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Forum: Financial Planning and Budgeting

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  #1  
January 17th, 2007, 11:49 AM
BensMom's Avatar Ephesians 4:29
Join Date: Apr 2005
Location: The Lonestar State
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Everyone knows that I almost never (like 99% of the time) suggest that someone get a credit card to establish or raise their credit score. Most of the time, it does more harm than good. I'm curious to hear YOUR thoughts and experiences though. Whether you're great at managing your money or a newbie to the board who feels like you're at your wits end... let's hear what you have to say!
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  #2  
January 17th, 2007, 02:21 PM
nmiracles's Avatar Mega Super Mommy
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Location: Houston, Texas
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Not a good idea. To me they are just WAY TOO easy to use and not keep up with. You just slap it down and don't realize, until it is too late, how much you have spent in total.
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  #3  
January 17th, 2007, 03:28 PM
Mega Super Mommy
Join Date: May 2006
Posts: 2,667
Exactly. It's just too easy to fall into a trap. You get a card to build your credit, but what does that really mean? It just means it's easier for you to get into even more debt.

By the way, we bought a house in 2005, at which time we had no credit score at all because we have not used credit in any form since we paid our last debt in April 2003. So we're living proof that a good credit score is not necessary even to buy a house.
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  #4  
January 17th, 2007, 06:47 PM
MandiK's Avatar Platinum Supermommy
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I would much rather have an unestablished credit rating because I didn't use (and abuse) credit than I would have a bottom of the barrel credit score because I had credit cards that went down hill, as most of them do. It's like that adage that it's better to not speak and have someone think you dull than to speak and prove it.
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  #5  
January 17th, 2007, 08:10 PM
Mega Super Mommy
Join Date: Aug 2005
Location: Texas
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I've had a different experience that the other posts. I did get a credit card when I went to college with a very low credit limit (I think it was $300). I was very disciplined with it though and paid it off every month. I really just used it at the gas pump and occasionally eating out. My dad thought it was an opportunity to build my credit. While he didn't run everything for me, we talked a lot about finances and he warned me not to get in trouble with them etc. It turned out well for me, I have a really good credit score now, but it does take discipline. My sister had all the same education I did, but she ran up her card in college. Luckliy not too badly ($1000 or so). When my parents found out, they had her set up a plan to get out of it.

What's scary though is how they raise those credit limits.... Since I paid it off every month, that $300 credit limit kept going up. As a broke college student I had like a $5000 credit limit.... I didn't have anywhere close to $5000 in money or assets!!!! Come to think of it, even or limits now are way higher than they probably should be. I really treat credit cards almost like my debit card.... if they money's not going to be there to pay it off then I don't buy it.

I think its definitely better to err on the side of no credit though. A blank slate with a modest, but stable income will do you much better than a higher income but a record of late, missed payments etc.
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  #6  
January 18th, 2007, 03:49 PM
Mjp121212's Avatar Platinum Supermommy
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If you are a vigilant spender then it can help, but only if you do it right. You can't pay off the balance every month and expect it to help your credit, you have to show you are able to make steady payments. So going to the bank and getting a 200$ cash advance and paying it back the next day doesn't work...yes I've seen people try that! Now if you go and charge 500 today, and pay 150$ each month until it's paid off that will help a little. But one thing that hurts your credit is if you keep a balance that is near the max, or if you keep paying of the balance each month. That doesn't really hurt it, but it doesn't do any good for it. I used a dept store card to help mine, I'd charge 30-50 every 3 months or so and devide the balance and pay it off....brought my score up pretty good...but I was VERY careful! Also, closing out all your cards in one day can do damage too. There's a really good book you can buy that details all that, but I can't think of the name right now.

It's better to buy a car to raise your credit than use a credit card, especially if you are planning on buying your first home.
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  #7  
January 18th, 2007, 04:04 PM
Mega Super Mommy
Join Date: Aug 2005
Location: Texas
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Quote:
If you are a vigilant spender then it can help, but only if you do it right. You can't pay off the balance every month and expect it to help your credit, you have to show you are able to make steady payments. So going to the bank and getting a 200$ cash advance and paying it back the next day doesn't work...yes I've seen people try that! Now if you go and charge 500 today, and pay 150$ each month until it's paid off that will help a little. But one thing that hurts your credit is if you keep a balance that is near the max, or if you keep paying of the balance each month. That doesn't really hurt it, but it doesn't do any good for it. I used a dept store card to help mine, I'd charge 30-50 every 3 months or so and devide the balance and pay it off....brought my score up pretty good...but I was VERY careful! Also, closing out all your cards in one day can do damage too. There's a really good book you can buy that details all that, but I can't think of the name right now.

It's better to buy a car to raise your credit than use a credit card, especially if you are planning on buying your first home.[/b]
I disagree that paying off your credit card every month does not help your credit score. When I bought my first car on my own at 23, the only credit history I had was my 1 credit card (my student loans repayments were still in the grace period so I hadn't started payments). It had been paid in full every month, I never carried a balance. The finance dept. looked down on me at first bc of my age and warned me that i may not qualify for 0%. After they pulled my credit report though, they kissed my rear end and noted that it was the best score they'd seen for someone my age.

I do agree though that paying off a car note every month is more beneficial than a credit card.

Just my opinion, I don't think I'd charge money on a credit card (esp a store card) with the intention of paying it off over a few months. Store credit cards are notorious for very high rates (unless its a has a introductory rate), and that's just wasted money on interest. As you say, there are other ways to raise your score.
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  #8  
January 18th, 2007, 04:48 PM
~Jess~'s Avatar Platinum Supermommy
Join Date: Oct 2005
Location: Central California
Posts: 16,959
I agree with Jenninator. Even having an open credit card that you NEVER use will help you establish good credit. As most of you already know, I'm anti-credit in general.
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