How am I supposed to build my credit when.....

The reason mortgages are more easy to obtain than say a credit card is one word. Security. Mortgages are secured on the house. If you default on payments the bank gets your house and sells it to regain the lost money. If you default on credit card payments there is a lot less they can do. Repo only works to an extent. If I buy £500 of food on my credit card then default on my card payment they aren't gonna be repoing my food. Its either eaten or stale most likely by the time they get the paperwork through.

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Originally Posted by fourdc

Get about $500 and deposit in a bank. Then borrow $500 for 6months using the savings account as collateral. Pay off the loan on time and now you have credit.

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Thats exactly what I did. I got a $2000 credit starter loan. You save $2000 and then go to a bank with credit starter loans. They'll put your $2000 in a CD @ 3% for the term of the loan. Then they'll "loan you" $2000 at the same rate as the CD %. When they give you a check for $2000, just go put it back in savings or open another CD so you don't spend your "savings".

They gave me the option and I choose 2 years. I had to pay $80 something every month back to the bank. If you really want to, you can just use the $2000 you've just been loaned and make your monthly payment out of that.
Just try to get one where the rate on the CD and the rate on the loan are about equal. The CD rate should be higher, but that doesn't always happen. Especially now since CD rates haven't been all that great.

So, you're not really making any money off of the CD and you're not loosing money on the loan due to interest on the loan.

So, you've just basically just loaned yourself $2000 and over the course of 1 or 2 years and it cost you nothing really. If you put that money that they "loan" you in a cd for a year or two, you'll make a couple of pennies on top of that.

A joint car loan would also be great if you can get a close family memeber or friend to go on a loan with you. Just be absolutely sure that you'll be able to pay it back without their help. If you default on the loan, they go after whoever signed for you... it's a good way to ruin a relationship and put marks on their credit... not to mention negates the whole reason for the loan... to build credit.

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Originally Posted by Computernerd22

you want to look for one with the lowest APR. The higher the APR the worse.

PS to the guy who side buy a house. It takes MONEY to make MONEY.

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Just be sure to know what you're getting yourself into on those credit cards. They are designed to make you miss a payment. You might get a 0% for 6 months, then it jumps to 8% fixed. What is in the fine print though... miss a payment, even by a day, and it jumps up to 25-30%! Whats worse? They actually move the due date around. For 3 months it might be due on the 17th. You get paid on 15th, so you go online and make your payment. You get into a routine. They then just change it on you to the 10th. Well, you're used to paying it on the 15th... and didn't pay much attention to the due date on the paper since you're already into your bills routine. You go to make your payment on the 15th and you're late! You've passed your grace period and you are charged a late fee and they increase your rate. Also, never get a "cash advance" from a credit card. (eg. using it in an atm to take out cash) The rates for purchases might be 8%, but cash advance might be 20% or more.

Check out this link for some more "dirty tricks".
http://profacere.com/personal-financ...nies-play.html

Oh, and I'll second the "it takes $ to make $". You have to have $ to afford clothes that fit the company policy, food, transportation, etc. just to make it to work to make more $. The higher the chain you move, the more $ you have to have to make more $.

Oh, kind of off topic: Don't forget to start a Roth IRA as soon as you can! You'll thank yourself later. I started my 401k when I was 20.5. (The earliest they allowed at the time.) But I started my IRA as soon as I started working. Most of the time, I could only put $10 or $20 in there at first.... but you'll be amazed at how fast that thing will grow. :)

i'm bookmarking this

I'm going to attend the "hack your finances" presentation @ notacon this weekend http://www.notacon.org/speakers.html#farr I'll try to take some notes and share any good information here.

I find it interesting that so many in our profession are bad with money. If I'm having money troubles I think the solution is make more money rather then spend efficiently.

yeah, unfortunately its hard to find a laser printer on the market good enough to make money. The metal strip and watermark are the easy parts.

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Originally Posted by Negative

When I first moved to the US (some 4 years ago), I obviously did not have any credit. I could not even get a cell phone, let alone a loan. I started trying to figure out how the system works, and the "nobody will give me credit, since I need credit to get credit" situation can be frustrating at times.

I think you need to keep some things in mind: what is it you're trying to do? Are you simply trying to build your credit, or do you have bad credit and you're trying to get a loan? If you're a student and you need a loan, did you try your school's financial department (rather than your bank)?

If you're simply looking into building some credit, fourdc is right on...

very_unhappy > home loans often have much lower (credit) requirements than other types of credit. It's not uncommon for someone to be denied for a $500 credit card, but being approved for a home loan. Credit isn't everything (mortgage companies look more at what you make - or will be making - than credit card companies, for example)...

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Excellent advice, I remember a similar thread years ago with your frustration. I can tell you that you can have shitty credit and still get a house as long as you can afford the payment or a quarantor (co-signer). The value of the house is also a factor along with loan to value. I see loans to subpar (below 640) credit all the time.

I remember having similar problems way back when, but wound up getting a creditcard for overdraft protection from my bank...since it was tied to the checking account I had with them and had a lower limit, it allowed me to establish a credit history, which is the most challenging thing (its really a chicken/egg scenario)..

Think there are other ways you can approach it as well, maybe a prepaid credit card (in practice very similar to debit) which I think can count towards your credit history (which is probably the biggest thing hurting you).

If you do have any type of credit, the single biggest thing you need to do is always pay on or ahead of time, late payments can murder your credit very quickly...especially if you are not paying the full amount (which you should always be prepared to do, lest you dig yourself in a hole very quickly).

I'm a little suprised your bank was unwilling to work with you...would consider looking elsewhere if I were you...

Credit card companies should be flooding your mailbox shortly with offers. Probably of the $500 limit variety. Good enough to create a profile and generate a score. Not sure what that score would be. No idea if they give you a high score and you hurt yourself, or if you start in the basement and work your way up, or somewhere in-between.

One word of advice, though...be very careful, and if you ever start paying for food, rent, gas, other bills, etc. with a credit card, you are in trouble. I would know. Got my $500 limit AT&T Universal credit card when I was 18...and filed for bankruptcy with over $13000 in unsecured debt when I was 25. That was five years ago, and I could barely secure a $5000 vehicle loan recently (and that was with a $2000 down payment). Don't overestimate your self-control with "free" money.

Good luck

O