Building Credit: The do's and don'ts

[Glorydog]

Sure.

Just sent one. I sincerely appreciate all of your help.

 

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[socaldude]

If you have zero credit or terrible credit then the only way to get credit is to get a secured credit card. You send a deposit and you get a credit line equal to your deposit. You charge small necessary expenses and pay it off every month.

I would recommend a secured credit card at a bank like Bank of America or Wells Fargo so you can qualify for their other cards more easily.

But be careful because credit if used recklessly can be a terrible thing. Wage garnishments, court judgments, seized bank accounts, harassing phone calls and bankruptcy. You never wanna owe more than you can pay off entirely. As soon as you start sending just minimum payments then you fell for the trap and you are in trouble. Credit cards are a very lucrative business because of this irresponsible consumerism. Hell I wish I owned a credit card company/bank. Credit should never be used to fuel a lifestyle. I would stay away from car loans and mortgages if you are young. These have liens and you don't own the property. The loans are for a long time and if you miss just a few payments then you struck out.

Keep expenses low and FIXED expenses low as well.

Credit is great, but let me tell ya, theres nothing like owning a car free and clear and having ZERO debt.

Even though I have credit, I still have the habit of paying things for cash. CASH has an element of control and independence that is FASTLANE. If you owe money to someone else you are at their disposal. Opps looks like you lost your job and now you can't pay back your $10k credit card balance. Oops looks like they raised your interest rates. Opps looks like they decreased your credit line by 50%. Oops looks like American Express all of a sudden demanded payment in full right away. Opps looks like the real estate market crashed. Oops looks like you lost you main source of income.

But yeah credit can be very useful to a fastlane journey. I use my AMEX plum card to charge business expenses and meet discrepancies in cash flow.

Also you never do business with just ANY bank. Just because its a bank doesn't mean you should do business with it. The same way I never do business with paypal.

 

[Glorydog]

If you have zero credit or terrible credit then the only way to get credit is to get a secured credit card. You send a deposit and you get a credit line equal to your deposit. You charge small necessary expenses and pay it off every month.

I would recommend a secured credit card at a bank like Bank of America or Wells Fargo so you can qualify for their other cards more easily.

But be careful because credit if used recklessly can be a terrible thing. Wage garnishments, court judgments, seized bank accounts, harassing phone calls and bankruptcy. You never wanna owe more than you can pay off entirely. As soon as you start sending just minimum payments then you fell for the trap and you are in trouble. Credit cards are a very lucrative business because of this irresponsible consumerism. Hell I wish I owned a credit card company/bank. Credit should never be used to fuel a lifestyle. I would stay away from car loans and mortgages if you are young. These have liens and you don't own the property. The loans are for a long time and if you miss just a few payments then you struck out.

Keep expenses low and FIXED expenses low as well.

Credit is great, but let me tell ya, theres nothing like owning a car free and clear and having ZERO debt.

Even though I have credit, I still have the habit of paying things for cash. CASH has an element of control and independence that is FASTLANE. If you owe money to someone else you are at their disposal. Opps looks like you lost your job and now you can't pay back your $10k credit card balance. Oops looks like they raised your interest rates. Opps looks like they decreased your credit line by 50%. Oops looks like American Express all of a sudden demanded payment in full right away. Opps looks like the real estate market crashed. Oops looks like you lost you main source of income.

But yeah credit can be very useful to a fastlane journey. I use my AMEX plum card to charge business expenses and meet discrepancies in cash flow.

Also you never do business with just ANY bank. Just because its a bank doesn't mean you should do business with it. The same way I never do business with paypal.

Great post! Thanks for the response. I applied for a student card, but they told me to reapply once I enroll in college in a few months. They suggested the secured credit card, which I have been considering for a few days now. I like my bank, there is a reason it is so popular in my area. The only issue is that should I decide to move states, I will have to get a new bank because it's mostly in my state. I hate PayPal. They closed my account when I was in Jr high (Of course, they didn't know that) and was running an in game currency buy/sell business. I made about a grand in the course of a day or so and my account was banned for suspicious activity. I was forced to eat the cost. Guess who probably eventually got to keep my money? PayPal. They are not a good company.

Back to your talking about a paid for car, etc. I will probably never finance a car. My parents bought me a $900 car when I was 16 and I just kept building on it until I got to the car you see in my picture. I just sold that one and bought a new vehicle in cash. I'd like to do the same for bigger purchases like real estate in the future but it's just not realistic.