Should I get a credit card solely to help build credit?

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WarrensBuffet
 
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Should I get a credit card solely to help build credit?

Postby WarrensBuffet » Sun Dec 08, 2013 12:50 pm

I am 28 and have never used a credit card before or incurred any sort of debt. I know I can finally utilize a credit card responsibly and am wondering if it is worth getting one to build my credit rating - or would it be better to forgo any sort of debt in general? I am confident I can pay off any monthly balance incurred in full, however is it better to remain debt free despite credit ratings? I would appreciate any advice on this matter.

Thank you!


MemberSince99
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Postby MemberSince99 » Sun Dec 08, 2013 8:09 pm

Yes it's better to be debt free in terms of credit card debt. That's debt you don't want.


In terms of installment debt like student loans, vehicles and property, that's another matter. Obviously less is better but if you are just talking about your score, then for the best score you will need to have and use credit cards and have installment debt. You can get a very good score with only one of them - I had almost 750 with no credit cards at all. But eventually you pay off those loans and then have nothing where with credit cards assuming you have the discipline to not dig yourself a hole (and if you don't, I advise you to pass on credit cards) then it will help your score.


So yes, avoid credit card debt but do use them for your credit.

samhradh
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Postby samhradh » Sun Dec 08, 2013 8:30 pm

Using a credit card and paying it in full every month does not mean you are in debt. It's an entirely different type of credit than the loans you're thinking of. Having a card is an easy way to build your credit and I 100% recommend you apply for a card.
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JoDa
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Postby JoDa » Sun Dec 08, 2013 11:59 pm

I just went through this with a friend *just* slightly older than you but, seemingly, very similar. It's amazing and wonderful that you've gotten to this point in your life without accumulating credit card debt! Stop and give yourself a pat on the back for that because, truly, very few people pull that off. You are very responsible and you should be proud of that.

That said, HAVING a credit card doesn't mean you need to go into DEBT! Using credit wisely will probably come naturally to you. As samhradh noted, if you never carry a balance, you're never in debt. Simply having credit is not the problem (my friend thought the same thing...just HAVING a credit card was bad).

Absolutely apply for a credit card to build your credit and provide some convenience and, possibly, rewards. Check into fee-free rewards credit cards where you might get something back from using them. Regardless, consider some of the benefits of having a credit card. I turned my friend from credit-free to a card holder when he booked a rental car for us on a vacation, and then was hassled trying to use his debit card to ultimately take it out (I didn't know before this that he did not have a *credit* card, and he volunteered to take care of the rental car since I used my airline status for freebies on the flight and hotel). I stepped up, dropped my *credit* card, and we were on our way. Sure, that's not entirely fair, but it's how things work currently. Not to mention that he was expecting to pay for extra insurance since he drives a beater and his insurance wouldn't cover a nice car, but I was able to say "don't worry about it, my credit card covers the CDW so long as I pay for the rental with the card."

Once you get a credit card, just use it for things you're going to buy anyway to keep it active. Maybe put your cell phone or internet bill on it, or buy your groceries on it. Then pay those purchases off immediately...you were going to spend that money anyway, right? Once you "get used to" putting things on the card and paying them off, use it for more purchases YOU WOULD HAVE MADE ANYWAY to take advantage of rewards, if possible. If you ease into using the credit like cash, you can make out like a bandit without paying a penny of interest. And, you will improve your credit and grow your available credit easily.

Good luck. It sounds like you've been very responsible up to this point, and you CAN use a credit card responsibly. :)
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PhoenixDown
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Postby PhoenixDown » Mon Dec 09, 2013 12:17 am

What everyone else here said, not having good credit will cost you more in terms of future house and car loans. You don't need to go crazy - just spend what you would normally spend and pay the card off each month.

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Postby takeshi » Mon Dec 09, 2013 8:52 am

WarrensBuffet wrote:I am 28 and have never used a credit card before or incurred any sort of debt. I know I can finally utilize a credit card responsibly and am wondering if it is worth getting one to build my credit rating - or would it be better to forgo any sort of debt in general? I am confident I can pay off any monthly balance incurred in full, however is it better to remain debt free despite credit ratings?

Better's always subjective. That's your call to make. Do you intend to buy a car? Do you intend to buy a house? Do you intend to finance either of them? Are you willing to jump through the hoops to do so without established credit?

As stated above, getting a card (or multiple cards) to build credit doesn't necessitate going into debt so there's a false dichotomy in your question.



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