So, I want to build credit, so i can do things like get a good student loan and maybe a house or apartment. Is getting a credit card and just buying, say, a 500 dollar computer part and then not anything else, just paying that off a good idea?
let's see if I can remember stuff basically, a huge thing is just that you pay it off. so it could be the 500 part, but it could also be a whole bunch of tiny things that you pay off
yea, i know. I'm just nervous because i've heard of it going bad so often. I'd save up for it but I only make like, 150 a paycheck or so, and need the part to complete my computer. All the other components can be bought on one paycheck.
it's also possible to check with a library to see if they have financial advice, too, because they often have free classes on stuff like that
They want to see you using the card regularly. But using more than half your available credit at a given time is bad. There's a list of things that'll make your credit score go down on my card's website, I think. I can grab it when I'm at a computer.
Here's what my credit website says are "a few of the most important" things that determine credit worthiness: On-time payments (self-explanatory) Oldest credit line (they want to see that you have had experience managing a credit account) Credit used (optimally use less than half of available credit per month) Recent inquiries (looking up your credit score too often or applying for too many credit cards is a sign of risk) New accounts (opening up too many credit accounts in a 2-year span is a bad) Available credit (relative to amount owed -- more is better) I misremembered -- not using a credit card is not bad for your score, but sooner or later they will close the account due to inactivity. I am not a money expert. But what I do is set up the credit card to pay all of my bills, and I keep all of the money already set aside for bill-paying in my bank account until the end of the month, when I pay off the credit card. This keeps the card active, and I know I'll always have the money to pay it off before it becomes a problem. (It also keeps enough leftover credit available that I can use the card for emergencies (or if I really, really want something)) So to answer your question specifically: Just buying a computer part and then not anything else, just paying that off: Good idea, so long as you know you can pay it off in a reasonable time period (based on your card's interest and APR) and so long as once the computer part is paid off, you go on to use the card for something else so it remains active.
My plan was to use the card for the computer part, and then lunch at work. Paying off 70 dollars or so a month should cover all of that in a reasonable time - the banker i spoke with last said there would be no interest until like 6 months, though, i'd have to talk more about apr and stuff. Could someone tell me some questions to ask about when i'm looking to get a card?
Introductory no interest is great. Questions to ask: are there going to be any fees after the first year? What's the minimum payment? What are the late charges, and when do they kick in? Are there any rewards other than the introductory no interest? (my Amazon card gives me 3% cash back on Amazon purchases, 2% on gas, and 1% on everything else, my other card gives me 18 months interest free on Apple products) But yeah, getting a credit card is great! As long as you pay it off in a reasonable time, it's a great way to build credit.
I work at a bank, so I'll give you some tips. (No I won't tell you what one, sorry.) Heres the hypocrisy about credit. The FICO score governs pretty much everything about your life, but FICO itself refuses to and has never divulged their formula. So I would love to say 'do this and this and you are set.' If anyone says they can tell you that, they are basically lying. HOWEVER, there are companies (credit karma is a good one, actually) that are pretty much sure that they know about it mostly and their advice is pretty great. With that said, heres what builds credit. For sure, 100% accurate. "Have Credit and Use Credit" Thats the only thing that anyone really knows for sure. Beyond that, the best tips ill give you for a credit card is to find one that works the best for you. I would also personally suggest going through banks and not companies (no offence to Amazon or whatever, in VERY general terms banks give the best interest, are more willing to take on risk - i.e., customers with lower credit scores). I personally like rewards. It depends on what you want - cash back cards are generally simpler, points cards give you more opportunities (they have catalogs that you should be able to peruse before applying for the card - plus you can use points for cash back and travel). Reward cards ALWAYS have higher interest ranges than non-rewards. Almost all cards will offer an introductory 0% Balance Transfer offer, most of them will have an intro 0% APR Purchase offer. keep in mind, even if they dont, if you do not carry a balance on your card from month to month you will never pay interest. Oph gave awesome advice and its similar to what I do. If I make a purchase on the card, I try to IMMEDIATELY transfer the money from my checking to cover the purchase on the card. That way I dont forget, and I dont put myself in a tough spot come payday. If you have anything else you want to know, feel free to ask. This is kinda my busmans holiday - I do this all day anyway *smile. Oh. Dont EVER use a credit card for cash. Awful. Bad idea.
