Should I Get Some Credit Cards?

[rainonacongadrum]

I'm pretty young and have never had a credit card. I was told by somebody that I should get three lines of credit...which I guess means three different credit cards. Is this a good idea? If so, how do I go about picking out the best credit cards?

[Brad1970]

In a word...NO. Most likely, someone your age (i.e. "young") doesn't need 3 credit cards nor would they qualify for 3 cards at the same time. Not at least by yourself from a reputable credit card issuer.

The best way for you to start building credit is to get a secured credit card or have your parents/other adult add you to theirs as an authorized party. It minimizes the risk of you running up the damn bill & then posting a "what do I do now" post...

There's been mulitple posts on credit cards lately. Look thru them for other tips.

[Fishhead24]

Try to get ONE very good card.


Shop around and see who will offer you one with a nice cashback rebate.

Try to NEVER pay one cent in interest to these cards and make sure you do not pay an annual fee.

Build your credit with one card for five years and work from there. After a year or so, ask the credit card you get for a credit increase...........and do this every year for five years. They should honor this if you keep your credit clean. Try to make some purchases and pay them off, this will build your credit.

[Cubswin]

[ QUOTE ]
or have your parents/other adult add you to theirs as an authorized party

[/ QUOTE ]

FYI... this practice will change later this. link

[Big Boiler Dawg]

[ QUOTE ]
I'm pretty young and have never had a credit card. I was told by somebody that I should get three lines of credit...which I guess means three different credit cards. Is this a good idea? If so, how do I go about picking out the best credit cards?

[/ QUOTE ]

This is a bad, bad idea.

Question - why do you want credit? Because "somebody" told you to? Who? What are their credentials? How much debt do they have?

If you have no debt right now, please keep it that way.

Credit cards are like casino chips - they don't feel like money when you use them, and that is by design.

For someone your age it is way too easy to get into debt with these silly credit cards and be paying on them forever.

Try to structure your life so your only debt is a mortgage on your home (when you get one). Make compounding interest work for you rather than against you.

You don't need car loans, student loans, or credit cards. Dare to be different, and you might just get rich, rather than broke like everybody else.

As I have said in other posts, I wish somebody had set me straight when I was young. Much easier staying out of debt than digging out.

[Cubswin]

[ QUOTE ]
You don't need car loans, student loans, or credit cards.

[/ QUOTE ]

I agree with the car loans but beg to differ with regards to the credit cards and student loans. Sure, you don't need them, but if you know how to manage your money you would be a fool not to have a credit card or take out a student loan.

[Big Boiler Dawg]

[ QUOTE ]
but if you know how to manage your money you would be a fool not to have a credit card or take out a student loan.

[/ QUOTE ]

How may 19-20 year olds know how to manage money? I'm just playing the odds here....

BTW, I have advised many people at work on how to set up their 401Ks. They range from 25-55 years old, and most don't have a clue how to manage their money.

[Nomad84]

[ QUOTE ]
[ QUOTE ]
I'm pretty young and have never had a credit card. I was told by somebody that I should get three lines of credit...which I guess means three different credit cards. Is this a good idea? If so, how do I go about picking out the best credit cards?

[/ QUOTE ]

This is a bad, bad idea.

Question - why do you want credit? Because "somebody" told you to? Who? What are their credentials? How much debt do they have?

If you have no debt right now, please keep it that way.

Credit cards are like casino chips - they don't feel like money when you use them, and that is by design.

For someone your age it is way too easy to get into debt with these silly credit cards and be paying on them forever.

Try to structure your life so your only debt is a mortgage on your home (when you get one). Make compounding interest work for you rather than against you.

You don't need car loans, student loans, or credit cards. Dare to be different, and you might just get rich, rather than broke like everybody else.

As I have said in other posts, I wish somebody had set me straight when I was young. Much easier staying out of debt than digging out.

[/ QUOTE ]

I think it depends on the person. I subscribed to that theory when I was in school. I graduated college having never borrowed any money. I was fortunate to have my car paid for by my dad, and I got through school on scholarships and internships. Now that I am looking to buy a house, I regret never taking on any responsible debt, such as getting a credit card and paying it off each month. I'm stuck trying to buy a house with no credit, even though, in my mind at least, there is no reason I shouldn't get a good rate on my mortgage. In my mind, the fact that I got this far without borrowing money is a testament to my skills with handling money, but I know it doesn't look that way to a lender. I also know that I have relatively good job security and reasonably marketable skills in the event that I lose my job. Unfortunately I only (barely) have a year of work history since graduation, and I've lived at my current residence for less than a year, which also isn't as positive as it could be in the lender's eyes. My point is that I don't think that completely avoiding debt is really the best idea for everyone. That said, the tone of the OP leads one to believe that he is not quite ready to take on debt just for the sake of building credit. I think it would be prudent to analyze why you are considering taking on debt and consider whether it is worth the risks. Try to understand more about how credit ratings work before you take on debt just to build credit. Be sure that you are doing all of the right things. I'd recommend holding off on getting credit right now. Do your research and decide for yourself whether or not it makes sense in your particular situation.

[Big Boiler Dawg]

[ QUOTE ]
I'm stuck trying to buy a house with no credit, even though, in my mind at least, there is no reason I shouldn't get a good rate on my mortgage. In my mind, the fact that I got this far without borrowing money is a testament to my skills with handling money, but I know it doesn't look that way to a lender.

[/ QUOTE ]

This all depends on the lender.

Do you have a good record of paying your rent and bills on time?

Do you have 3-6 months of living expenses saved in an emergency fund?

Have you saved enough to pay 20% down + closing costs? (this is money outside the emergency fund)

If so, you should no problem getting a prime mortgage. You'll just have to find a lender that doesn't solely depend on FICO scores.

Since you have no payments other than your rent, it shouldn't take you too long to save up these funds.

In contrast, it took me 5 YEARS to save up 5% down + costs. That's what being buried in debt at a young age will do to you.

[domer2]

Get a credit card and PAY IT OFF every month. If you can handle that, get two. If you can handle that, get three.

Not building credit can not only be crippling in the future, but it can cost you thousands of dollars in higher interest payments when you need a car, a house, or anything else requiring financing.