nevergiveup Posted May 1, 2014 Share Posted May 1, 2014 My son was looking into getting a mortgage and was told he needs 3 lines of credit, which could include car loans, credit cards, or insurance bills. He has had a checking account since he was 15 and, although he has one credit card, he has purchased most of his stuff with cash. His auto insurance is grouped with ours. The loan officer suggested the easiest way to establish credit was to get 3 credit cards, make some small charge on each every month and set them all up for autopay. He also said that he only needed to keep them for one year which was enough time to establish credit. Though my son is really responsible, I don't like the idea of him having 3 credit cards; but it is good to know that he would only have to have them for one year. I thought this was good information to know and wanted to pass it along. Quote Link to comment Share on other sites More sharing options...
NicksMama-Zack's Mama Too Posted May 1, 2014 Share Posted May 1, 2014 An additional method of obtaining credit is to get a secured loan through your credit union or bank and pay it back within six months or so. That is how I established credit when it was much more difficult to obtain a credit card. Quote Link to comment Share on other sites More sharing options...
Pawz4me Posted May 1, 2014 Share Posted May 1, 2014 I wonder if he really needs 3. I'd think 1 would probably work too. My sister's husband has never had a credit card. He makes enough money. He just isn't into credit cards. He was advised to take on any sort of credit transaction (even something like one of those rent to own furniture stores). Some stores offer credit cards with 6 month interest free deals if you spend at least something like $299. So, for example, you go to Home Depot and buy an appliance, or whatever, and pay it off in 6 months you don't even have to pay any interest. That's the first time I believe I've ever heard having a credit card (or not) associated with having money (or not). Everyone I know who has a credit card does so because of the convenience. We plan on getting DS (18) a credit card this summer before he goes to college. I assume we'll have to co-sign since he has little to no earned income. We'll tell him what he can use it for (gas, other necessities) but we'll closely monitor its usage and pay the bill online. That way he can begin to establish a good credit score and learn how to use a credit card wisely while we can still be pretty much in control. He's very good with finances and plans to major in business or economics, so we don't anticipate any problem. Quote Link to comment Share on other sites More sharing options...
Barb_ Posted May 1, 2014 Share Posted May 1, 2014 Adding your teen or adult offspring to your existing credit card account as a user actually builds credit for them. As an added benefit, you don't actually have to allow them to access account. Quote Link to comment Share on other sites More sharing options...
QueenCat Posted May 1, 2014 Share Posted May 1, 2014 That's the first time I believe I've ever heard having a credit card (or not) associated with having money (or not). Everyone I know who has a credit card does so because of the convenience. I was thinking the same thing. I have the money to pay for the things I use a credit card for. I am not about to carry several hundred dollars in cash when I go grocery shopping. I pay the cc bill in full every month. As far as I'm concerned, it's the same as cash but more convenient. Quote Link to comment Share on other sites More sharing options...
milovany Posted May 1, 2014 Share Posted May 1, 2014 An additional method of obtaining credit is to get a secured loan through your credit union or bank and pay it back within six months or so. That is how I established credit when it was much more difficult to obtain a credit card. Agreeing with this, except make it for a year if you can. They do look at length of time the credit line is open from what I understand (and having done a couple of different things with our oldest son to establish credit), and I think a year matters in some way. Our son got a secured loan as noted above, had the proceed deposited into his savings account, and then had autopay from his savings account set up each month. (A secured loan is the bank/credit union basically giving them cash for whatever; I believe its purpose is this very thing). It's pretty silly in how it works -- you use the money from the loan to pay off the loan -- but it works. Having done this at about 18 or 19, he was able to get a one year small car loan ($2000) through the same credit union a few months back. They clearly said that without that previous secured loan, he would not have been approved for the car loan. So now he has the car loan being paid of through autopay each month. (He had cash for the car, but wanted to build credit.) Next he'll try and get a credit card; I believe there are some better/easier than others to get as a young person. It scares me, too, but they have to learn, right? They've seen/heard us and how we've had to watch payments and income and etc. over the years so hopefully they realize it's something that takes oversight and oversight. HTH! Quote Link to comment Share on other sites More sharing options...
nevergiveup Posted May 2, 2014 Author Share Posted May 2, 2014 It all just seems so backwards. How is showing that you can pay of a $20 charge per month the same as paying off a $800 per month mortgage? It seems that they (the bank) would look at one's assets that one has saved for and purchased with cash. I would think that would show a better picture of one's financial ability. Quote Link to comment Share on other sites More sharing options...
milovany Posted May 2, 2014 Share Posted May 2, 2014 Adding your teen or adult offspring to your existing credit card account as a user actually builds credit for them. As an added benefit, you don't actually have to allow them to access account. Do you know this for sure? I asked Discover about this and they said it didn't. Quote Link to comment Share on other sites More sharing options...
Barb_ Posted May 2, 2014 Share Posted May 2, 2014 Do you know this for sure? I asked Discover about this and they said it didn't. I know for a fact that Amex and visa both report. At least mine do. I've seen the oldest kids' credit reports and they are in excellent shape despite being just 19 and 24. Even my 17yo is getting pre-approved platinum card offers which I think is kind of dumb. Quote Link to comment Share on other sites More sharing options...
Barb_ Posted May 2, 2014 Share Posted May 2, 2014 It all just seems so backwards. How is showing that you can pay of a $20 charge per month the same as paying off a $800 per month mortgage? It seems that they (the bank) would look at one's assets that one has saved for and purchased with cash. I would think that would show a better picture of one's financial ability. Because humans are no longer involved in the decision making process. Everything is computerized and based on your FICO score. Quote Link to comment Share on other sites More sharing options...
Kerileanne99 Posted May 2, 2014 Share Posted May 2, 2014 Yes, in this day and age it seems the best way to establish a solid credit rating is to get credit cards Not a child, but my hubby is JUST establishing credit of his own in this country as he is British by birth, and has been living here since we married. Same thing. Ridiculously it actually can SAVE money if you are careful. For example, many utility companies first run credit checks when you apply for a utilities account. If you do not have decent credit (or any credit) you end up paying hundreds of dollars in deposits! Btw, when the kids first move into their own place, getting the utilities in their names even with parents names as cosigners will help establish a credit history. Quote Link to comment Share on other sites More sharing options...
Arcadia Posted May 2, 2014 Share Posted May 2, 2014 Do you know this for sure? I asked Discover about this and they said it didn't. "Last week Fair Isaac announced that its latest credit-scoring model, dubbed "FICO 08," will include authorized user accounts when calculating someone's FICO credit score. The company estimates that 50 million consumers are "legitimate" authorized users on someone else's credit card. Legitimate authorized users have a relationship with the primary accountholder and a reason to share access to the account, such as spouses, and parents and children. FICO 08 was originally designed to ignore authorized user accounts, in an effort to stem "piggybacking" on a stranger's credit card and artificially inflating one's score" (Bankrate link) My credit report did list all the credit cards that I am an authorized user for. They are hubby's cards. The cards are AMEX, Visa and MasterCard. It all just seems so backwards. How is showing that you can pay of a $20 charge per month the same as paying off a $800 per month mortgage? It seems that they (the bank) would look at one's assets that one has saved for and purchased with cash. I would think that would show a better picture of one's financial ability. When we applied for a mortgage, the bank ask for all records of fluid assets that we have. So they were looking at how much money we would still have in our savings after paying the down payment. The credit score affected the interest rate but did not affect the initial approval in our case. We also produced our monthly gas and internet bills to show credit worthiness. Quote Link to comment Share on other sites More sharing options...
Mandylubug Posted May 2, 2014 Share Posted May 2, 2014 We had a small store credit card, a small loan of 2, 000 that we paid off within 6 months and a tiny car loan. It was sufficient for credit when we bought way back when. Quote Link to comment Share on other sites More sharing options...
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