Getting a credit card?

Question

I am 18 with no credit score. My dad is against me getting a credit card knowing the high interest rates it can cause. Is there a way to build your credit score without a credit card? The reason why I want a good credit score is so I can have a low interest rate on my mortgages when I apply for one for a rental property.

Matt Hurley · Answer

Credit cards are a fantastic way to build your score, when used appropriately. Your best bet is to spend some time budgeting, find out how much you spend each month and how much you're making. If you're making more than you spend, then put every transaction you can on the credit card then (MOST importantly) pay that entire balance off at the end of every month. By doing this you will not get charged an interest rate and you'll be building your credit score.

Keep an active and keen eye on your balance, and don't spend more than you make.

Ambrosio Daniel II · Answer

If you have a savings account think about getting a secured credit card first. The secured credit card will allow you to borrow against your own savings account and while increasing your score

Chris Teti · Answer

In my opinion you definitely want to build your access to credit cards, but you have to do it the right way. Credit cards (aka revolving credit) not only help you build your score, but can be a great tool if you are going to own a business or get involved in real estate investing. You have to be careful to make sure you don't run your balances up too high or that will negatively impact your score and DTI.

Account Closed · Answer

@Sam Bedich Like others said, pay it off in full every month. My wife and and I use a credit card for absolutely everything, and our scores are both over 800. I buy nothing with a debit card. It’s a cash back rewards card so we get 1.5% cash back on everything. You’ll be surprised how fast the points add up when you use it exclusively. You just have to be disciplined and pay it off every month. If you carry a balance it’s pointless because the interest rate will outweigh the rewards.

Matt M. · Answer

@Sam Bedich

My daughter turned 18, went to school and applied and got a Discover student card. Limit of $1000. 6 mos later got a chase or citi card with a $3k limit.  I’d start with the discover if you are a student.

Alecia Loveless · Answer

@Sam Bedich If you go on Experian, the Credit Score website, they have Experian Boost which you might be able to sign up for without a credit card. It allows for other bills to be applied toward your credit score such as your cell phone bill or your electric bill or rent if you live in an apartment. Of course you must always pay these bills on time or it will count against your credit score.

Another way to build credit is if your parents provide you with any money while you are at school if you are in college have one of them sign you as a user onto a credit card of theirs and give you a $250 allowance each month or whatever your limit is and they pay it off on time each month (if they are responsible with money). Then when you graduate you have a great credit score. Once again this only works if they pay their bill on time each month.

Bruce Woodruff · Answer

I hate debt. But you have to have it. Make sure you pay it off every month. Since you have to get one, you might as well get one with rewards....

Michael Dumler · Answer

@Sam Bedich if you are a responsible spender, then I recommend starting with a secure card. You have the right idea, credit score is one of many variables lenders look at when underwriting a loan for approval. Length of credit history accounts for about 15% of your total credit score. Obviously, pay your credit statement on time. Set up auto pay so you don't even have to worry about it. Research Discover It secure card. Great beginner card to establish credit. Hope this helps.

Ambrosio Daniel II · Answer

If you have a savings account think about getting a secured credit card first. The secured credit card will allow you to borrow against your own savings account and while increasing your score

Getting a credit card?

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