Starting to build Credit-first credit card

If you can avoid everything else, charge one thing each month (a tank of gas, Netflix bill, whatever) and pay it off.

 

Credit cards are great for emergencies and back-ups.

The scenario you described -- paying bills and stuff -- would be ideal for somebody trying to get frequent flier miles. Now THAT's my area of expertise.

However, those affinity cards have high % rates and high yearly fees ($65/yr as opposed to $40, let's say).

I think it's critical for somebody in their early to mid-20's to become financially responsible and not use the cc as an ATM.

Give yourself 5-6 months of limited credit card use, something that you're comfortable with like 3apples mentioned above.

If you do that and you still pay off your bill every time, then consider bills, netflicks, gas, etc. on an airline affinity card AND PAY IT OFF EVERY FRIGGIN' MONTH. They typically give you 1 mile for every dollar.

(If you want to start off conservative, several airlines have debit cards, which give 1 mile for every $2 spent. But this won't help you build up credit.)

I know that American Airlines gives you 20,000 for having a card w/ them. Surf their rewards website and you can find many ways to earn miles: flowers, satellite tv, dining (great as a restaurant guide, btw), you name it.

Again, this is not necessarily to build up credit, just how to work the system IF YOU PAY YOUR BILL EVERY MONTH.

I cannot stress that enough. If you carry a balance, you are paying for those "free" miles.

 

Building credit:

While I do not endorse rampant consumerism, I do believe in smart spending.

If you have a decent job, try to maintain as much of a frugal college lifestyle as possible.

Where you have to stop being a college student is when purchasing consumer goods, such as furniture, luggage, electronics.

Furniture: Instead of buying a ratty old bed or a ratty old couch and a piece shit Ikea bookcase, consider shelling out the extra dough and buying something of quality that you know you will take with you when you move (and move and move again).

When you add up how much ppl spend on bad furniture from the time their 18-28, it's ridiculous the amount of waste.

Most furniture and electronics stores have financing available, and that's a great way to build credit.

Don't go out and buy the mega tv with all the trimmings. Just be smart.

LUGGAGE: I don't know how often you travel, but quality luggage saves you money long term as opposed to the piece of crap that I used to buy.

Again: if you buy it at a dept. store, you can apply for credit and it's a good way of building credit.

I'm just trying to give you a way of thinking about consumer products. These might not apply to you, but it's the mentality that matters.

 

A lot of times you can 0% financing for a decent amount of time. Just remember, PAY IT OFF before the grace period ends. Otherwise you get hit with a ton on interest all at once.

 

The big 3 credit agencies have their own twists on how to give the FICO score. My understanding is that how often you actually use the card doesn't matter. What does is how long the account has been open, if you have missed any payments (assuming it's reported), and how much potential credit you have on the card and how much balance you have. Generally carrying more than half of the credit limit as a balance, let's say $1575 for a card with a $2500 limit will have a negative affect but not the other way. That is, as far as I know you don't actually ever have to use the thing.

Having it for an emergency will definitely be handy.

For myself, I don't have a debit card. I know, I know, the bank swears up and down I'm protected just as well as a credit card. But legally it's different and even if something happened and they were to follow through with their claims, at best it means cash in my checking account being tied up. Worse, it's just flat out gone. So I use my credit card for all sorts of day to day spending. I make payments on it 4-8 times a month. But as others have pointed out, you have to have reached the point where you're not willing to incur debt for those things that really aren't that important (mp3 player, drinks at the bar, etc).

 

here is a page link which provides useful tips for Building & Maintaining a Strong Credit History http://www.studentmarket.com/studen...-and-maintaining-a-strong-credit-history.html