Credit from nothing

Kiroy

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He needs credit and will need it soon...most likely.

You may have mentioned it but why will he need credit soon? Vehicle purchase or home purchase?

If it's a vehicle purchase he can obviously just save up and pay cash. If it's a home it gets a little tricky, but he can research manual underwriting and save up that 20%+ down payment and he'll find a lender that will play ball (assuming he can pass the manual underwriting). Or you can just co-sign.

I was in the same boat after I got out of the Navy - I had saved up enough for a down payment on my starter house but I had zero credit. Parents had to co-sign.

Any other option will take years.
 

brekk

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If it's a vehicle purchase he can obviously just save up and pay cash.

Fucking DONT DO THIS!! If you can afford the car outright, buy it with financing and then pay it off. You can avoid interest, but still have an open and closed account in good standing for a significant amount of money depending on the car value. Hell, you might even save money. Dealerships make their money off the financing, go in crying poor asking if they can drop the sale price by 1,000 and get you one of those 90 month loans. They will see nothing but dollars signs with this deal. Just make sure there are no early payoff penalties.
 

Sanrith Descartes

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I'd agree with that. The only thing I'd question would be opening too many cards. If you don't have any then, yes by all means open them in the same manner brekk suggested. I keep 4 cards. Three that I use for rewards depending on where I'm shopping and one where I locked the limit low for use on unknown/untrusted sites.

I decided to check my Credit Wise report from one of my cards website. Here are the points they made regarding score if it helps:

View attachment 272562
With the current FICO math, there isn't a downside to the number of cards. In fact each one adds to your max borrowing which increases you ratio so the more cards the better.
 

Kiroy

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Fucking DONT DO THIS!! If you can afford the car outright, buy it with financing and then pay it off. You can avoid interest, but still have an open and closed account in good standing for a significant amount of money depending on the car value. Hell, you might even save money. Dealerships make their money off the financing, go in crying poor asking if they can drop the sale price by 1,000 and get you one of those 90 month loans. They will see nothing but dollars signs with this deal. Just make sure there are no early payoff penalties.

Some people are morally against debt. Sounds like his son is in that boat
 
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AladainAF

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130000 points would be $2600 certificate for Best Buy. Basically he spent 26 grand. Now can buy a few Best Buy HDMI cables.

This is correct. Only idiots buy an HDMI cable from Best Buy though.

It's basically a 10% reward on a credit card, and I'd use it anyway. Ok ok, so not "taking them for a ride" but a 10% credit card reward is really high. Since the points never expire, I just use them every year at Black Friday for some really good deals. The way their setup is structured too, you don't pay tax on the product, but you have to work in $5 increments. My last TV i got was just over $2 and like 20 cents sales tax.
 

AladainAF

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So something I realy just discovered.

Apparently, if your credit utilization on *one* of your cards is high, but all the others combined are still in an acceptable range, you can take an epic credit score hit.

I just noticed, as last month I had to put a $15,000 purchase on my amex. Despite my total credit range still being in a good range, I took a huge score drop (per credit karma so take that as you may).

1590437782922.png

1590437757381.png
 

sleevedraw

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So something I realy just discovered.

Apparently, if your credit utilization on *one* of your cards is high, but all the others combined are still in an acceptable range, you can take an epic credit score hit.

I just noticed, as last month I had to put a $15,000 purchase on my amex. Despite my total credit range still being in a good range, I took a huge score drop (per credit karma so take that as you may).

View attachment 272731
View attachment 272730

Yeah, utilization has two different score factors: average utilization among all revolving accounts (there's increasing score hits at 9%, 29%, 49%, 69%, and 89% overall utilization), and also individual card utilization (if any individual card goes over 29% utilization, there is a hit.) In this case, you took a double hit, one hit for high utilization on the Amex, and one hit for having over 9% total utilization on all accounts.

If you ever plan on using more than 29% CL on your card or 9% of your overall revolving credit lines, you want to pay it off immediately if possible (before the statement generates and the high balance gets reported to the bureau.)
 
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Khane

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This thread is making my head hurt. Advice to take a 90 month car loan? What is this... the twilight zone?
 
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BrutulTM

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Fucking DONT DO THIS!! If you can afford the car outright, buy it with financing and then pay it off. You can avoid interest, but still have an open and closed account in good standing for a significant amount of money depending on the car value. Hell, you might even save money. Dealerships make their money off the financing, go in crying poor asking if they can drop the sale price by 1,000 and get you one of those 90 month loans. They will see nothing but dollars signs with this deal. Just make sure there are no early payoff penalties.


We did this last time we bought a pickup truck for the ranch, but not to build credit rating. They offered us a $1500 rebate for financing through ford. We financed $10k (the minimum) and payed it off 3 months later (also the minimum). We wound up paying about $90 in interest to get the rebate.
 

brekk

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This thread is making my head hurt. Advice to take a 90 month car loan? What is this... the twilight zone?

If you intend to actually finance a car absolutely do not do this.

If you can pay it off in full, why not? Finagle the best sales price, with the premise of signing a 90 month loan. Then pay it off in a lump sum. The only caveat is making sure there aren't any early pay off limitations.
 

Khane

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Well, mostly because we're talking to people who are poor and trying to rebuild their credit, so... presumably... they cannot pay off a vehicle in one lump sum.

And secondly, why would you bait yourself into a 90 month term if you intend to pay it off all at once anyway? A shorter term is going to have a massively better interest rate in almost every situation, which means even if you only carry the loan for one month you're still saving yourself money taking a 36 month term over a ludicrous 90 month term (so ludicrous I've never even heard of a car loan term that long). That's not even divisible by 12.
 
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Oldbased

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This is correct. Only idiots buy an HDMI cable from Best Buy though.

It's basically a 10% reward on a credit card, and I'd use it anyway. Ok ok, so not "taking them for a ride" but a 10% credit card reward is really high. Since the points never expire, I just use them every year at Black Friday for some really good deals. The way their setup is structured too, you don't pay tax on the product, but you have to work in $5 increments. My last TV i got was just over $2 and like 20 cents sales tax.
Don't worry. Just 10% isn't a huge deal but it is ok. Best Buy used to be outrageous but the past few years they got the best deals when on sale. I wasn't happy fully with my Fitbit Versa 2 so BB had the Samsung Galaxy Active for $119 few months back which was a deal in itself, but I used my 2% cashback card and went through swagbucks for the purchase which was 7% cash back in points you can use to buy giftcards for paypal, amazon, walmart and so forth, but they messed up and applied a 10$ bonus with a purchase over $100 or more twice. So I got $20 in Amazon giftcards +$8.33 in ( $8 ) Amazon giftcard +$3 cash back. So basically under $100 in the end. It's twice the watch the Fitbit V2 is I paid twice as much for too.
 

addlemixie

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I went through this fairly recently having moved to the US from Canada. I couldn't believe that the credit systems apparently don't talk to each other so I effectively had zero credit history.

Most everything I'd suggest has been covered, but one thing to be careful of is when the credit cards report your balance to the credit bureaus. My credit card billing cycle is near the middle of the month, but reports the balance on the first. If your son is needing a certain credit score, make sure he pays off the credit card balance before the reporting period.
 
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Comrade Araysar

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With the current FICO math, there isn't a downside to the number of cards. In fact each one adds to your max borrowing which increases you ratio so the more cards the better.

False.

Each new card you open up reduces the average age of your credit history. But the improvement in credit utilization ratio usually outweighs this. Unless you're already at 0.