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grantd 10-07-2010 03:03 PM

First credit card- good for credit rating??
Hi everyone, I'm 22 and have always refrained from getting hold of a credit card, seeing it as unnecessary debt as long I don't need one.

However, I have a feeling that getting hold of a credit card, using it little and often, and paying on time, will lead to a favourable credit rating for any future loans I may want to request for the bank.

What advice or information can you give me?

Thanks to everyone.

DavidBibby 10-07-2010 06:36 PM

Re: First credit card- good for credit rating??

Spare yourself from years of torment. Don't get a credit card.

As a young person... you have an amazing potential to build wealth and a future for yourself.

The banks, the car dealerships, the credit card companies, the department stores, and student loan lenders (the government) all want to stick a hose in your ability to produce wealth and siphon off your money over to them.

I am serious... I'm 33 years old now, and I WISH I'd have listened to someone wiser than me when I was younger and newly married.

Let me tell you... I wasn't irresponsible with my credit cards either.. it's just that it became a habit to use a credit card when I had an emergency for things I should have planned better on.

It took my wife and I at least three years to get out of all of it.

In any case, grantd. When you open a line of credit or have a credit card.. you've allowed a third party to open a channel so that YOU can PAY compound interest. Instead you want to open channels for yourself so that YOU can earn compound interest.

If you don't have a savings account. Open one now. I understand the rates are low, but hear me out. If you have a credit card then you are at a NEGATIVE savings rate. If you have something that you would like to purchase... save up for it and buy it cash.

Do that for everything you buy.

Feel free to ask me any questions... but in the meantime I recommend the following books:

"The Richest Man in Babylon"
"Financial Peace" by Dave Ramsey
"The Automatic Millionaire" by David Bach

One last thing.. 96% of Americans are NOT financially free. The 4% that are got that way because they STOPPED borrowing money. Every time you borrow money you LOSE.

I hope that you stick around. You will get a multitude of perspectives here.. but I think that most will agree with me that the credit card was the start of their downfall.

By the way...I help people get OUT of debt, so if I can persuade you not to go INTO debt... then you will be on your way to financial freedom sooner than you think.

Please feel free to check out my other posts. I think you'll get some good info there.

grantd 10-10-2010 02:15 PM

Re: First credit card- good for credit rating??
Thanks for your help here David.

I do have a savings account and am generally pretty good a putting aside a set amount of my earnings. I always avoid borrowing money off anybody at all and only spend money that I actually have.

I was under the impression that with the right discipline, use of credit could generate a better relationship with the bank. Is it wrong to think that? I understand that is could well be a slippery slope, but I would not use it for any expenditure that I did not have the cash set aside to pay it back at the appropriate time.

Would you say the reward for this is not worth the risk of getting carried away?

Regarding financial books, I have read Rich Dad, Poor Dad which amongst others which I found interesting. If you have any other recommendations please let me know.

Thanks again.

DavidBibby 10-10-2010 04:58 PM

Re: First credit card- good for credit rating??
Most of the time when a bank says that you have a good relationship with them it means that you are making them money.

Some banks have gone so far as to adjust rates depending on your "relationship rewards points" but then the criteria for having those points is dependent upon how much you have in loans with them and in savings.

Credit unions are also guilty of this... including the account that I've held onto for years.

For checking account had no monthy fee as long as I maintained "preferred" member status. So I asked them... what made me a preferred member? They told me it was because I had more than $1500 on my line of credit.

Then I asked them a question that ultimately led to me leaving them. "What happens if I pay off my line of credit tomorrow?". They told me that I'll lose my preferred membership status and then my account will be subject to monthly fees.

So the ONLY accounts that I have now... is a checking account with no fee's at a bank that doesn't do the "rewards" game. A savings account at a different online bank with a 1.1% rate (which is GOOD for my emergency fund) and my investment accounts in my 401(k) and wealth building accounts.

I'm USING the banks for their services instead of THEM using ME.

By the way... don't give any mind to what your credit score is. The FICO score doesn't say anything about how good a person you are nor does it say how successful you will be financially.

If you're looking to buy a home in the future... put 50% - 100% down and you will NOT NEED credit. There are mortgage companies out there that will give you a home loan without the FICO score. They do their OWN underwriting.

In my opinion... getting a credit card, regardless of the intentions, will cause you to eventually get into debt in other ways.

Instead if you live a credit-free, loan-free lifestyle. You honestly only need about 10 years of solid investing to build a HUGE nest egg.

People in debt... don't get the nest egg.

Hope this helps...

grantd 10-12-2010 05:52 PM

Re: First credit card- good for credit rating??
Yes that does help thanks. It in fact highly backs up my natural approach to things. I was just wondering if this was a decent way of adding to my financial repertoire- clearly not, in your wise opinion.

David, how do I attach/edit a signature onto my posts?

Thanks a lot.

DavidBibby 10-12-2010 07:12 PM

Re: First credit card- good for credit rating??
First click on the UserCP link in the top menu bar in the forum. On the left.. click "edit signature"

The forum rules do not allow you to post links or phone numbers until you have 15 posts under your belt. I've not added my signature until you just mentioned it. So I guess it DOES work!

grantd 10-20-2010 06:33 AM

Re: First credit card- good for credit rating??
Ok David. I suppose I best get posting!


grantd 10-20-2010 07:22 AM

Re: First credit card- good for credit rating??
I just checked, and can't see 'edit your signature'. In fact the top one is 'edit your details'.

Do I need to be patient and wait to have written more posts?

DavidBibby 10-20-2010 10:58 AM

Re: First credit card- good for credit rating??
It should be on the left hand side of the UserCP.

It's in the heading "Settings and Options" and is right under the link for "Edit Avatar"

You should hopefully see "Edit Signature" there.

Although I am a moderator. I am not the administrator, so I don't have the ability to edit someone else's privileges.

Good Luck!

Adia 10-22-2010 08:30 AM

Re: First credit card- good for credit rating??
while it's still early don't use a credit card it could get you in trouble if you don't use it wisely

richard29 11-26-2010 04:01 AM

Re: First credit card- good for credit rating??
The day when i took my first credit card i am happy as you and today also i am happy the only concern is that as my friends are come in defaulters of credit and it makes not indication to their profile so i would suggest you make your payment to bank as early as possible to not come in defaulter. Anyway enjoy.

goodyphilips 01-18-2011 05:12 AM

Re: First credit card- good for credit rating??
well I think credit card some times become a necessary evil in order to build a good credit score, some thing vital when you go about buying a home and need mortgage for that.
Yes if you use it not much and always pay on time then there is no problem.

ralphegermain 02-09-2011 02:11 AM

Re: First credit card- good for credit rating??
Owning a credit card is not as bad as it seems if you have the self discipline that is needed when using it. Use it, then pay for it. As simple as that. Simple yet hard. Some of us just don't seem to do this simple math. If its not necessary, don't buy it.

iZoe 02-13-2011 12:32 AM

Re: First credit card- good for credit rating??
I've also heard not having a credit card can affect your credit score! It's like being stuck between a rock and a hard place. :mad:

RichS 02-14-2011 11:32 AM

Re: First credit card- good for credit rating??
I agree with goodyphilips and ralphgermain. You need to build your credit but you must have the discipline to use a credit card wisely. Whatever you use the credit card for must be paid off in full each and every month. That is where the discipline and the tough part comes into play.
American capitalism demands that you have a credit history. You have no choice if you want to rent a car, rent a hotel room, etc. You have to have a credit card even if you don't use it to pay for these things.
But again you have to be careful. Use the credit card sparingly and pay the balance off each month and you will be okay.

RichS CFP(r)

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