Comments on: Can you Build a Credit History Without Getting a Credit Card

By: Abby

Abby — Tue, 08 Jun 2010 03:09:10 +0000

I’m 20, & instead of getting a credit card (because when I was trying everyone was freaking out about the economic crisis & wouldn’t give me one) I got a small car loan with a co-signer, & I’ve been making steady payments on it for well over the minimum, any extra cash I get goes towards that loan, etc. The problem I’m seeing isn’t really a problem, it’s more just a question no one really seems to know the answer to: if I have the opportunity to pay off a 36 month loan in 5 months instead, which I do, will it even count towards building my credit? Should I just keep/invest/spend the money instead, & pay it off just a little early, or what? I keep getting mixed advice & in the new economic climate, no one really seems to know what to do! I want good credit so when I go to medical school, I can get good loans & not have to work as I’m trying to concentrate on classes, not so I can blow thousands on shopping trips & be living the high life outside of my income… & no one really seems to be able to tell me how to do this the best way. It’s a little bewildering.

By: Brandon Martinez

Brandon Martinez — Thu, 25 Feb 2010 14:27:55 +0000

I’m very sorry to hear that.

Even though I have a high trust in my wife, we reach have our own separate credit cards that in turn, we both manage together. This is how we are setup:

â€¢ We each have a student credit card. No interest on balances under $250. We’ll use these to buy small, fun things, or if something comes up that we’d like to spread payments out over a small period of time. Can be really handy when we use them together ($500 without interest sounds great).

â€¢ I have an Amazon credit card. I only put purchases I would make anyway, regardless if I had a credit card or not (e.g. gas for the car, some student bills). At the end of the month, I pay it off no matter the balance (I think there’s close to a 24% interest rate, so forget that).

However, she has co-signed on a few of my student loans. So, her inherit risk is *much* higher than mine. However, I would never leave her with that debt, regardless of what happens between us. I think it’s pretty low for anyone to do that.

By: Awareness Home Funding

Awareness Home Funding — Wed, 17 Feb 2010 20:25:23 +0000

As a lender it is incredibly frustrating when a client has “behaved” by having no debt and has gone an extended period of time doing so. Unfortunately, because some have not behaved, a credit score is (to date) the best way to determine a person’s responsibility toward debt. There are still some lenders out there that will manually underwrite a loan, but they are also becoming fewer and farther between. It doesn’t take much though to develop a score, and a credit card doesn’t have to be a “major” provider. A card from a local retailer for a nominal amount will also work to establish a history of behavior. Using a card for just groceries or gas and then paying that off is all it will take. If more consumers take responsibility though, perhaps the pendulum can swing in the other direction again. One can hope.

By: Sarah

Sarah — Fri, 12 Feb 2010 01:03:12 +0000

I have been talking to a few folks that are starting to get charged a daily interest rate on their cc because they pay it off every month. The banks don’t like giving away free services so they will charge a nice interest rate on those few days that you have borrowed money. More cards will probably go to that if more people pay it off each month. My score will be dropping shortly because I started being responsible with my money so that I don’t have to borrow anything and talked to HR at my last job to see how that could affect my hiring. They stated that a no score because you pay your bills is much better than a bad score because you don’t pay your bills. If they know what they are doing, the non score should not be a huge factor and if they don’t know what they are doing, you probably don’t want to work for them.

By: Kyle

Kyle — Tue, 09 Feb 2010 21:08:50 +0000

@Chris

This can get confusing with two Kyles! I have a job, a very competitive job that requires very high security clearances. To my knowledge, not having a credit score did not hinder my process. Even if it did, it clearly didnt stop it!
I have seen that some companies want higher security deposits, ect. But that has not really been a big deal at all, I just pay the cash(that I have saved up).
So I can only see validity in one of your points. a) maybe my insurance is higher, but if so, marginally. b) clearly not true..I can not discuss my job, but it is highly sought after. c) NA. I will not be taking out a loan for anything except a house, which I will have a good percentage of the total as down payment anyway. Even if I don’t get the *best* rate, it wont kill me in the long run as I will pay it down as quickly as possible!

@Kyle Ya, if they base your worthiness to work for them on your credit score, you probably want to look elsewhere!

By: Kyle

Kyle — Mon, 08 Feb 2010 15:59:39 +0000

This isn't a bad suggestion. The thing is you HAVE TO exercise responsibility and not use the card for other things that you can't pay off at the end of the month. As Lili so poignantly showed us not everyone can be so responsible with their credit cards.

By: Kyle

Kyle — Mon, 08 Feb 2010 15:56:48 +0000

I think it is great you have chosen to go the zero debt route. As you already pointed out though it is only simplified up to a point. It does make things more difficult in certain situations like buying a home. I don’t know many organizations that do true “manual” underwriting.

I know Dave Ramsey talks about it all the time but not a lot of banks/brokers are going to be willing to do it. That limits your choices and while not eliminating your ability to get a loan it certainly hinders your ability to negotiate a better rate.

By: Kyle

Kyle — Mon, 08 Feb 2010 15:36:49 +0000

Hiring agencies don’t necessarily look at just your score when pulling your credit. In fact their main focus is on your responsibility with credit. Making sure you don’t pay late and aren’t in a mountain of debt that could affect how you do your job or cause you to embezzle/steal to get ahead.

If all they look at is the score you probably don’t want to work their anyway because they aren’t doing their research very well.

By: Chris

Chris — Sun, 07 Feb 2010 20:46:32 +0000

@Kyle,

Good luck getting a job if you have no credit and your employer pulls your credit score to see just how responsible you are with money. Credit scores help determine a.) your insurance premiums b.) the jobs you can get and c.) how much money in interest you’ll pay on any type of loan.

You can work around the last one by never borrowing, but not the first two.

By: Lili

Lili — Sun, 07 Feb 2010 20:32:01 +0000

Or you could have married a fiscally irresponsible jerk who maxed out all your credit cards and bankrupted you in just 10 years, then refused to accept responsibility for any of the debt because “its all in your name.” Then he had the gall to whine because I refused to give him one of the two cars we purchased (with my money and credit) when I divorced his sorry ass.

I had no problem controlling my credit card usage prior to getting married, and I’ve had no trouble not even using the damned things since I left the sorry bastard. But its MY credit that’s been tanked, and it will take years to rebuild my credit. It sucks, because his credit is now better than mine is.