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Improving My Credit


Secret Agent Man
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I'll be turning 20 years old in August, and as of yet I have done nothing in terms of my credit. I've heard doing things like getting a credit card and buying a thing or two with it, followed by paying the monthly bill for it improves your credit. Are there other ways to get my credit started off on the right foot? I'm considering getting a debit card linked to my (not yet formed) checking account just so I can buy things online, as well. Will that have any affect on credit?

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Instead of getting a credit card and just paying the monthly balance try buying things you know you can afford and pay the whole thing off immediately. This will avoid you having to pay a shitload of interest, keep your debt low, and help your score immensely.

I don't think a debit card will help much, I don't know how things work there but here it's just a instant link to ones checking account. If you don't already have the funds in your account it will simply be rejected. The money comes out of your account immedietly. Instead of going to the bank and taking out the cash you just use it like real money.

Hope that was somewhat helpful.

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There was a good article at the Get Rich Slowly blog not to long ago:

http://www.getrichslowly.org/blog/2007/05/25/proper-care-and-feeding-of-your-credit-score/

The article has a little bit of "don't do anything dumb" information, but also some good information. It has links to some older articles that may have more general information about credit scores. Also, the forums there are very good, and filled with some very bright and knowledgeable people.

Being almost 20, you're essentially at a point in you life where some good (or even just not bad) financial decisions will make your life easy. Similarly, bad financial decisions (like carrying big credit card debt) can screw you up for life. I would highly recommend reading over as much as his blog as you can:

http://www.getrichslowly.org/blog/

If you don't like his blog, read some of the ones that he links to.

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Instead of getting a credit card and just paying the monthly balance try buying things you know you can afford and pay the whole thing off immediately. This will avoid you having to pay a shitload of interest, keep your debt low, and help your score immensely.

I don't think a debit card will help much, I don't know how things work there but here it's just a instant link to ones checking account. If you don't already have the funds in your account it will simply be rejected. The money comes out of your account immedietly. Instead of going to the bank and taking out the cash you just use it like real money.

Hope that was somewhat helpful.

Really good advice: don't let your spending get ahead of you! For the debit card thing, depending on your bank your transfer can either be rejected or you can overdraft if there are insufficient funds available. I honestly don't know enough about how it works, though I would assume it negatively reflects on your credit score when an overdraft occurs.

Another way to increase your credit score, which is something most are unaware of, is simply paying your monthly utility bills (assuming you are on-time with the payments, and they're in your name). Also, if you purchase anything (computer, car, etc) via a payment system and you always pay on-time and all that, it'll increase your credit score too.

Are you looking to up your credit rating for any particular purpose at this point, or just in case for the future? If you're looking to get a homeloan at some point, I can give you some pointers at how to begin increasing what you qualify for (at 20, you probably aren't ready for that yet...though at 23, I'm currently in the process of approval for one). If it's for, say, a car loan I wouldn't really be able to help you there since I don't have any experience with that personally.

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.

Another way to increase your credit score, which is something most are unaware of, is simply paying your monthly utility bills (assuming you are on-time with the payments, and they're in your name). Also, if you purchase anything (computer, car, etc) via a payment .

Solid. Put your own Internet ISP, cell phone, etc... In your name if you are able and pay it on time. It's small enough to be manageable and will also boost your credit.

Nice one Penfold, it was so obvious and probably the most meaningful I completely overlooked it.

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Very good advice from all of you. No, I'm not looking into anything specific at the moment; I'm just wondering how to get started off on the right foot. As for my spending habits, I'm incredibly financially conservative. I just sepnt $300 on computer stuff, but that was putting money aside for the better part of three months. The only bills I am responsible for at this point in time are my college-related bills: Tuition, room/board, etc. Unfortunately, since I do not have a debit card, I have to use my parent's debit card to pay these bills, so I'm not getting recognized officially for paying them off. That's the primary reason I wish to obtain a debit card.

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What you probably want is a credit card, not a debit card. One thing to keep in mind is that you want to protect yourself from fraud as well (if someone steals your account information from online or if someone steals your wallet), as any of these cards only insure you up to a certain amount, excepting maybe American Express, so if you have a credit card, you will always want to be protective of your wallet that contains it.

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