Its impossible to establish credit

[Boise40]

I'm starting to think its impossible to establish credit. I don't have any credit at all. I went to Job Corps a few years ago and my carpentry teacher told everyone that we need to establish credit as soon as possible. Sometimes, a cashier from Walmart would offer me a credit card of some kind. I told the person that it won't do any good because I always get rejected or something. I think its because of my income and I get about $400 or $450 a month. It seems like everything is based on your income and I think its a BIG BS. I guess, I will continue to live my life without any credit.

[Annella]

Believe it or not, you are probably better off than you think. Establishing credit is okay if your going to buy a house or a hugh purchase like that. However, I have found in my 61 years that paying cash for what you want or need is the best way to go. If you don't have the cash for it, then save it, or do without. You will be surprised that you can live without a lot of "extra". Credit isn't all it's cracked up to be. It can get you in a lot of trouble. If you buy with cash, then it is yours completely. If you buy with credit, it's not yours until that last payment to the bank. Which can seem to take forever.

Ask those who have lost jobs and can't pay their credit card bills now if it was worth it? We have been conditioned to think we need to have it all....NOW, and therefore credit helps us get it. Thing is, you are paying a lot more than just the purchase price when you buy things on credit. Interest rates can be crippling and downright daunting when comes time to make those monthly payments month after month, year after year, plus any added fees the banks vote to tack on.

It's good to have one credit card for emergencies, or for renting a car, or reserving a room in a hotel. Other than that, you really don't need it. I have ONE for just those things in an emergency and nothing else. It requires discipline to use a credit card responsibly.

[Boise40]

I'm not a big fan of having any credit cards because I don't wanna get lost in a large debt. I just imagine that a credit would be nice to have to buy a few things. Just like I could use a credit card now to buy a new computer before my old one falls apart. I'm usually good about going without until I'm able to afford what I want. Just like I'm saving my money to buy a new stereo system for my vehicle.

[Annella]

You sound like someone who is responsible with money. I know how it feels to want something and there just is not enough in the savings to swing it. Sometimes you have to separate wants from needs. Working out a monthly budget and putting aside so much every month (like your car stereo) for a big purchase works. I need a new car and find putting back a car payment (around $300) every month adds up fast and soon I'll pay cash for one. Since I don't have a car payment going out now, it's economical to do this. The car will be mine and not the banks. Then all I need to take care of is the maintenance on it. There's something very satisfying about having things that are already paid for and you are the proud owner. Nobody can take it back from you because you are just borrowing it until it becomes yours after paying double or triple for it.

However, to help you establish credit, here are a couple ideas: Save up enough money to buy something and then look for a seller that carries their own financing (like a furniture store). Say you are looking to buy a new bed frame and mattress that cost $1500, and you have saved up $1300. Put down the $1300 on the set, and let the furniture company finance the rest for you. That will establish credit. Make sure to ask if they report to a credit reporting agency. Sometimes if you almost have the purchase price saved up, a bank will extend you the credit on the balance also. They definitely report to a credit reporting agency. That's one way of establishing a little credit along the way to getting more credit. Sometimes businesses will have a financing company they will refer you to when you want to purchase something from them. These finance companies usually charge a high interest rate, but will establish credit under your name. Like I said before, have most of the purchase price already paid down, so the remainder is just to establish monthly payments to get your credit name established. Some won't care about your income if you have most of the price in hand.

You can also establish credit with prepaid credit cards. Some banks will issue credit cards on the savings you have placed with them. You open a savings account linked to a credit card. You cannot charge over the amount you have in the savings and cannot withdraw the savings out. The savings account actually protects the cards borrowing limit. Say you put $250 in a savings backed credit card. The bank will issue a credit card with a $250 limit on it. Get what I'm saying? This establishes credit because you pay the payments to the bank and/or put more in your savings to "up" your spending limit. Paying the card off in monthly payments establishes credit because the bank reports it to the credit reporting agency. A word of caution here: These types of cards usually have high interest rates and annual fees that are astronomical. You can do this to establish credit, then afterward look for a different card with lower interest rates, etc. By that time, your credit has been established and you have some credit worthiness reported under your name.

Stay away from places like "Rent To Own". Which are nothing but a rip off.

Do you know someone who is computer savvy? A friend of mine certainly is and he helps me buy my computers refurbished or almost new. My desktop is a Mac that was bought refurbished and is still going strong after 7 years. My next Mac laptop will be bought refurbished also. I'm Looking to buy one in the next couple months. You can get them so much cheaper than new and they are just like new. However, you do have to pay cash for them and not on credit. You really do need someone who knows what they are looking for and the ins and outs of a computer. There are too many websites out there selling computers and parts that are not reputable.

You almost need to have a credit card to rent a car or reserve a hotel room. You can do it without, but it's a hassle and you may lay down hundreds of dollars in deposits in lieu of a credit card. Everything today in our society is geared towards having credit cards and some people live off of their credit cards in this economy. Not a good thing to do. There is going to come a time to pay the Piper.

Hope this helps a little bit...........

[alaric99x]

Well, Annella, your advice is very sound, you speak from experience.  I also paid cash for the car I bought and I'll only replace that car with another cash payment.  I don't have a mortgage or any other debts, I pay the full balance of my credit cards every month.  I use the Discover card for almost all my purchases and it gives me a cash back bonus of 1%, and up to 5% for certain specials.  I pay everything possible with that card, I rarely use cash.  I generally get a cash back bonus between $20 and $30 per month.  This only works if you have a good credit limit, mine is over $12,000 on that card.  If you have a lower limit you can still accomplish much the same thing by making charges and sending a check or bank transfer to your card immediately to pay off what you've charged allowing you to make further charges in the same month.  

[pcoll]

It seems impossible to establish credit when many financial institutions which are supposed to help you build credit deny you the opportunity to do so... :sad1:They all deny you a credit card which is supposed to "help you build credit" by telling you that you "dont have enough credit to own a credit card....This is almost ridiculous

[AdamH1978]

If you make less than say 30-40,000 ballpark guess the most credit you will likely be given is probably only 500 dollars to begin a starter credit card/line.  I am by no means and expert, so you can take this with a grain of salt, these figures come from people I know and my experiences.  Be thankful you don't have credit card debt as it's almost like the credit card companies own you and it can be an albatross around your neck if you become too mired in debt.  A few places don't require any credit for purchases, but then they usually require proof of a job and income requirements.  If your earnings are low then you can save up enough to put down a majority payment on whatever item or service you want and thus bypass the income establishments.  If you have paid the majority of what is needed for say furniture, cell phone, transportation(scooter, even), et cetera then you will likely be granted credit for whatever small amount is left.  Once paid off they will likely report your good standing to credit agencies and voila you are in the system.  It can be discouraging to be denied credit, but keep your head up and be thankful for all the free things in your life.  Bad credit is worse than no credit so you still have time to map your course.   

[dreamyxo]

Do you have any utilities in your name?  You can also get a secured credit card that will help you build credit.

[Boise40]

Do you have any utilities in your name?  You can also get a secured credit card that will help you build credit.

Yes, I pay my power bill and phone bill and internet bill too. I'm responsible for all my bills now LOL

[sommap]

I am in the same place as Alaric.  I do have credit crds, but pay them off every month. I rarely pay cash or write a check.  It seems like I get credit card preapproved offers a few times  week in the mail.  Once you get the credit, everybody wants you. 

[hammy12]

What i dont get is if you have bad credit it affects your car insurance cost. If its bad the price is higher? So their saying if i have bad credit, i am a unsafe driver??? ITS ALL ANOUT MONEY PEOPLE!!

[light_of_ryuk]

yes it is