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Parrotine posted:Correct me if i'm wrong here, but isn't the main way of building solid credit primarily done via paying off things over a period of time You're wrong. Having a credit card account in good standing with low utilization is what builds credit. You should never be carrying a balance on any credit card. Period. That would be considered a financial emergency. Pay you statement balance on time each month and you won't have to pay anything more than the annual fee to build good credit.
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Jul 13, 2020 19:29
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Parrotine posted:Correct me if i'm wrong here, but isn't the main way of building solid credit primarily done via paying off things over a period of time instead of just one-shotting the expense? Family members have told me that if all you do is buy something using a CC and pay off the expense the next month it won't really end building up much credit at all, or at least nowhere near enough to get you approved for the big ticket items like loans or a mortgage. Your family members are unfortunately quite wrong and are either wasting tons of money on interest payments or trying to justify living in debt. Pay with a CC, get the statement, pay it off. Don't max out your card, even if it has a low limit. Resist any urge to buy something you really can't afford just because your credit limit allows for it unless it really is some kind of emergency. quote:Also, while I am mainly interested in building solid credit, I wouldn't mind pursuing a different one if the rewards are solid enough. The only thing that nerdwallet recommended was that particular Discover card and an OpenSky Visa card (which seems to have a very high APR fee attached). On a side note, my younger sister has had some negative experiences using Discover, as she seems to be paying off her final balance and cancelling her card so there's also that. Normal secured card recommendations are traditionally Discover or Capital One, but I want to say Capital One's graduation system got worse lately. I don't follow secured cards too closely so I'd recommend a deeper look if you were considering Capital One. Capital One also kinda sucks and hard pulls all 3 bureaus. You might read about tricks to freeze one to try to get around it, but that shouldn't work these days. edit: Once you have at least a year of credit history, you should look into signing up for a Chase credit card like the Freedom or Freedom Unlimited.
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Jul 13, 2020 19:35
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astral posted:Your family members are unfortunately quite wrong and are either wasting tons of money on interest payments or trying to justify living in debt. Pay with a CC, get the statement, pay it off. Don't max out your card, even if it has a low limit. Resist any urge to buy something you really can't afford just because your credit limit allows for it unless it really is some kind of emergency. On the contrary, they have very little to no debt, and usually pay off everything at the first of the following month since they use AmeX. I'll have to get some clarification on what they're talking about here, i'm sure i've left something out by mistake. In terms of cards, am I to assume that I should just go with the Discover it Secured card here? The purchases i'll be making are things that are not 'emergency', just things for leisure that I can pay for out-of-pocket currently. However, one of the two items is close to costing two grand, so would be a second purchase at a later date; sounds like it could max out the card balance as well. After that I would probably not use that card for much of anything else outside of emergencies.
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Jul 13, 2020 20:19
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Parrotine posted:Correct me if i'm wrong here, but isn't the main way of building solid credit primarily done via paying off things over a period of time instead of just one-shotting the expense? Family members have told me that if all you do is buy something using a CC and pay off the expense the next month it won't really end building up much credit at all, or at least nowhere near enough to get you approved for the big ticket items like loans or a mortgage. Credit card companies report two things each month to credit reporting agencies: * Your last statement balance * Whether you paid your bill on time, late, didn't pay it at all, or if there was no bill (say, because you didn't have any charges against the card in the last statement period) The point of your credit score is to show that you're a good risk - if a bank loans you money, you'll pay it back without any trouble. To make that work, you want to rack up a bunch of "paid this month's bill on time" entries, and show that you're not stretching yourself by using all the credit you've got. Putting a cheap bill like Netflix on the card, and setting it to auto-pay every month, will get you that history of on-time payments and low utilization. You don't need to pay a cent in interest to get this. There's a common misconception that your credit score is a measurement of how much the bank likes you - and, yes, they definitely like customers who carry a balance and pay interest (and maybe even the occasional fee for late payment or going over a credit limit). But, credit scores are only supposed to measure risk, not your profit potential to the bank. So, they track whether you pay your bill on time, and try to measure whether you're over-extended with things like utilization and recent credit applications. As you move out of secured cards, there's a bit of benefit in keeping that monthly statement balance number fairly high - it lets you ask the credit card company for a credit limit increase, so you can get the various benefits of a credit card (purchase/chargeback protection, rewards points, etc) without running at the red line of your limit and messing up your utilization. If you never put anything but Netflix on a card, they might not be super willing to give you a $20k limit - on the other hand, if you regularly put all your monthly expenses through your card, that's not out of the question. But - for that, it still doesn't matter whether you carry a balance, or pay the card in full every month. The best strategy is to treat your credit card like a delayed debit card, put expenses through it, and then pay it off in full every single time.
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Jul 13, 2020 20:30
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Parrotine posted:On the contrary, they have very little to no debt, and usually pay off everything at the first of the following month since they use AmeX. I'll have to get some clarification on what they're talking about here, i'm sure i've left something out by mistake. Yeah, it's possible that there was a miscommunication somewhere there, like maybe you had asked (or they thought you had asked) about making payments immediately after the purchase vs. waiting for the statement to cut (you should wait for the statement to cut). quote:In terms of cards, am I to assume that I should just go with the Discover it Secured card here? The purchases i'll be making are things that are not 'emergency', just things for leisure that I can pay for out-of-pocket currently. However, one of the two items is close to costing two grand, so would be a second purchase at a later date; sounds like it could max out the card balance as well. The Discover Secured card is a great first card. Discover has amazing US-based customer service. It also gives you 1% cash back, which is pretty nice for a secured card - and it has cashback match, so however much cash back you get in the first year is doubled at the end of that first year. quote:After that I would probably not use that card for much of anything else outside of emergencies. It's good to have use on your card(s). If utilization drops to zero, that will temporarily lower your score, but all you have to do to raise it back up is use it again.
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Jul 13, 2020 20:32
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astral posted:Normal secured card recommendations are traditionally Discover or Capital One, but I want to say Capital One's graduation system got worse lately. I don't follow secured cards too closely so I'd recommend a deeper look if you were considering Capital One. I have a capital one secured card, secured with ~$1100 on it from 5 years ago (6? maybe?) now, since then I have bought a house, boat, maintain a ~775 credit score etc etc, two other credit cards with substantial limits, they will not upgrade me to a regular unsecured card I think we have two more major purchases to do this year and then I'm going to get a new card from somebody else and retire that old secured card, gently caress those guys. Supposedly you can graduate from secured but AFAIK I have the perfect graduation story and it's not happening. Maybe they will offer to graduate me when I cancel it this fall.
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Jul 13, 2020 20:43
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Hadlock posted:I have a capital one secured card with ~$1100 on it from 5 years ago (6? maybe?) now, since then I have bought a house, boat, maintain a ~775 credit score etc etc they will not upgrade me to a regular unsecured card Capital One is absolutely insane, but I just read this morning that they're adding price protection (4 claims per year max) to their world mastercards after most other issuers have removed it.  Apparently the Rakuten (ebates) Visa also has price protection; I'd be slightly tempted if it weren't Synchrony.
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Jul 13, 2020 20:47
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astral posted:It's good to have use on your card(s). If utilization drops to zero, that will temporarily lower your score, but all you have to do to raise it back up is use it again. I have a couple of monthly prescriptions I pay that I pay with CC that rounds out to a good $300+ after everything's said and done, I don't see the harm in doing this if it helps keep my score running. I'm mainly concerned about putting too many of my monthly expenses on a card which I could easily lose track of; perhaps starting off small and working my way up would be the best course of action. White Light fucked around with this message at 22:25 on Jul 13, 2020 |
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Jul 13, 2020 20:56
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Parrotine posted:I have a couple of monthly prescriptions I pay that I pay with CC that rounds out to a good $300+ after everything's said and done, I don't see the harm in doing this if it helps keep my score running. I'm mainly concerned about putting too many The mathematically "best" way to use it (if you get cashback or some kind of other rewards) is to just treat it like a debit card. Do all your regular spending, pay it off in full, and get the rewards. Don't use it to "float" money or spend money that you don't have if you are worried about it. But, if you just want to build some credit and don't care about the rest, then just put some subscriptions on it and set it to auto-pay the full balance each month on a specific day. The biggest factors in having a good credit rating are no missed payments and length of credit. Just paying off everything on time will eventually get you excellent credit. You don't need to worry about gimmicks or gaming the score. Leon Trotsky 2012 fucked around with this message at 21:05 on Jul 13, 2020 |
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Jul 13, 2020 21:03
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Parrotine posted:I have a couple of monthly prescriptions I pay that I pay with CC that rounds out to a good $300+ after everything's said and done, I don't see the harm in doing this if it helps keep my score running. I'm mainly concerned about putting too many of my monthly expenses on a card which I could easily lose track of; perhaps starting off small and working my way up would be the best course of action. I don't want to pry, so feel free not to answer if you don't want, but are your monthly prescriptions name brand drugs and are you in the US? Many of the name brand drugs have programs where if you're insured, you only pay a certain amount of your copay. Have you checked to see if any of your prescriptions have this? For instance, I am prescribed Entyvio, once every other month. It's in a tier that would cost me a copay of about $125, but they have a program where I only pay $5 of the copay and they cover the rest. My FIL has been prescribed Eliquis and it has the same type of program, but since he's medicare, I don't think he qualifies for it. Don't pay any more for drugs than you absolutely need to.
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Jul 13, 2020 23:45
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Just a note on utilization. It doesn't have a "memory" so if you don't have a use for your credit score in the near future and want to get rewards on a large purchase there's no permanent mark on your record/score for having a high utilization for a month or two. If a card you gets has an introductory 0% APR period and you have a high interest checking or savings account, putting money into that account to cover your purchases and setting up autopay for the minimum payment on your card for the introductory period to draw from that account is a good way to get a little extra back and have your money continue to work for you. Treat credit cards like a debit card, only spend what you have, setup autopay, and monitor your accounts via statements/personal capital and over time your score will grow nicely.
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Jul 14, 2020 01:46
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Cacafuego posted:I don't want to pry, so feel free not to answer if you don't want, but are your monthly prescriptions name brand drugs and are you in the US? Many of the name brand drugs have programs where if you're insured, you only pay a certain amount of your copay. Have you checked to see if any of your prescriptions have this? Unfortunately my insurance does not cover the costs of my prescriptions. The pricey one is called Vyvanse, costs about $260-ish, that's after I use a coupon from GoodRX to knock it down a bill. I used to have an ACA plan that cut down the price considerably but was discontinued about three years ago. I'm going to meet with my psychiatrist next month to see if there's a generic available that's more affordable, think I've been taking it for a good ten years now.
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Jul 14, 2020 05:25
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Parrotine posted:However, the OP also says that it's extremely recommended to pay off the full amount of anything you purchase before the end of the following month due to high interest rates, which yeah, does make sense. Correct me if i'm wrong here, but isn't the main way of building solid credit primarily done via paying off things over a period of time instead of just one-shotting the expense? Family members have told me that if all you do is buy something using a CC and pay off the expense the next month it won't really end building up much credit at all, or at least nowhere near enough to get you approved for the big ticket items like loans or a mortgage. I just recently went from; no credit score, buying a house 5.12% , building it higher and am signing a refinance tomorrow 2.625% all without paying a dime on credit card interest. No score to 750 in less than 3 years and the only thing holding it back from being even higher is I needed a new central heating and air unit and got a Trane for like 6k (0% interest 5 years) that raised my credit utilization % and slightly dinged my score every month for awhile. (Having another line of credit did help my score but that was 4x the credit I had besides it. I.e I'm still at 35% utilization of my total credit on the unit alone when 20-30% utilization or less is ideal.) Quaint Quail Quilt fucked around with this message at 20:52 on Jul 14, 2020 |
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Jul 14, 2020 20:45
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Yeah, the statement has to print to show usage. It also used to be advised to set a reminder every 6mo or so to call and raise your limit. Utilization is a big part of your score, so the higher limit makes your % utilization go down . You look more responsible for doing the same things. No idea if that is still viable. Also, if you have 2 cards with a company, move the credit kind before you close one. That way you retain the overall credit limit.
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Jul 14, 2020 21:27
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FunOne posted:It also used to be advised to set a reminder every 6mo or so to call and raise your limit. Utilization is a big part of your score, so the higher limit makes your % utilization go down . You look more responsible for doing the same things. Viable when the issuer does it with a soft pull, but often a waste if they do it with a hard pull which could've instead been used to just get a new card to fill out your rewards card portfolio and/or a signup bonus.
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Jul 14, 2020 21:30
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One more question regarding the Discover It Secured card. What's my spending limit for new users? I can't seem to find anywhere that tells me how much i'm able to use before maxing out the card.
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Jul 16, 2020 22:05
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Parrotine posted:One more question regarding the Discover It Secured card. What's my spending limit for new users? I can't seem to find anywhere that tells me how much i'm able to use before maxing out the card. If it's a secured card, your limit is the amount you deposit with them.
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Jul 16, 2020 22:08
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saintonan posted:If it's a secured card, your limit is the amount you deposit with them. So if I deposit two grand with them, and I want to make a purchase of, say, 1800, is it going to pull from that 2k I deposited, or do I have to give them 2k just to charge 2k?
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Jul 16, 2020 22:53
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Parrotine posted:So if I deposit two grand with them, and I want to make a purchase of, say, 1800, is it going to pull from that 2k I deposited, or do I have to give them 2k just to charge 2k? You give them $2000, they issue you a "credit line" of $2000. Your $1800 purchase takes up most of that $2000 "credit line". You do not get to put $3800 on the card: that's $1800 over your limit. You then pay them $1800 next month to pay off the credit line, and repeat until a bank or issuer trusts you enough to loan you their money instead. When you close the secured card (or convert it to unsecured, if Discover offers that) they give your $2000 back, or maybe they let you apply it to paying off the last bill and send you the rest. Secured credit cards are the issuer capturing swipe fees and maybe other fees, for letting you borrow your own money to build credit history. Putting additional money through it doesn't matter: you're building months of on-time payments, the amount you charge each month doesn't impact the credit record.
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Jul 17, 2020 00:01
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I have a secured card too, and something I was wondering: because one of the things that’s against me is average length of credit time, I’m better off leaving say 50-100$ on it (rather than cancelling) and using it occasionally yeah? Given I’ll be replacing it with a regular card which will push my average age down a bit.
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Jul 17, 2020 04:57
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EL BROMANCE posted:I have a secured card too, and something I was wondering: because one of the things that’s against me is average length of credit time, I’m better off leaving say 50-100$ on it (rather than cancelling) and using it occasionally yeah? Given I’ll be replacing it with a regular card which will push my average age down a bit. For now, probably yes. Throw a subscription or something on it and put it on autopay so you have the history. If your credit improves enough you can ask to "product change" into something else that might be unsecured so you get your deposit back but keep our length of credit history. This is all such a stupid game, but learn to play it.
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Jul 17, 2020 05:10
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Yeah that sounds like a good idea too, especially as it’s with the bank I use for everything else. Yeah starting credit again from scratch is a pain when moving to a new country, at least Credit Karma has me in ‘excellent’ from both TU and Equi now, and I plan on keeping it that way.
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Jul 17, 2020 05:22
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EL BROMANCE posted:Yeah that sounds like a good idea too, especially as it’s with the bank I use for everything else. Yeah starting credit again from scratch is a pain when moving to a new country, at least Credit Karma has me in ‘excellent’ from both TU and Equi now, and I plan on keeping it that way. If you had an Amex, I remember reading something about a program that lets you use your credit history with Amex in one country to apply for a single Amex card (so pick a good one!) in another.
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Jul 17, 2020 05:25
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Huh that’s pretty neat, I’ve got an Amex but it’s as a signee on a family members account. Something I’ll keep in mind though (I’m still sad they pulled delta lounge access like, the week I got it). Altho sadly I went from having great credit in my home country to ‘absolutely hosed’ due to not realizing I was on a bill that an ex roommate then defaulted on, but that’s a story for another day and a wait of 6 years for the loving court poo poo to disappear. At least I have no plans of leaving here.
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Jul 17, 2020 05:32
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EL BROMANCE posted:Huh that’s pretty neat, I’ve got an Amex but it’s as a signee on a family members account. Something I’ll keep in mind though (I’m still sad they pulled delta lounge access like, the week I got it). I don't know what they can do for you in your situation, but my 17 year old daughter has a 26 year old credit history because they let me add her as an authorized user when she turned 16. They seem pretty permissive if you're in their good graces.
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Jul 17, 2020 05:39
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I’m not too bothered about the home country stuff, I mean it was only going to slowly sink as I don’t hold any active accounts there anymore anyway. My green card here has more time left on it than the judgment against me, so at worst I’m hoping if I do go back it’s just starting with a blank slate again. Not the end of the world. It’s nice things are moving in the right direction here at least. It’s taken a looooong time for agencies to even acknowledge my existence despite having a job/SSN for 3 years but not having much that was building credit, and thus a file. Also I have no immediate need for any credit, it’s just something I think is important to work on. Be prepared, as they say.
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Jul 17, 2020 05:44
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EL BROMANCE posted:Also I have no immediate need for any credit, it’s just something I think is important to work on. Be prepared, as they say. This is the best time to be thinking about it. When you need it it's already too late to do anything about it.
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Jul 17, 2020 05:50
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Discover's Secured card is great because it should if you pay it off properly every month convert on its own to a standard card, giving you back your deposit while keeping the account and your history open.
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Jul 17, 2020 06:29
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Parrotine posted:So if I deposit two grand with them, and I want to make a purchase of, say, 1800, is it going to pull from that 2k I deposited, or do I have to give them 2k just to charge 2k? I wouldn't put more than $400 or $600 pr whatever the bare minimum was on there if it's your first card. Do the absolute bare minimum to build enough credit to transfer to a regular $0 annual fee card after six months or something and then dump the secured card so you get that money back I did a secured card and kept pumping money into it because  and it's my oldest card by ~1 year and I have $1000 cash I can't access and they won't graduate me to a regular card. I had some fantasy that having $1002 credit limit would make my score go up faster than if it was $400To answer your original question, if you put $1000 on a secured card, your limit is $1000. If you buy a new $999 HDTV, you will have $1.00 left over of available credit
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Jul 17, 2020 06:39
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Motronic posted:I don't know what they can do for you in your situation, but my 17 year old daughter has a 26 year old credit history because they let me add her as an authorized user when she turned 16. Anyone know if this is real or not? My credit report shows a 45 year history when I’m only 32 thanks to a Shell card my parents put me as an authorized user on. I always figured that banks filtered that out somehow.
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Jul 17, 2020 12:32
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My parents added me as an authorized user to their card when I was very young. Eventually I was removed for inactivity and i saw my Credit Karma score drop hugely along with my average age of accounts. I got my parents to add me back and my score went back up accordingly, so this is very much a thing. It works as long as your parents are good with credit 
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Jul 17, 2020 15:24
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Yeah I’m sure the secured card has helped, but being on cards with big limits under people with good credit has undoubtedly been how I’ve gone from nothing to solid scoring at least. I’ll definitely stay on those cards even if I try to move my utilization to ones that are solely mine.
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Jul 17, 2020 15:27
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spatula posted:My parents added me as an authorized user to their card when I was very young. Eventually I was removed for inactivity and i saw my Credit Karma score drop hugely along with my average age of accounts. Being immigrants my parents must have not completely understood this, which is why I wasn't added as an authorized user to their credit cards, but I was added as a AAA member. 
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Jul 17, 2020 16:17
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I swear when I was in college it was pretty easy to get $1000 or $2000 limit real credit cards with basically no credit history, because they wanted to suck you into the credit life style. Have times changed?
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Jul 17, 2020 18:29
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spatula posted:My parents added me as an authorized user to their card when I was very young. Eventually I was removed for inactivity and i saw my Credit Karma score drop hugely along with my average age of accounts. Yeah it affects the score as seen on credit karma and mint, I just always assumed the real score the banks used knew better.
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Jul 17, 2020 18:37
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heffray posted:You give them $2000, they issue you a "credit line" of $2000. Your $1800 purchase takes up most of that $2000 "credit line". You do not get to put $3800 on the card: that's $1800 over your limit. You then pay them $1800 next month to pay off the credit line, and repeat until a bank or issuer trusts you enough to loan you their money instead. When you close the secured card (or convert it to unsecured, if Discover offers that) they give your $2000 back, or maybe they let you apply it to paying off the last bill and send you the rest. Okay, let me see if I understand this: 1) Open up a card, want to purchase something that would cost me $2k in a couple of months. Let's say because of taxes/shipping/etc I decide to round that up to $2,500; with the deposit fee of $200 that's going to come out to $2,700 2) Card approved, I now have $2,500 of credit. I decide to make a purchase that costs about $2,200 and some change. This is where it gets tricky for me 3) My first statement comes in with the $2,200 bill. To pay this off, will I need to come up with another $2200 to cover this, or will most of the $2,500 I paid in step 1 cover this already? If i'm interpreting things right then that $2500 would not go to paying off the first statement, it's just stuck in limbo until I close out the card or use it to pay off my final statement; that means I would need to pony up between 4/5k just to make one purchase. That is a lot.
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Jul 17, 2020 19:42
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Yes, that's correct. It seems like you'd be better off setting up a secured card with a low limit and making whatever big purchase in cash (or debit or whatever).
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Jul 17, 2020 19:47
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Most people don't use secured cards to make large purchases. They open up a small ($500ish) credit line and pay their Spotify or Netflix on it for a year or so (paying off every month obv) until their credit score stabilizes.
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Jul 17, 2020 19:49
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CaptainJuan posted:Yes, that's correct. It seems like you'd be better off setting up a secured card with a low limit and making whatever big purchase in cash (or debit or whatever). I see. Hmm, yes that does seem to be quite the dealbreak for me i'm afraid. Out of curiosity, are all credit cards done this way, where you have to pay forward a credit limit? I suppose I was under the impression that certain cards already had a 'built in' spending limit, not something you had to pony up beforehand. It would not be the first time I was wrong!
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Jul 17, 2020 20:12
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Parrotine posted:Out of curiosity, are all credit cards done this way, where you have to pay forward a credit limit? No, the key word is 'secured'. You're securing the credit by paying it upfront. I'm guessing you want to purchase an expensive item on a credit card to get inbuilt protection, as opposed to using your debit?
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Jul 17, 2020 20:16
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