Question about Credit

Discussion in 'Current Events' started by Cain, Feb 8, 2011.

  1. Cain
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    Cain Air Force DEP

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    So, I have always had questions about what Credit really is, and how to make the best of it, and I have a few questions that I'd like to ask:

    1. If you where to use a credit card to let's say, pay your payments/buy everyday items, and you always pay it off that day or at most a week later, would that improve your credit more then just buying and selling with money or debit?

    2. How can you improve your credit score other then a credit card and paying payments on time?

    3. What good is having a high credit score?

    4. What is your credit score when you become 18? I mean, is their a standard everyone starts with?
     
  2. SFC Ollie
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    SFC Ollie Still Marching

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    First off having a good credit score lowers much of the interest that you may be charged on things like a car loan. So it can mean a difference over a few years of thousands of dollars in your pocket.

    Get one credit card. use it to buy your gas every month, and pay it in full every month.

    Do not pay your cell phone or any type of monthly payment you have late.

    Things like auto insurance can be withdrawn directly from your checking account.

    Do not permit multiple credit checks for no good reason. In other words, do not apply for credit that you do not need.
     
  3. Cain
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    Cain Air Force DEP

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    Thanks! You're a great help Ollie :).
     
  4. code1211
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    code1211 Senior Member

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    Will Rogers was humorist from the Depression era. He noted that a bank will only lend you money if you can prove that you don't need it.

    That's what a good credit score indicates. You don't need the money. You can pay it back and you will pay it back. If you desperately need the cash, you will probably have a great difficulty paying it back. Lending has loosened considerably since Roger's day.

    That's why the economy collapsed.

    Credit was too tight during the depression.

    That's why the economy collapsed.

    Getting confused yet? Put aside 10% of everything you earn and you'll be able to burrow from yourself instead of someone else.

    Confusion eases considerably when you have no debt. I haven't made a car payment since 1978 and haven't made a house payment since 2009. Now if that worthless wife of mine would just find the right job, I could retire.

    Ahhh... Independence!
     
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  5. Cain
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    Cain Air Force DEP

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    I wouldn't call a wife worthless.

    Hmm, well, I just want a good credit score, if for no other reason then it's good to have. I might have to do car payments, but I am not going to be paying much, and shouldn't have issues paying it.

    Cell Phone wise I am getting rid of my cell phone once I ship out, whether I get one after I get through Basic is debatable.
     
  6. R.C. Christian
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    R.C. Christian Gold Member

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    Credit is one of the biggest scams ever waged on the human race. I don't have any, zilch. Cash only.
     
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  7. RadiomanATL
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    RadiomanATL Senior Member

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    Here's my advice, take it or leave it.

    1. Carry a balance of about 10% of your total available credit on your credit card. Paying it off every month is good if you have long term established credit, but carrying a *small* balance from month to month is better if you are trying to establish credit. The key is small. This only applies if you are young and are trying to establish credit. If you own a house and make monthly payments, then pay the whole thing off.

    2. Pay all your bills on time. A cell phone bill will not help your credit if you pay it off every month, but it most certainly will hurt your credit if you fall behind. This is because monthly bills don't report to the credit agencies UNTIL you go into collections.

    3. There is no "standard" credit score everyone starts with. The credit agencies don't look at your age. It's not even in their reporting. All they look at is your debt to income ratio. This is why when you are first starting out, and have no history, carrying forward a *small* monthly balance isn't a bad thing. Once you have a history though, pay the thing off in full every month.

    4. Having a good credit score will help you when it comes to purchasing a house. Tremendously.
     
  8. xsited1
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    xsited1 Agent P

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    I learned the importance of good credit from my Mom. She always spent more than she had, paid her bills late and had creditors calling her weekly. Because of this, I decided to do the opposite.

    The Importance of Good Credit - Why Good Credit Matters

    BTW, my credit score has always been in the top 1%. Because of this, I've never been turned down for a loan and always got the lowest interest rate available. Now if we can only get the government to do this we'll be in good shape.
     
  9. Cain
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    Cain Air Force DEP

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    I will do my best to follow everyone's advice, I am glad so many have knowledge on this. I will probably need really GREAT credit then since I plan to buy a farm later on in life in North Dakota.

    I really hope I can get my credit score as best as possible. So, basically, do the right thing and don't get into debt seems the #1. I don't see how I could get into debt unless I was stupid about it. The only payment I should have is car and car insurance. Everything else is covered.
     
  10. GWV5903
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    GWV5903 Gold Member

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    The 10% balance advise Radioman gave you is the best way to get points in a short amount of time....

    You want 2 to 3 cards with low limits, when you exceed 50% of limit it will usually have a negative effect on your score....

    Keep in mind that car loans and home loans use two different scoring methods, for homes visit Free FICO Credit Score + Check Your Credit Report Online | myFICO for more info....
     

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