who pays off immediately. I would suggest getting one card, but managing things evenly. Don't sign up for anything with a yearly fee and get the lowest interest rate possible. **Get something where you won't have interest for the first one/two years will also help. Don't overspend, but let yourself build up credit if you need a loan someday, for a car, medical bills, or whatever. Unless you're filthy rich, credit will come in handy when something unexpected comes along - allowing you for $35 a month payment minimums for example….or paying as much as possible to get your bills paid off without too much interest. The real trick is to pay as little interest as possible, while raising credit scores. If you have monthly bills, that will count toward credit, but cards will allow for higher amounts available on possible loans and lower interest rates (less risk for the bank to give you the money). If you never will need a loan….then don't worry about a card. |
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y2josh
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Joined on: Dec 18, 2001 15:13:21 GMT -5
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Post by y2josh on Dec 4, 2013 13:17:55 GMT -5
So, general consensus is to avoid them. Those NFL Extra Rewards cards look so attractive from a bonuses standpoint! If you need to eventually get a loan for whatever reason, a house more specifically, you will need credit. Not having debt doesn't equal good credit. Credit scores are based on your ability to both pay off debt & the amount of credit you are capable of carrying (unpaid credit). It may sound strange, but if you have several manageable bills (technically debts until they're paid), you will have a higher score than someone who pays off immediately. I would suggest getting one card, but managing things evenly. Don't sign up for anything with a yearly fee and get the lowest interest rate possible. **Get something where you won't have interest for the first one/two years will also help. Don't overspend, but let yourself build up credit if you need a loan someday, for a car, medical bills, or whatever. Unless you're filthy rich, credit will come in handy when something unexpected comes along - allowing you for $35 a month payment minimums for example….or paying as much as possible to get your bills paid off without too much interest. The real trick is to pay as little interest as possible, while raising credit scores. If you have monthly bills, that will count toward credit, but cards will allow for higher amounts available on possible loans and lower interest rates (less risk for the bank to give you the money). If you never will need a loan….then don't worry about a card. I am considering buying a home in May-ish, which clearly is not enough time to establish an amazing credit rating. However, the last time I was assessed for a car loan, my credit score was a 650, which I understand is good, but not great. This financial, adult-type stuff is all really foreign to me...I've always just used my Visa Debit Card, checking account and cash. |
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acura143
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Post by acura143 on Dec 4, 2013 15:12:36 GMT -5
If you need to eventually get a loan for whatever reason, a house more specifically, you will need credit. Not having debt doesn't equal good credit. Credit scores are based on your ability to both pay off debt & the amount of credit you are capable of carrying (unpaid credit). It may sound strange, but if you have several manageable bills (technically debts until they're paid), you will have a higher score than someone who pays off immediately. I would suggest getting one card, but managing things evenly. Don't sign up for anything with a yearly fee and get the lowest interest rate possible. **Get something where you won't have interest for the first one/two years will also help. Don't overspend, but let yourself build up credit if you need a loan someday, for a car, medical bills, or whatever. Unless you're filthy rich, credit will come in handy when something unexpected comes along - allowing you for $35 a month payment minimums for example….or paying as much as possible to get your bills paid off without too much interest. The real trick is to pay as little interest as possible, while raising credit scores. If you have monthly bills, that will count toward credit, but cards will allow for higher amounts available on possible loans and lower interest rates (less risk for the bank to give you the money). If you never will need a loan….then don't worry about a card. I am considering buying a home in May-ish, which clearly is not enough time to establish an amazing credit rating. However, the last time I was assessed for a car loan, my credit score was a 650, which I understand is good, but not great. This financial, adult-type stuff is all really foreign to me...I've always just used my Visa Debit Card, checking account and cash. Now in days it's pretty hard to get a home loan. I just went through all the process and bought a home in July. Depends what type of loan you are getting, you might able to get a home load through FHA with that credit score but you will have to pay a PMI for the life of the loan. I did a lot of research when I was buying a home. I currently have 3 credit cards which comes handy when you have a home incase there is an emergency and you need to buy or repair something. I use my credit card for everything but I pay whatever I use at the end of the week. I get most of the rewards that way. |
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Post by Hulkamaniac on Dec 4, 2013 15:30:22 GMT -5
So, general consensus is to avoid them. Those NFL Extra Rewards cards look so attractive from a bonuses standpoint! If you need to eventually get a loan for whatever reason, a house more specifically, you will need credit. Not having debt doesn't equal good credit. Credit scores are based on your ability to both pay off debt & the amount of credit you are capable of carrying (unpaid credit). It may sound strange, but if you have several manageable bills (technically debts until they're paid), you will have a higher score than someone who pays off immediately. I would suggest getting one card, but managing things evenly. Don't sign up for anything with a yearly fee and get the lowest interest rate possible. **Get something where you won't have interest for the first one/two years will also help. Don't overspend, but let yourself build up credit if you need a loan someday, for a car, medical bills, or whatever. Unless you're filthy rich, credit will come in handy when something unexpected comes along - allowing you for $35 a month payment minimums for example….or paying as much as possible to get your bills paid off without too much interest. The real trick is to pay as little interest as possible, while raising credit scores. If you have monthly bills, that will count toward credit, but cards will allow for higher amounts available on possible loans and lower interest rates (less risk for the bank to give you the money). If you never will need a loan….then don't worry about a card. I can't really agree with much of this advice. You don't have to be filthy rich to plan for emergencies. I'm certainly not filthy rich. I have several k stashed away in a rainy day fund for such emergencies. A few months ago the transmission in my car died. I just paid cash for it and got back on the road. Cost me about $2k at the end of the day, but didn't cause me any burdens financially. I put a little bit into that fund every paycheck. It adds up. You're foolish to not plan for the unexpected but your plan for the unexpected doesn't have to be to take on more risk. I haven't used a credit card in over 5 years and haven't regretted it. If you're looking at buying a house, explore manual underwriting. It causes them to actually look at your financial situation and figure out whether you can actually afford the payment, not just look at a credit score and make a NINJA loan based on it. |
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Post by 3Lephant (Naptown Icon) on Dec 4, 2013 15:33:34 GMT -5
Credit Karma - This site is great and will tell you your credit score. It will also give you some other valuable information, explain ways you can improve your rating, etc. Also, its 100% free! Not free for 30 days, 90 days, but actually free. I am working towards buying a home soon too and this site has been helpful. TRW and j offered great advice too!
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Post by T R W on Dec 4, 2013 16:05:45 GMT -5
I am considering buying a home in May-ish, which clearly is not enough time to establish an amazing credit rating. However, the last time I was assessed for a car loan, my credit score was a 650, which I understand is good, but not great. This financial, adult-type stuff is all really foreign to me...I've always just used my Visa Debit Card, checking account and cash. Now in days it's pretty hard to get a home loan. I just went through all the process and bought a home in July. Depends what type of loan you are getting, you might able to get a home load through FHA with that credit score but you will have to pay a PMI for the life of the loan. I did a lot of research when I was buying a home. I currently have 3 credit cards which comes handy when you have a home incase there is an emergency and you need to buy or repair something. I use my credit card for everything but I pay whatever I use at the end of the week. I get most of the rewards that way. You can actually have your lender take the PMI off after a % of your loan is paid off. |
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Post by sean™ on Dec 4, 2013 16:14:27 GMT -5
Having one and paying it off monthly can increase your score over the years. However only get a credit card if you are excellent at budgeting and saving and are able to completely resist impulse buys. If you aren't great at all of those things, credit cards will likely get you in major financial trouble. Couldn't agree more. If there's one way to "sum up" the benefits and downfalls of having a Credit Card in one paragraph, this would be it. It's a great tool to help you with a few bucks when in need, so long as you can continue to make the payment each month. My mom recently signed up for one simply to help build credit, since she has no history as she's been disabled for a few years now. She is going to make her monthly purchases on it, and then pay it off as she makes the purchase so there's no interest to account for. The more you use a card, and get it paid off in a timely manner, the higher your limit becomes along with your credit score so long as you stay current. Last bit of advice is READ THE TERMS. I can't tell you how many people I know who never read the fine print, and got hit with an Annual Fee the following year out of nowhere. |
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Post by Deleted on Dec 4, 2013 16:38:55 GMT -5
If you need to eventually get a loan for whatever reason, a house more specifically, you will need credit. Not having debt doesn't equal good credit. Credit scores are based on your ability to both pay off debt & the amount of credit you are capable of carrying (unpaid credit). It may sound strange, but if you have several manageable bills (technically debts until they're paid), you will have a higher score than someone who pays off immediately. I would suggest getting one card, but managing things evenly. Don't sign up for anything with a yearly fee and get the lowest interest rate possible. **Get something where you won't have interest for the first one/two years will also help. Don't overspend, but let yourself build up credit if you need a loan someday, for a car, medical bills, or whatever. Unless you're filthy rich, credit will come in handy when something unexpected comes along - allowing you for $35 a month payment minimums for example….or paying as much as possible to get your bills paid off without too much interest. The real trick is to pay as little interest as possible, while raising credit scores. If you have monthly bills, that will count toward credit, but cards will allow for higher amounts available on possible loans and lower interest rates (less risk for the bank to give you the money). If you never will need a loan….then don't worry about a card. I can't really agree with much of this advice. You don't have to be filthy rich to plan for emergencies. I'm certainly not filthy rich. I have several k stashed away in a rainy day fund for such emergencies. A few months ago the transmission in my car died. I just paid cash for it and got back on the road. Cost me about $2k at the end of the day, but didn't cause me any burdens financially. I put a little bit into that fund every paycheck. It adds up. You're foolish to not plan for the unexpected but your plan for the unexpected doesn't have to be to take on more risk. I haven't used a credit card in over 5 years and haven't regretted it. If you're looking at buying a house, explore manual underwriting. It causes them to actually look at your financial situation and figure out whether you can actually afford the payment, not just look at a credit score and make a NINJA loan based on it. I agree with you that people should plan for savings to cover emergencies, but I believe having a credit card for those times when you don't have the finances for that option is a positive thing…or if your money is tied up. At times, I've put my savings into CD's (still do, when worth it) & you can't touch it for some time. Also, sometimes, if you get a period with no interest payments, why not use a credit card and pay in installments, instead of clearing out your savings? That way you can manage your spending from your personal budget, cutting back on other costs, instead of leveling your savings & possibly not cutting back enough to cover the difference. It's good that you don't need a credit card & that can make a huge difference in getting into financial ruin, but they do offer some good for anyone that can't cover something immediately. If he makes enough money, he'll get a great loan, but the interest rate will be higher than if he doesn't have much credit (carrying capability). I've also heard the huge negative of using debit cards for online purchases. Banker told me that it's a huge no-no & much easier to have identity stolen. **It's really good that you could pay off your car issue. Sometimes things hit all at once though & would go way past my savings - school for example was something I didn't have the immediate savings to pay for with cash. My books went on a 2 year interest free credit card. |
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Post by Deleted on Dec 4, 2013 16:45:19 GMT -5
I can't understand why someone would ever tell you not to get one. They are almost a necessity to building credit.
My advice: Get ONE credit card and only use it for large purchases. Don't spend money you don't have. Instead of making a large purchase with your debit card, use a credit card instead to build credit.
Pay it off immediately to avoid interest charges.
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y2josh
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Post by y2josh on Dec 4, 2013 16:53:16 GMT -5
So, basically, you guys have all given me AWESOME info, and I really appreciate it. I ran my credit score, it came back a lot better than I previously thought, so maybe I'll steer clear of the cards for now. Thanks everyone, you guys are awesome.
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Deleted
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Post by Deleted on Dec 4, 2013 17:38:34 GMT -5
If you need to eventually get a loan for whatever reason, a house more specifically, you will need credit. Not having debt doesn't equal good credit. Credit scores are based on your ability to both pay off debt & the amount of credit you are capable of carrying (unpaid credit). It may sound strange, but if you have several manageable bills (technically debts until they're paid), you will have a higher score than someone who pays off immediately. I would suggest getting one card, but managing things evenly. Don't sign up for anything with a yearly fee and get the lowest interest rate possible. **Get something where you won't have interest for the first one/two years will also help. Don't overspend, but let yourself build up credit if you need a loan someday, for a car, medical bills, or whatever. Unless you're filthy rich, credit will come in handy when something unexpected comes along - allowing you for $35 a month payment minimums for example….or paying as much as possible to get your bills paid off without too much interest. The real trick is to pay as little interest as possible, while raising credit scores. If you have monthly bills, that will count toward credit, but cards will allow for higher amounts available on possible loans and lower interest rates (less risk for the bank to give you the money). If you never will need a loan….then don't worry about a card. I am considering buying a home in May-ish, which clearly is not enough time to establish an amazing credit rating. However, the last time I was assessed for a car loan, my credit score was a 650, which I understand is good, but not great. This financial, adult-type stuff is all really foreign to me...I've always just used my Visa Debit Card, checking account and cash. It's great that you aren't in a hole…filled with debt from credit cards. There's a lot that'll go into buying a home that will seem foreign, but it'll be fine. Remember that you don't have to spend the amount that you are approved for & many people suggest getting approved before you decide on a house (so that you know a more accurate price range). Be prepared to asked a lot of questions. Your decision on everything will also depend on your down payment (if that is an option for you). Usually, the more you put down, the more it'll help you with the interest rate (from what I've heard)…but putting more down will at least help if you don't get that large of a loan, to reach the cost of the house you want or to not be forced to borrow as much. I've always been told by my bank not to buy things online with a debit card. I've done it & had someone get a hold of the info a few times and they told me to avoid doing it if possible. My card is also only insured if I use it as credit (for whatever reason). A fair credit score isn't worse than a lot of debt, so you'll be fine. It all comes down to living within your means (IMO), especially when getting a loan. Your score isn't bad really at all & paying off a loan will make a big difference in raising it. I've also been warned that any time your credit score is checked, or you are under review for credit acceptance, it is a negative toward your score. So, only apply for credit that you assume to be approved on. |
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Post by Hulkamaniac on Dec 4, 2013 18:24:58 GMT -5
I can't really agree with much of this advice. You don't have to be filthy rich to plan for emergencies. I'm certainly not filthy rich. I have several k stashed away in a rainy day fund for such emergencies. A few months ago the transmission in my car died. I just paid cash for it and got back on the road. Cost me about $2k at the end of the day, but didn't cause me any burdens financially. I put a little bit into that fund every paycheck. It adds up. You're foolish to not plan for the unexpected but your plan for the unexpected doesn't have to be to take on more risk. I haven't used a credit card in over 5 years and haven't regretted it. If you're looking at buying a house, explore manual underwriting. It causes them to actually look at your financial situation and figure out whether you can actually afford the payment, not just look at a credit score and make a NINJA loan based on it. I agree with you that people should plan for savings to cover emergencies, but I believe having a credit card for those times when you don't have the finances for that option is a positive thing…or if your money is tied up. At times, I've put my savings into CD's (still do, when worth it) & you can't touch it for some time. Also, sometimes, if you get a period with no interest payments, why not use a credit card and pay in installments, instead of clearing out your savings? That way you can manage your spending from your personal budget, cutting back on other costs, instead of leveling your savings & possibly not cutting back enough to cover the difference. It's good that you don't need a credit card & that can make a huge difference in getting into financial ruin, but they do offer some good for anyone that can't cover something immediately. If he makes enough money, he'll get a great loan, but the interest rate will be higher than if he doesn't have much credit (carrying capability). I've also heard the huge negative of using debit cards for online purchases. Banker told me that it's a huge no-no & much easier to have identity stolen. **It's really good that you could pay off your car issue. Sometimes things hit all at once though & would go way past my savings - school for example was something I didn't have the immediate savings to pay for with cash. My books went on a 2 year interest free credit card. First of all, if you "need" a credit card for an emergency, then you've failed in your emergency planning. You can't plan for an emergency sufficiently and have need of a credit card in said emergency because you have no cash. The two things are kind of mutually exclusive. A good emergency fund is ALWAYS liquid. It's not just regular savings. It's set aside just for emergencies. That's ALL I use it for. If I'm going to save for something (a car, a major appliance, etc....) I do it in another savings account. CDs can be great, but they're a horrible place to park an emergency fund. Why not use a credit card in an emergency? Simple. You are adding risk to your life at the worst possible time. Suddenly you go from being out a car and having no cash to now being $2k in debt which means that if you can't pay it back ('cuz you hit another emergency in the mean time) suddenly you have no cash and no credit line either and you owe money. So you're now worse off than if you had just a pile of cash to begin with. If that were the case you'd be sitting on a smaller (maybe even non-existent) pile of cash, but you wouldn't have $2k of bills that you can't pay. I've spent the past 5 years (and actually more than that) buying stuff online with my debit card. Your banker is beyond stupid if he tells you it's a no-no. Go read Visa's debit card protection policy. They offer the same protection as their credit card does. Your banker is an idiot if he says otherwise or he can't read one. A need to buy school books isn't an "emergency" that "hits all at once". You know when school starts. You know how much books are going to cost ($200-400 if I recall correctly and probably less than that if you're buying online). You can easily save up that much money in advance. I spent $500 on Christmas gifts so far. I didn't borrow a dime. Why? Because I've been saving since June/Julyish 'cuz I know that Christmas comes in December every year. |
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