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Credit card questions


IVIYTH0S

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Some myths on CCs - they don't really raise your credit score.  I thought I was doing good by having a credit card many years, but when I went to buy my first car I finally asked why no one would give me a good rate I was told it was because I had no credit ..."just credit cards".

 

I have to disagree. As I said in a previous post, that's how I built my credit. The first purchase I made that needed credit was my first house. I had always paid cash for cars so never needed a loan until then.

The bank said my credit was "excellent". That was about 12 years ago and the only way I could have built "excellent" credit was:

1. My credit cards

2. Paying my bills in a timely manner (ie electricity, sewerage, water, phone, etc)

3. Not being sent to collections for unpaid gym memberships, lol (like happened to a buddy)

I'm sure all three played a factor, but I would be highly surprised if the credit cards don't get the lion's share of the credit (pun intended)

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So I'd have to pay money to raise my credit (getting a loan) or you're saying I could pay it off early and incur no interest?

 

 

I'm not sure how long you have to hold onto a loan to get real benefit from it.  Many recommend holding onto the loan for the full term so if you did that than ya you would have to pay to increase your credit.

 

Though no matter what you are going to have to pay to raise your credit.  I wish someone had told me the loan strategy before I tried buying my first car.  I'm sure the interest rate on a $5k loan is pretty low and the amount you pay over the course of the loan is MUCH CHEAPER than getting a crappy interest rate on your first real investment - house or car.

 

The bank wants to know you can borrow money and you will responsible enough to pay it back.  And credit cards don't give them that warm fuzzy.

 

Ehhh...I hope more chime in because I'd VERY much prefer not to just pay into the evil scum that is the banking world just to establish what I and anyone who knows me already knows (who happens to lend a lot of money out to other people because I am so good with mine, for no interest unless they force it on me)

 

 

Some myths on CCs - they don't really raise your credit score.  I thought I was doing good by having a credit card many years, but when I went to buy my first car I finally asked why no one would give me a good rate I was told it was because I had no credit ..."just credit cards".

 

I have to disagree. As I said in a previous post, that's how I built my credit. The first purchase I made that needed credit was my first house. I had always paid cash for cars so never needed a loan until then.

The bank said my credit was "excellent". That was about 12 years ago and the only way I could have built "excellent" credit was:

1. My credit cards

2. Paying my bills in a timely manner (ie electricity, sewerage, water, phone, etc)

3. Not being sent to collections for unpaid gym memberships, lol (like happened to a buddy)

I'm sure all three played a factor, but I would be highly surprised if the credit cards don't get the lion's share of the credit (pun intended)

 

I hope you're right, because my boss recommended taking a loan out for no reason and really all I'd ever need a loan for is a house as I'll never buy a car I can't pay outright from my bank account/cash, if I can't afford a car than I don't deserve to be driving it.

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I hope you're right, because my boss recommended taking a loan out for no reason and really all I'd ever need a loan for is a house as I'll never buy a car I can't pay outright from my bank account/cash, if I can't afford a car than I don't deserve to be driving it

So responsible you are, lol

 

 

 

 

EDIT: I don't know what it is but I screw up this quoting system EVERY time!

Edited by ivangela

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Cancelling a credit card in and of itself does not lower your credit score.  However, losing the available credit limit from the card you cancelled does.  You're credit risk is partly determined by the amount of available credit you have versus the actual $ amount of credit you use.

 

So if you cancel a card that has a credit limit of $1,000 then that $1,000 is subtracted from your amount of available credit.  Assuming you have some other type of credit debt then your available credit to used credit percentage decreases - and that will lower your credit score.

 

I wouldn't ever carry a card with an annual fee...... ever.

 

Check with your banking institution as they will often have a partner credit card company that offers competitive finance charges with no annual fee.  In today's credit market, a bank will not make a loan just for the sake of making a loan.  You'll need some sort of collateral, whether that is matching funds or qualifying assets.  Also, credit grantors like to see different "types" of responsible uses of credit.  While revolving credit is one type, so are installment loans (i.e. vehicles, boats, motorcycle etc.), unsecured loans, and mortgages for example.

 

Consider taking a small amount of money and opening an account at a credit union.  Maybe your employer is already affiliated with one, and if so take advantage of that - if not then get some references and pick one you like.  Spend six months with them building a relationship, regularly making deposits, withdrawals etc. but never over-draw your account or do anything stupid that negatively reflects on your ability to manage money.  Then find a small ticket item that they might make a personal loan for.  Apply and hopefully get approved  :)

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I have to disagree. As I said in a previous post, that's how I built my credit. The first purchase I made that needed credit was my first house. I had always paid cash for cars so never needed a loan until then.

The bank said my credit was "excellent". That was about 12 years ago and the only way I could have built "excellent" credit was:

1. My credit cards

2. Paying my bills in a timely manner (ie electricity, sewerage, water, phone, etc)

3. Not being sent to collections for unpaid gym memberships, lol (like happened to a buddy)

I'm sure all three played a factor, but I would be highly surprised if the credit cards don't get the lion's share of the credit (pun intended)

 

 

Ehhh...I hope more chime in because I'd VERY much prefer not to just pay into the evil scum that is the banking world just to establish what I and anyone who knows me already knows (who happens to lend a lot of money out to other people because I am so good with mine, for no interest unless they force it on me)

 

I hope you're right, because my boss recommended taking a loan out for no reason and really all I'd ever need a loan for is a house as I'll never buy a car I can't pay outright from my bank account/cash, if I can't afford a car than I don't deserve to be driving it.

 

 

I'm going from personal experience of trying to get a loan (as a young person) with nothing but credit cards for credit history.   The consensus from trying to get a loan was I had no credit history.  They specifically said, "No credit history."  As in wasn't good or bad, it just wasn't there.  And I had a credit card for 5 years with spotless payment history.

 

Credit Cards do not establish you can take on debt and pay it back because you can have a credit card and never use it.  The credit agency doesn't track your purchases with it.  They just track if your CC company reports you for failing to pay.  In fact, the agencies won't even know you missed a payment unless your CC bank make it a point to report you.  For Ivangela (going from memory on spelling since the new quoting system leaves out the name in the reply box and I won't be able to edit this post so forgive me if I spell it wrong) it probably had more to do with the fact he established himself with the utility companies than the CCs themselves.

 

 

If you really want to settle this, IVI, look up tips and advice for buying your first home.  All of the good articles will bring up credit, how to establish it and how to fix it if you broke it.  In short though, it is much easier to go from no credit to good credit than it is to go from even just spotty credit to good credit.  All of the advice I read is stuff I am passing on to you.  Take it or leave it, but this is what I learned from doing months of research.

 

I would try something simple first, like take a $5k loan and pay it off early before I incrued a monthly expense.  

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I will say that I did read one article that recommended making the minimum payment on a CC for awhile, then pay it off, if your credit sucks too much to take out a loan.  The loan is the preferable method since APR on credit cards is stupid high.  So it is possible to build up some credit off of a credit card, but its definitely not ideal due to the high interest rate they charge.

 

 

Still can't edit my posts or I would have edited this in.

 

edit: seeing if IVI is right, if so he gets a Like!

Edited by Fogel

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Hey Fogel, thanks for all the info. I come from a long line of no credit history, so I've got no resources to learn from other than Google. I don't really need credit at all (maybe when I get a house or get herpes... No, student loans, sorry...), but having good credit would save me some hassle in the future. Still waiting on my green card and I can't get a credit card on a visa, but when it goes through, I'll start hunting. Thanks Fogel.

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I hope you're right, because my boss recommended taking a loan out for no reason and really all I'd ever need a loan for is a house as I'll never buy a car I can't pay outright from my bank account/cash, if I can't afford a car than I don't deserve to be driving it

So responsible you are, lol

 

 

 

 

EDIT: I don't know what it is but I screw up this quoting system EVERY time!

 

I'm the frugalmeister at OCC, why are you surprised :P

 

Cancelling a credit card in and of itself does not lower your credit score.  However, losing the available credit limit from the card you cancelled does.  You're credit risk is partly determined by the amount of available credit you have versus the actual $ amount of credit you use.

 

So if you cancel a card that has a credit limit of $1,000 then that $1,000 is subtracted from your amount of available credit.  Assuming you have some other type of credit debt then your available credit to used credit percentage decreases - and that will lower your credit score.

 

I wouldn't ever carry a card with an annual fee...... ever.

 

Check with your banking institution as they will often have a partner credit card company that offers competitive finance charges with no annual fee.  In today's credit market, a bank will not make a loan just for the sake of making a loan.  You'll need some sort of collateral, whether that is matching funds or qualifying assets.  Also, credit grantors like to see different "types" of responsible uses of credit.  While revolving credit is one type, so are installment loans (i.e. vehicles, boats, motorcycle etc.), unsecured loans, and mortgages for example.

 

Consider taking a small amount of money and opening an account at a credit union.  Maybe your employer is already affiliated with one, and if so take advantage of that - if not then get some references and pick one you like.  Spend six months with them building a relationship, regularly making deposits, withdrawals etc. but never over-draw your account or do anything stupid that negatively reflects on your ability to manage money.  Then find a small ticket item that they might make a personal loan for.  Apply and hopefully get approved   :)

What if I cancelled a card with $500 of credit (my Cap1) and then got one with $500 or more of credit available?? Would that minimize the impact or completely nullify it?

 

I had to get the Annual Fee, no one else would deal with me unfortunately (or rather, I didn't keep trying others since I heard that if you send out alot of credit applications, the desperate effort looks bad to the credit bureau)

 

Well my bank is (was) ING Direct...which is now CapitalOne360 so, I'd still be looking at CapitalOne. Interestingly enough, I'm not sure the two communicate too closely since I know Cap1 had purchased ING before I got my credit card but they just recently changed the name to CapitalOne360, I could make that case when I request a card switch or apply for the better, no annual fee, version.

 

What do you mean by a Credit Union?? Is that a checking account type relationship?? I have been with Commerce Bank (now TD Bank) for MANY years and have a checking account with them as well as a checking account with ING, I'm betting I could request loans from them if I wanted to.

 

 

I have to disagree. As I said in a previous post, that's how I built my credit. The first purchase I made that needed credit was my first house. I had always paid cash for cars so never needed a loan until then.

The bank said my credit was "excellent". That was about 12 years ago and the only way I could have built "excellent" credit was:

1. My credit cards

2. Paying my bills in a timely manner (ie electricity, sewerage, water, phone, etc)

3. Not being sent to collections for unpaid gym memberships, lol (like happened to a buddy)

I'm sure all three played a factor, but I would be highly surprised if the credit cards don't get the lion's share of the credit (pun intended)

 

 

Ehhh...I hope more chime in because I'd VERY much prefer not to just pay into the evil scum that is the banking world just to establish what I and anyone who knows me already knows (who happens to lend a lot of money out to other people because I am so good with mine, for no interest unless they force it on me)

 

I hope you're right, because my boss recommended taking a loan out for no reason and really all I'd ever need a loan for is a house as I'll never buy a car I can't pay outright from my bank account/cash, if I can't afford a car than I don't deserve to be driving it.

 

 

I'm going from personal experience of trying to get a loan (as a young person) with nothing but credit cards for credit history.   The consensus from trying to get a loan was I had no credit history.  They specifically said, "No credit history."  As in wasn't good or bad, it just wasn't there.  And I had a credit card for 5 years with spotless payment history.

 

Credit Cards do not establish you can take on debt and pay it back because you can have a credit card and never use it.  The credit agency doesn't track your purchases with it.  They just track if your CC company reports you for failing to pay.  In fact, the agencies won't even know you missed a payment unless your CC bank make it a point to report you.  For Ivangela (going from memory on spelling since the new quoting system leaves out the name in the reply box and I won't be able to edit this post so forgive me if I spell it wrong) it probably had more to do with the fact he established himself with the utility companies than the CCs themselves.

 

 

If you really want to settle this, IVI, look up tips and advice for buying your first home.  All of the good articles will bring up credit, how to establish it and how to fix it if you broke it.  In short though, it is much easier to go from no credit to good credit than it is to go from even just spotty credit to good credit.  All of the advice I read is stuff I am passing on to you.  Take it or leave it, but this is what I learned from doing months of research.

 

I would try something simple first, like take a $5k loan and pay it off early before I incrued a monthly expense.  

 

That's so strange that it didn't help you at ALL

 

I'll look into guides relating to that, and see what I can find, thanks for the tip.

 

I thought when you take out a loan, you agree to a certain price higher than the amount requested before it gets approved. But you're saying if you pay it off lightning fast, you don't have to pay interest on it??

 

I will say that I did read one article that recommended making the minimum payment on a CC for awhile, then pay it off, if your credit sucks too much to take out a loan.  The loan is the preferable method since APR on credit cards is stupid high.  So it is possible to build up some credit off of a credit card, but its definitely not ideal due to the high interest rate they charge.

 

 

Still can't edit my posts or I would have edited this in.

Hmm, so letting them  bend me over for interest from the CC would work also (I mean it makes sense...but sucks that just using the card and paying it off completely every month doesn't help...)

 

Also a way to edit I found (before both of my computers magically worked) was to middle click the edit button to open it up in another tab and then the full editor opens.

 

Hey Fogel, thanks for all the info. I come from a long line of no credit history, so I've got no resources to learn from other than Google. I don't really need credit at all (maybe when I get a house or get herpes... No, student loans, sorry...), but having good credit would save me some hassle in the future. Still waiting on my green card and I can't get a credit card on a visa, but when it goes through, I'll start hunting. Thanks Fogel.

No Visa with a Visa eh? :P

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Hey Fogel, thanks for all the info. I come from a long line of no credit history, so I've got no resources to learn from other than Google. I don't really need credit at all (maybe when I get a house or get herpes... No, student loans, sorry...), but having good credit would save me some hassle in the future. Still waiting on my green card and I can't get a credit card on a visa, but when it goes through, I'll start hunting. Thanks Fogel.

 

No problem :D

 

Sadly researching this stuff isn't fun.  My friend is a real estate agent and my mom had a real estate agent friend so I've talked with a few real estate agents and quite a few mortgage brokers to see what my eligibility is.  Real estate agents don't know crap about loans - flat out.  I didn't meet a mortgage broker who didn't try selling me a rusty nail disguised a beach faring flip flop.  Before you buy a house, do a LOT of research on your own ...you cannot count on anyone and industry is constantly changing.

  

That's so strange that it didn't help you at ALL

 

I'll look into guides relating to that, and see what I can find, thanks for the tip.

 

I thought when you take out a loan, you agree to a certain price higher than the amount requested before it gets approved. But you're saying if you pay it off lightning fast, you don't have to pay interest on it??

 

Hmm, so letting them  bend me over for interest from the CC would work also (I mean it makes sense...but sucks that just using the card and paying it off completely every month doesn't help...)

 

Also a way to edit I found (before both of my computers magically worked) was to middle click the edit button to open it up in another tab and then the full editor opens.

 

 

I haven't taken out a simple loan ...simply because I didn't know about that trick TILL AFTER I needed it.  But from my experience, I would count on some adminstrative fees.  You won't walk out clean of no payment.   Keep in mind, I am recommending you invest a little into your future ...instead of PAYING a lot because you didn't invest.  Getting a crappy interest rate hurts far worse ...trust me.  Rates are much better now.  For example, when I bought my first car it was 20k.  If I would have paid the minimum payment for the whole 6yrs I would have dropped a total of $38k!  Nearly double!  Compounding Interest is the math major's nuclear bomb.   Needless to say, once I did the calc I paid that car off pronto!  I worked my tail feathers off and paid it off in 2 years.  I love that car, its been great to me but its no $40k car.

 

I know you have no interest on taking a loan on a car but that is an example.  The calc on a house is even worse - ty compounding interest. :unsure:

 

So if it takes a few hundred dollars to save THOUSANDS later, I will pay that price!   Sometimes investments aren't just guaranteed payments of money.  Do the research and see what you come up with.  You may find a better path. :)

 

 

Thanks for the tip on editing, that seems to work!  Now I can edit my PS4 post in the gaming section and update it, but its go home time!

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my second x-wife took me to the cleaners in 1999 and so i had to completely re-establish credit in just my name rather than "our name" (i hope you don't find out about these things the hard way), i got myself an upfront pre-paid card and started buying things randomly and paying them off and did the small balance thing for about a year, and then capital one offered to give me a regular card at a slightly higher but still fairly reasonable interest rate,  but after a few months capital one sent me notices saying things like my account had been reassessed and the interest rate would be readjusted accordingly, i remember that they raised my annual fee at least once and like i said earlier, they refused a needed limit increase, so i paid them off and cancelled them out...hey ivi, you're a smart guy you'll know if they're trying to get over on you, so just be careful about putting yourself in the position of not being able to move on and go forward if need be, that's all...

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Hey Fogel, thanks for all the info. I come from a long line of no credit history, so I've got no resources to learn from other than Google. I don't really need credit at all (maybe when I get a house or get herpes... No, student loans, sorry...), but having good credit would save me some hassle in the future. Still waiting on my green card and I can't get a credit card on a visa, but when it goes through, I'll start hunting. Thanks Fogel.

 

No problem :D

 

Sadly researching this stuff isn't fun.  My friend is a real estate agent and my mom had a real estate agent friend so I've talked with a few real estate agents and quite a few mortgage brokers to see what my eligibility is.  Real estate agents don't know crap about loans - flat out.  I didn't meet a mortgage broker who didn't try selling me a rusty nail disguised a beach faring flip flop.  Before you buy a house, do a LOT of research on your own ...you cannot count on anyone and industry is constantly changing.

  

That's so strange that it didn't help you at ALL

 

I'll look into guides relating to that, and see what I can find, thanks for the tip.

 

I thought when you take out a loan, you agree to a certain price higher than the amount requested before it gets approved. But you're saying if you pay it off lightning fast, you don't have to pay interest on it??

 

Hmm, so letting them  bend me over for interest from the CC would work also (I mean it makes sense...but sucks that just using the card and paying it off completely every month doesn't help...)

 

Also a way to edit I found (before both of my computers magically worked) was to middle click the edit button to open it up in another tab and then the full editor opens.

 

 

I haven't taken out a simple loan ...simply because I didn't know about that trick TILL AFTER I needed it.  But from my experience, I would count on some adminstrative fees.  You won't walk out clean of no payment.   Keep in mind, I am recommending you invest a little into your future ...instead of PAYING a lot because you didn't invest.  Getting a crappy interest rate hurts far worse ...trust me.  Rates are much better now.  For example, when I bought my first car it was 20k.  If I would have paid the minimum payment for the whole 6yrs I would have dropped a total of $38k!  Nearly double!  Compounding Interest is the math major's nuclear bomb.   Needless to say, once I did the calc I paid that car off pronto!  I worked my tail feathers off and paid it off in 2 years.  I love that car, its been great to me but its no $40k car.

 

I know you have no interest on taking a loan on a car but that is an example.  The calc on a house is even worse - ty compounding interest. :unsure:

 

So if it takes a few hundred dollars to save THOUSANDS later, I will pay that price!   Sometimes investments aren't just guaranteed payments of money.  Do the research and see what you come up with.  You may find a better path. :)

 

 

Thanks for the tip on editing, that seems to work!  Now I can edit my PS4 post in the gaming section and update it, but its go home time!

 

Yeah, my girlfriend is stuck in never ending financing (and her choice in vehicles is awful but that's a thread all on its own...) My bestfriend tried to tell me that financing a new car was smarter than paying it all in up front cash because of inflation and since the money of today is more valuable than the inflated values tomorrow, you "break even". I mean it sounds logical but I know I'm still losing in interest than I'd ever "gain" if I ever were to just spend the money that day.

 

I could take a loan out just because right?? Doesn't have to be a car loan does it? (as I forsee and hope my Saturn doesn't kick it and force me to buy something else....which would probably be a car under $5000 anyway)

 

Your logic makes sense and I'd not mind your tactic...maybe I'll take a out a loan for the next school semester and then pay it off in that same month!

 

Not a problem, I was pretty pissed off at the forum switch...but now the only things I hate about it is I *need* to use the mobile site on my phone to post from (the last gen forum would allow me to do anything I wanted on my phone's browser in desktop mode) and also requoting quotes is impossible since it just has the gray box that doesn't have the BB user date/reference code to copy.

 

 

my second x-wife took me to the cleaners in 1999 and so i had to completely re-establish credit in just my name rather than "our name" (i hope you don't find out about these things the hard way), i got myself an upfront pre-paid card and started buying things randomly and paying them off and did the small balance thing for about a year, and then capital one offered to give me a regular card at a slightly higher but still fairly reasonable interest rate,  but after a few months capital one sent me notices saying things like my account had been reassessed and the interest rate would be readjusted accordingly, i remember that they raised my annual fee at least once and like i said earlier, they refused a needed limit increase, so i paid them off and cancelled them out...hey ivi, you're a smart guy you'll know if they're trying to get over on you, so just be careful about putting yourself in the position of not being able to move on and go forward if need be, that's all...

I will definitely keep an eye on it/them. I just talked to a Cap1 rep and he told me I have until the 28th of this month to cancel my current card which I shall immediately change for THIS CARD should I be approved.

Edited by IVIYTH0S

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