building my credit

[andrewrichardgale]

so ive saved up a whole bunch of money to spend freely to help build my credit....... anyway at first i was going to go on a shopping spree, get ridiculously priced clothes,shoes, etc... but now i was thinking.... wouldn't it be smart just to buy websites with residual income? do these websites require alot to upkeep and keep making money?

[pboychuk]

How does buying a bunch of clothes build up your credit?
I would suggest, although I am not an expert in this subject to take out a loan for 6 months, and then pay it off, if you are looking to throw away money.

[andrewrichardgale]

because if i bought the clothes on the credit card it would build credit

[jasaunders]

Going on a spending spree isn't going to instantly build your credit.
What you need to do is increase your revolving credit lines while maintaining very little to no balance over time. Just buying things one time will do nothing, except maybe affecting you negatively if it is reported to a credit bureau before you have paid it, showing you with a high balance. It would be much better to spend $10 on a credit card every month and make sure you always pay it back on time, month after month.

[pboychuk]

Well, hopefully someone else will jump in, because I am also trying to build my credit score so i am learning the subject as well. But, it is not good to carry large balances on a credit cards, also, the larger your credit allowance to debt ratio the better. I honestly dont think going and buying stuff on credit is going to help your score that much. unless you take out a loan and pay it back over a period of 6 months or more. But honestly, unless you are trying to rebuild your credit score I wouldnt do anything out of the norm, just continue doing everything right, pay on time, dont open too many cards, dont carry debt.

[andrewrichardgale]

ill just suscribe to a whole bunch of magazines then, maybe some guitar lessons too.... any recurring payments right?

[pboychuk]

i talked to a financial adviser once and he said to get something at like $250 limmit and use it but dont max it out and only make the minmum payment on it but alway make it on time and never be late on it. so that is what i did and it took about six months and i started to notice my score going up. you cant make it better over night. my advice is to do that and also talk to someone who deals with credit because collecters are scams there are so many little details that us as normal people dont know. i paid $75 to a adviser and he was able to get rid of 50% of my bad credit in two weeks.

I was told this once, but i still choose to pay my balance in full, but its nice to see this also works, maybe ill try it sometime.

[gofrugal]

I am not expert in this area but I learned from articles online that it doesn't matter how much u pay, it matters how big your credit limit is and how less u are utilizing it.
I don't think it is good idea to pay only minimum and pay interest on the rest.
Getting few credit cards and try to increase their credit limits should help a lot.

[Gaulkin]

I started off with a $500 dollar secure line of credit and for a year used it and paid it off completely each month. My score now is 700 and I now have a $1000 unsecured limit. Soon ill apply for a $2000 dollar limit.

[jasaunders]

Paying the minimum balance on a credit card is possibly some of the worst advice I have ever seen posted here. And there has been some bad advice.

Consider this, with a $2000 balance at 15% interest, if you pay the minimum on your card each month it will take you 15 years to pay it off.

You need to increase your credit limit while carrying no balance, but continue utilizing your cards. If you open a new credit line but never use it, it won't help you. Likewise, the lower your balance is, preferably it is zero, the better your credit will be.

Building credit takes time and discipline. It means never missing a payment on anything. Not your credit card, your utility bill, your phone bill, or your car payments. "I forgot to pay the bill" is not an excuse, it will negatively affect your credit. You need to make sure you get all your bills and pay them on time. A portion of your credit score is your credit history. You could only increase your score over time by not being late or defaulting on a payment.

So the rules of the game are to be fiscally responsible. Pay your bills on time. Only charge things with a credit card that you can afford and pay the balance in full every month. One of the biggest problems for young people is the urge to spend more money on a credit card then they have to pay it. The mentality of "I will have enough to pay it next month" or "but I really need this product, so just this one time I'm going to charge it" is dangerous and a bad habit to get into.