Establishing a line of credit, need advice

[hostage]

This is directed to the more knowledgable guys out there. I am a 21 year old college student and I have 0 credit. I want to get some credit going, but every place I go I must have previous credit. Any ideas how I can get a line of credit established, quickly and safely?
Thanks,
Doron

[Big'n slo]

I got my first credit card (VISA) through my college. Check in your campus bookstore or admin. building. There are usually low limit introductory card pamphlets around.
Just use your head, pay it off every month, and never open a tab with it at the local pub (NEVER!)

Good luck and welcome to the American way....

[banzaimf]

here's what I did.

Took out a 1000 dollar loan. Made sure there were no penalties for early repayment. Bought a 6 month CD. Made minumum payments until the CD was due, cashed it out and repayed the loan. Not much, but it's something. You do end up losing some money on it, but generally less than credit card 1 year fees or interest

[Crighton]

Borrow against a CD. Banks love to hand out credit when its secured with a CD.

[irbodden]

Get a student VISA, $1000 spending limit, jumps up to $1200 after you make your first payment on time, and so on.

Easiest method to earn some credit

[lopxtc]

Gas Company credit card ... usually the easiest to get and typically dont have unlimited spending limits.

Got my first one at 19 and that help me get a good credit score later on.

See if you can get a low $$$ loan and do the CD thing or just put it in a interest gaining account of somekind and use it to pay itself back. I know its lame, but I have known people to do that before.


Aaron

[punkncat]

As a student you should have credit card companies jumping over themselves trying to give you a card.Word of advice though.If you get a credit card be very careful.Whereas they are a great tool for building credit , they are also an easy way to get into lots of trouble.
I got a high intrest rate card (the only one I could get at the time) and made purchases that I already had the money for on it.Like grocery store, clothes, etc.Sent my payment in immediately so I never carried a balance.After a year I checked my credit rating which was now good cause of the history paying my bill on time.Then I destroyed my credit card.

[lord1234]

if u can get ur parents, they can cosign for a card for you, keep that for like 6 months...and then u r set!

[1stdeadeye]

Banker's advice

Your easiest way to establish credit is through Citibank, First USA, or Discover. They have a great student Visa program. Usually if you have no credit, they will start you out with a $500.00. As a student be careful! Do not get over your head!

The CD option is worthless. It will reflect on your credit report as a secured loan. The unsecured types of credit will help build your score.

Also, check with the bank you deal with. I know that my company gives students $500 credit cards providing the student has not credit and an account with us.

[MantisMag]

i'll agree with deadeye here. i got a discover card when i turned 18. $500 limit. in 2 yrs they've increased my limit to $1200. i only made very small purchases which i paid off immediately. after 3 years of having sub $200 balances that were paid off at the end of each month sears offered me a gold mastercard with a $12,000 limit! so you see it doesn't really take much effort to build up a credit line. just get whatever credit card you can no matter how small the initial limit. and just never carry a balance. if there's no annual fee, which none of mine have, then it doesn't cost you anything.

[Crighton]

Re: Banker's advice

Originally posted by 1stdeadeye
The CD option is worthless. It will reflect on your credit report as a secured loan. The unsecured types of credit will help build your score.

False.

Secured loans or secured cards do improve your credit score.

[Restola]

Well after working in credit for the last 2 and a half years, I can give some advice.

Get a credit card (with no application fee, no fees at all). Capital One gave me my first right after I turned 18. Start making small purchases. For example only put your gas on the card each month, maybe another small item. Pay the card down to under $100, but not nessisarily completely to 0 each month. Either way will work, I personally suggest leaving some balance on there, even though you'll be charged $1-2/month in finance charges.

DONT MISS ANY PAYMENTS. If you cant be resposible enough to spend 2 minutes at the companies website each month making a payment (even the minimum payment), its better to not to even have a credit card. Your FICO score will likely drop over a hundred points if you miss even one payment. And while not devistating, you will be one of two things in the future when you buy a house: 1. Happy you have perfect credit, 2: Wishing you had perfect credit.

[1stdeadeye]

Re: Re: Banker's advice

Originally posted by Crighton


False.

Secured loans or secured cards do improve your credit score.

Wrong! Have you ever seen a credit report? A secured loan will show up, but not help you much. Unsecured credit is a much more important part of your score. Outstanding versus available credit is a very important part of your score. Did you ever notice that Car dealers and mortgage companies seem to be able to get anyone a loan? It is because secured credit is fairly simple to do. Unsecured credit is where you are better off setting up credit. Also, a secured credit card doesn't show up as such on a credit report. It shows up like a regular credit card. I was meerly pointing out your error with the CD secured loan.

This young man's best bet is to get a small $500 Visa/MC/Discover and use it responsibly.

BTW Crighton I am a commercial loan officer for one of the nation's largest banks. I know how to read cbrs!

Hostage,
Shoot me a PM if you want more info. I can't post everything here.

[Crighton]

Re: Re: Re: Banker's advice

Originally posted by 1stdeadeye


Wrong! Have you ever seen a credit report? A secured loan will show up, but not help you much. Unsecured credit is a much more important part of your score. Outstanding versus available credit is a very important part of your score.
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BTW Crighton I am a commercial loan officer for one of the nation's largest banks. I know how to read cbrs!

Yes unfortunatly I have seen to many of them.


You first stated that a secured loan is worthless on your credit score which is FALSE. Secured loans maybe a lesser factor in your over all score VS unsecured credit lines but they are not worthless. Of course any open revolving credit account riding at a lower balance is better than a loan that only effects your score to any real extent when its completely paid or not paid, but a secured loan is not worthless. Its a valid way to build credit. A single CC is not going to boost your score all that quickly the guy should embrace different options to build as many different types of credit as possible. Variety in credit accounts is also a factor when calculating total score.


I was never argueing secured loans are better then CC accounts for building score, My point was simply that secured loans do factor into the total score and they could be used to raise his score. If hes managed to dork up his score in anyway a secured loan or card is a reasonable option to rebuild his score. Hence they are not worthless.


Thats great, I work at one of the most respected banking associations in the US

Banker fight!
*Tosses a pack of 100's at 1stdeadeye*

[1stdeadeye]

Re: Re: Re: Re: Banker's advice

Originally posted by Crighton

Yes unfortunatly I have seen to many of them.


You first stated that a secured loan is worthless on your credit score which is FALSE. Secured loans maybe a lesser factor in your over all score VS unsecured credit lines but they are not worthless. Of course any open revolving credit account riding at a lower balance is better than a loan that only effects your score to any real extent when its completely paid or not paid, but a secured loan is not worthless. Its a valid way to build credit. A single CC is not going to boost your score all that quickly the guy should embrace different options to build as many different types of credit as possible. Variety in credit accounts is also a factor when calculating total score.

Ha, you made my point for me. They are worth less then the unsecured credit towards your score, hence Worthless!

Gotta love a battle of semantics!


I was never argueing secured loans are better then CC accounts for building score, My point was simply that secured loans do factor into the total score and they could be used to raise his score. If hes managed to dork up his score in anyway a secured loan or card is a reasonable option to rebuild his score. Hence they are not worthless.

He stated he had no credit. I was suggesting the fastest way to build a credit score. He won't have an 800 overnight, but if he is wise, there is no reason he can't build a strong 700+ score!


Thats great, I work at one of the most respected banking associations in the US

Associations? What, do you work for an S&L or something like the ABA?

Banker fight!
*Tosses a pack of 100's at 1stdeadeye*

Uhm thanks!
*Grabs 100s and runs for the door*