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Establishing credit. Fear of plastic cards.

Discussion in 'Do It Yourself (Not Computer-Related)' started by gotrootdude, Jul 17, 2006.

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  1. gotrootdude

    gotrootdude Thread Starter

    Feb 19, 2003
    This may seem a bit odd. I bought my house, my cars with cash, even paid for my children's birth with cash. I've never bounced a check. I've owned credit cards before, but the accounts were long ago closed due to inactivity. Oddly enough, I write checks for the family company routinely in the multiple thousands of dollars. etc. etc. I don't consider myself rich, yet I'm far from poor.

    Recently, I've come to the conclusion that before my four children attend college, I must establish a line of credit to prepare myself to obtain educational related loans if required.

    My bank has offered to extend me a loan against my house, and I believe it would be in my interest to take out one, since I have no idea how much my children's education will cost. Yet, I don't presently need any money, I don't want to borrow too much, and I don't want to borrow too little to establish decent credit.

    What may be the best plan of attack for my situation?

    P.S. My grandfather was in the same boat. He always paid everything in cash. When he was 62 yrs old, he went on a trip to New Jersey, and ran into trouble getting a hotel room because he didn't own a credit card, even though he had several companies that he owned. :rolleyes:
  2. kiwiguy


    Aug 17, 2003
    Interesting scenario

    I run 2 credit cards (one private, one company).
    I would never use a credit card unless I had the money to pay for it, but as I travel for business, book airline tickets on-line etc its simply essential.

    I pay the bill as soon as it comes in (or ahead of time by an on-line transaction with internet banking) so I have a credit history that is good, both personal and private.

    Unless you feel that you cannot trust yourself with a credit card, why not use one for everything you can, then pay the bill immediately it comes in? I know the credit card companies hate us for it (free loading) as they want us to make minimum payments and they collect large interest, but that's their tough luck.

    Using one now would establish your rating. At little or no cost at all. Most cards here have "bonus points" for every $ spent on them as well, so it's an easy way to get free magazine subscriptions, small appliances etc for nix.
  3. hewee


    Oct 26, 2001
    I would get a card or cards for places that you shop at and they should not cost you anything. Just pay them off each month. You can even make money from them in the rebates they have on so many of the cards now days but you have to pay them in full each month.

    I had not had cards in like 25 years and I did get junk mail for cards but the rates were way to high and or had fees etc so I never wanted to get those cards.
    But when I went back east or just going places away from home it is hard doing things without a card.
    Well I had joined Sam's Club and they asked if I wanted a credit card so I asked for more info on it. Card was only good at Sam's and Walmart and they put a $1000.00 limit on it but it got me in the door.
    I had a JC Pennys card and early in the years there card and other store cards started turning them into credit cards too. Could of said no but there cards are now good others places. So I said say to the Penny's card changed and it is a J C Penny's Master card I think. I stopped the Sam's club and signed up at Costco and they would not even take a check. They take cash or American Express or Costco/ American Express card so they ok'ed me for a Costco/ American Express card.
    I am on a limited income and now have more credit then I could ever pay back if I went to the limit on them. But I only use the cards to buy what I need.
    I have gotten junk in the mail on new cards but hey the rats they have on them are now lower then the ones I used to get.

    Funny thing is I had money in my credit union and wanted to get one of the debt cards and was told no because of no credit history. I said why and they said yest it is a debt card but also a credit card if you go over the amount in your checking. Plus back then I had no cards and they turned me down and now I have more then I should but don't use them.
    I just use the Costco/ American Express card. But not all places take American Express card so good to have a Master card and or Visa card too.

    So just get cards from places like I did where you shop all the time now and pay the card off each month.
  4. hewee


    Oct 26, 2001
  5. NYCGurl


    Jul 8, 2003
    Just get one low interest rate card and forget about it. You don't have to make charges on it every month if you dont want to, you want your credit:debt ratio to remain decent, meaning having your outstanding debt remain way lower than your available credit. The higher your credit:debt ratio is the more risky you look to future creditors.

    Some more info:


    Suze Orman is wonderful and has great practical advice on credit and money. She also has a show that comes on Saturdays on CNBC.
  6. TechGuy

    TechGuy Administrator

    Feb 12, 1999
    First Name:
    Check out www.daveramsey.com -- Heather and I listen to him frequently, and we recently cut up our credit cards. :) Debit cards work fine for travelling.
  7. larae1of6


    Oct 17, 2005
    Ditto on the Dave Ramsey advice. He has a lot to say about credit history and such. He is easy to understand and puts things right on the line. Get his Total Money Makeover book from the library or bookstore. You are on the right track and don't want to get derailed.
  8. StumpedTechy


    Jul 7, 2004
    Play the credit game... I have an almost perfect credit score - I got approved for a 750k house when our family has a combined yearly income barely over 100k (of course we didn't take it as it would have ruined our credit score).

    We have people literally throwing themselves at us to spend our money and you know what. We DON'T. We buy what we need to but we do about 70% of it on credit. But as has been said pay it off monthly.

    Here is a great trick - we keep all cards that are offered to us on 0% interest for 1 year and thats about it. When we hit 11 months IF there is a balence we just go with the next 0% interest card company. We do keep one standard card (non introductory rate) which in fact we have had it so long we got the company down to 2.5% interest and it has a high spending limit its our always have ace in the hole emergency card. Any ones your not going to use CANCEL. If you don't cancel the card it does show up as available debt and TOO MANY open credit cards even unused are just as bad as no open credit cards.

    We keep our cards in the 3-5 range and we pay most all of them off monthly (except when we have big ticket items like our house remodel we just did) and that will be rolled into our remortgage of our house here shortly but were even wondering if we should do that since its at 0% right now and adding it into a remortgage is going to incur costs and add a %. :)

    Funny to see how easily you can "pull yourselves up" when you don't use the cards and rely on them though. When I first got out of school years ago I got myself about 20k in debt had creditors after me, had a car repoed. Within 3 years I had it turned around to no debt but bad credit and within 5 years I had people coming out of the woodworks wanting me to use their services....

    Last bit of advice remember too many hits on checking your credit in a short period of time will affect your credit too! Don't apply for a ton of items at once. it doesn't look good to lenders hwo look and see oh this person applied for X,Y,Z, ALL IN 1 WEEK. Just do 1 card here, wait a few months another card.... Do this gradually and not gung ho.

    Good luck on the credit and remember baby steps and don't fall into spending temptation.
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