How do you guys establish a credit score?

[GOD GUNDAM]

Well, I turned 18 this year and I was wondering about getting a credit card! I did some research about how to establish a credit score by applying for a department store credit card or a gas card! It said to use the card regularly, but is there a reason for that? Does a department credit card work like a regular credit card beside some perks and a higher interest rate? Should I ask them if my payments will get reported to the Bureau so I can establish a credit history/score? Any advices?

[Araciel]

well in this country at least, yes. any kind of credit can have a negative effect on your credit score. at first it will be a good score but you need to build up history to get approved for lots more, so you need to have it for a while....good to start with a dept. store or gas card.

[Jojee]

Hm, I applied for a credit card a few weeks ago, but never heard back from them. >=|

It's about time I get one, too. I think you only need to use it once and pay it off to activate it, and then just let it sit there and you'll get at least some credit off it.

[Yamaneko]

Opening a credit card actually damages your credit history. Or at least opening a second line of credit.

[GOD GUNDAM]

If opening a credit card does damage my credit history, then how can I start my credit history on the right track? How does a department credit card and/or gas card differ from a credit card?

[Shoeberto]

If opening a credit card does damage my credit history, then how can I start my credit history on the right track? How does a department credit card and/or gas card differ from a credit card?
Taking out a loan, though you need a co-signer for that.

The reason you need to use a credit card regularly is that they need multiple examples of you being good at getting the money back to you. If you borrow and pay back money a lot of times, it shows more dedication to repaying your debts than borrowing money just once.

That said, don't get yourself into trouble by borrowing more than you can pay. Interest is absolutely killer and it's easy to get behind. Basically, don't feel like you need to pay for every purchase with a credit card just to build up your credit rating. Use it when you need it.

Also, don't go for a department store card or something like that. Go through a bank. Department store cards et al have ridiculous terms and interests rates and are just trying to suck you in with a miniscule discount. They're a scam.

edit: I think what Yams meant is holding multiple credit cards (like having a standard card, but also getting secondary ones through stores and such) hurts your credit, because you're borrowing from multiple sources instead of just one place. If you just open one (and definitely do go through a bank, your local one should have everything you need to set one up) you should be fine.

[Namelessfengir]

i just have a debit/credit card so however much i got in the bank is what is available.

as for credit scores... what i know about it is very little cuz i don't care. if you buy beyond your means and then are slow paying it back your score will reflect this. if your overdraw alot score shows that too.

as for starting right just open an checking account at a good bank and see if you will get a debit card with it. i recommend a bank affiliated with visa or capital one. not American Express cuz they charge you every time you have the card swiped.

so try that and see how it goes

[Yamaneko]

edit: I think what Yams meant is holding multiple credit cards (like having a standard card, but also getting secondary ones through stores and such) hurts your credit, because you're borrowing from multiple sources instead of just one place. If you just open one (and definitely do go through a bank, your local one should have everything you need to set one up) you should be fine.

New credit applications can detract from your score. Even an application for a department store card can lower your score. Multiple applications can have a devastating effect on your score, especially around the time you are shopping for major purchases like a car loan or mortgage.
Which is why those promotional deals where you apply for a store's credit card to save x% off all purchases is never worth it. It will come back to bite you in the ass later.

[Miriel]

edit: I think what Yams meant is holding multiple credit cards (like having a standard card, but also getting secondary ones through stores and such) hurts your credit, because you're borrowing from multiple sources instead of just one place. If you just open one (and definitely do go through a bank, your local one should have everything you need to set one up) you should be fine.
Huh? :confused: Why would borrowing money from different places hurt your credit score?

My brother and my Dad both told me that I should get at least 2 credit cards and use them well in order to establish good credit. They both have good credit (good enough to buy cars, take out loans, etc.) so I assume they know what they're talking about. I've always been under the impression that the more stuff you pay on time, whether it's loans, credit card bills, or whatever, the better your credit score will be. On top of that, I know it's better to have multiple credit cards and keep well below your credit limit than it is to have one credit card and have the balance be more than 50% of the total credit limit.

[Yamaneko]

It sort of works like that, but whenever you open a new line of credit it requires the company to initiate a hard check (as opposed to a soft check) of your credit history. The way the system is setup these types of checks have a negative impact on your credit score. The reason why you don't want to do this when you're considering large loans or mortgages is because banks and lenders will bump you into a different tier which may result in higher monthly payments. You could potentially end up paying thousands (if not tens of thousands) of dollars that you could have otherwise avoided paying.

My advice is stay away from department store cards and only have one card for all your purchases.

[rubah]

Hard to have one card when most places take different ones. EXCEPT VISA LOL.

Except my parents never had a visa so I probably won't ever either. I have a Discover card with my parents (who have never owed a dime of interest over a period of like 15 years or so, good role models, imho), but of course that doesn't do a thing for credit, and just gives me excuse to bum money off my parents 8)

But I was thinking of getting one in my own name because places like to have a nasty habit of not accepting discover >:[ and to build my own credit.

I'm pretty miserly with my own money, so it might not get much use right now, but it might save me from having to sign up with a department card . . .oh hell it might be too late for that like a million times fold xD :O Now i'll have to be a responsible buyer ;.; )

[Shoeberto]

I'm just gonna say that I don't know the system entirely, but my mom's a banker and has talked a lot of stuff about credit cards and such to me before... so these are just tips I've picked up with inferences I've made to fill in the gaps :)

My advice is stay away from department store cards and only have one card for all your purchases.
Basically this is what I've always been told, particularly with emphasis on the former. 'cause those places are just out to make a buck (even worse than the credit card companies themselves are... and that's really saying something) and you get the short end.

[Goldenboko]

You cannot establish a credit score until you travel deep into the bowels of hell with nothing but a toothbrush and a comically misshapen carrot. Fend off 12 demons, and feed the carrot to Cerberus. Then you must steal Satan's teddy bear, gather cheese from the moon, wipe Uranus's butt, fetch lava from the sun, and finally give all of this crap to the bank in exchange for the lowest credit score possible.

[Yamaneko]

High credit score is good.

[Shlup]

I started establishing credit when I moved out of my mother's house when I started paying my own bills and doing so on time. Most of what raised my credit score, though, was buying a car.

[Yamaneko]

Teachers have some good mortgage options depending on their school district.

[rubah]

Yams, what do you think of 'reverse mortgages' where [usually] elderly people will be paid so much a month for their house and when they die or whatever the bank owns it? What do they do with it after that?