Building Credit

[prep.mac 7]

Messybrownhair:

Yes, being your hubby's "extension" for now is the better option. That's the "piggybacking" thing I mentioned earlier. In my case, my hubby's credit score's not so good after his divorce so you're starting off better than me here..hahah!

I still think it wouldn't hurt to get an unsecured one maybe after 6 months to start "your own". See another Pinay got approved by BA too without a credit history?Hmmm...

Appreciate everyone's inputs here....learned a lot!

Have a blessed 4th of July, everyone!

[prep.mac 7]

Here is what I did:

Since the time of engagement (a couple of months before sending the I-129, asked a couple of my CC providers to issue a card on my fiancee name. Also, I had opened a couple of new cards in the meantime and of course, they want to know if I want to add someone else, so I did.

I was initially thinking on giving one of the cards to her for expenses, but looking at the fees they are charging these days for international transactions, I decided to just send money when needed.

I did use the cards for a few charges here and there, so there is activity.

End result was that, her name is now on lists, so I already get all sorts of mail, inclusive one CC offer already (we are about to go to the interview), so by the time she gets here, she would be able to open her own card. I will of course do the joint ones on top of.

Goshia and Tito!

This is very proactive of you. It's both for your future anyway.

God bless!

[prep.mac 7]

FYI: Rental, utility and mobile phone companies DO NOT report to the credit bureaus (FICO, Equifax, Transunion etc) and does nothing to help build credit score. They MAY look at your credit score to determine if they will sign a lease with you or a mobile phone contract. Debit cards don't count either. Store credit cards are a good way to establish credit, providing you are careful to pay it all on time. But that rings true for all credit cards.

Here's how they calculate your credit score.

1) 35% of your score is determined by payment history - i.e. if you pay on time, every time, your score will look good.

2) 30% is determined by debt usage - the ratio of your debt to your available credit. The lower your debt usage the better. But no debt isn't a good thing either you want to be show that you can pay off your debts. Having none doesn't help that cause.

3) 15% is determined by credit age - the longer your credit history, the better it will be. This naturally takes a few years. But I've seen people with a credit history of 5 years with scores of 750 and above.

4)10% is determined by account mix - your score will be better if you have a variety of credit accounts such as multiple credit cards (financial experts say that 5 to 6 is actually a good number - why anyone needs that many is still beyond me), mortgage, auto loans, student loans and so on.

5)10% is determined by the number of inquiries on your account - the fewer the better, but while having a few inquiries in a short period of time might ding your score, it doesn't take long to bounce back.

Hopefully this information helps you understand the credit history process better.

How I got started with my credit history was through our home mortgage. My husband has an excellent score (due to his diligence in paying on time despite a lot of overspending in his college days), and I piggy-backed on his.

Bzbe, this is a very helpful post for me ..thanks for sharing...

[Messybrownhair 251]

Messybrownhair:

Yes, being your hubby's "extension" for now is the better option. That's the "piggybacking" thing I mentioned earlier. In my case, my hubby's credit score's not so good after his divorce so you're starting off better than me here..hahah!

I still think it wouldn't hurt to get an unsecured one maybe after 6 months to start "your own". See another Pinay got approved by BA too without a credit history?Hmmm...

Appreciate everyone's inputs here....learned a lot!

Have a blessed 4th of July, everyone!

Thanks, prepmac! Happy 4th of july to you too! This is really important to us because we want to hopefully buy a house and get a new car when I graduate two years from now

[Daniel&Theary 30]

The bad thing about credit is you need it but you do not want to be in debt. I pay my credit card off every month and never charge over half of the card amount on it. I have a card that I get airline miles on so I put on my monthly bills on it and pay it off as soon as the bill comes. It helps to build and maintain good credit and also I get the miles.

If you want to buy a house you need good credit history. Anything you buy on credit helps cars or department store but you do not want to much credit if you have 3 good credits on your report and job work history of 2 years you can get a home loan. Unless you can pay cash for a house I would build your credit to buy a house then stop using it and pay cash for as much as you can or do like I do for the miles. (I earn enough doing that to pay for tickets to Asia about every 3 years)

Just make sure it is something you talk about with your husband so you are both on the same page.

[william_wallace 8]

I'm not sure if this is any help to anyone, but this is what I did with my local bank. I have been with First Federal Bank since I arrived here(2009)

At first I had to go on my wives joint account as my credit history was zero here. After about 18 months I got a copy of my credit history from the UK. I then went to the bank and showed them my past history, which was very good when I left the UK(I made sure I paid all my bills before I came over here)

I pay my bills - direcTV, water, electric, car payment, car insurance, cell phone, rent on an automatic debit.

I also opened up a high interest saving account with First Federal, I put a different amount in each month, sometimes I put in 50, sometimes I put in more. I keep clear of store card as I think their bad news. The bank now see's I can handle money and have offered me a Gold MasterCard in which I haven't decided yet.

Basically, If you can have a good relationship with your bank and you can show them over a period of time you can handle money, they will look after you and that credit will soon build.

Also, they offered me an overdraft of $500 on my account 4 months ago. I have only need to go in it once and I want to show the bank I don't want to dip in it too often.

[Gosia & Tito 199]

Goshia and Tito!

This is very proactive of you. It's both for your future anyway.

God bless!

The trick, as you have seen from all posts in here, is to know the rules of the game and play them in your favor.

In terms of cards, no card is bad per se, but there are some better than others if you want to carry a balance or if you want to carry no balance. Because of the recent regulations on credit cards, those providers are making penalties very high, but at same time, are offering a number of incentives (miles for example) for people to favor them. It used to be a 'teaser' 0% or a few months and up to a year if you transferred a balance from another card (which now you want to stay away from, because most have an upfront fee that cancels out any savings). What is getting popular now is a cash back bonus, up to 5% in some cases (but you have to know the rules, for example, you have to 'register' for the offer).

The critical thing is to understand correctly the terms of the contract and it can be very deceiving; but once you get the hang of it, not a big deal. For example, when a bank promises 'no fees' (for any product, not just cards, but ATM cards, Debit cards, etc); they mean no fees coming from them, but any other fee that might result from a transaction that is passed to them, they will pass to you. So, a CC company might tell you charges no fees and after you used it in your country, you come back and find a bill that "must be wrong" with all the fee listed. They charged you no fee. The fees listed will be the exchange rate fee, the international transaction fee (Visa network, not the bank), etc; that would amount to 5%. There are a few cards out there that are safe to use internationally, I've found only 2 so far, and even them, will still carry the 1% Visa network international transaction fee.

Anyhow, hope this helps

[prep.mac 7]

Thanks, prepmac! Happy 4th of july to you too! This is really important to us because we want to hopefully buy a house and get a new car when I graduate two years from now

Messybrownhair:

Very good plan there and you have 2 years to build a very good credit..just in time for your graduation. Yay!

You're both young...hope to get a post in 3 years you guys have moved in to your own home!

Again, have a great long weekend and thank you for your husband's service! Just have high respect for all the men and women in uniform!

Ingat!

[newlyweds2010 208]

My in-laws were constantly pushing that I need to get a credit card. I don't see why, but I applied just to keep them quiet, and both our banks turned me down for insufficient credit history. I still live my happy life. what's the point in getting a credit card?

[웃 910]

Also, what about walmart credit card? Or since im going back to school, should I get those cards offered to students?

Store cards are easy to get approved for but they usually look for 'a little' credit history. And you said you don't have any? So you will probably be denied...I would do a secured card through your bank...Anything that says Chase on it that comes in the mail pre-approved immediately apply...They give high limits and have some of the best cards.

You said you wanted a house and the good news is you don't need a super high credit score to be approved. I think 610 or 620 was the cutoff that our bank used for our mortgage and that is extremely low....They look more for LAST TWO YEARS employment and monthly income and you have to have money in your bank account to cover the closing costs which should be at least a few thousand dollars...

My in-laws were constantly pushing that I need to get a credit card. I don't see why, but I applied just to keep them quiet, and both our banks turned me down for insufficient credit history. I still live my happy life. what's the point in getting a credit card?

You have to get a secured card. You pay the bank X amount for X amount of a credit limit, say $500....They extend you a card with $500 limit and you make monthly payments. After 12 months they return the money and you will have good credit assuming you paid on time and didn't max the card out...

[newlyweds2010 208]

You have to get a secured card. You pay the bank X amount for X amount of a credit limit, say $500....They extend you a card with $500 limit and you make monthly payments. After 12 months they return the money and you will have good credit assuming you paid on time and didn't max the card out...

but what is the practical reason of doing that? other than receiving a credit card with which I will pay 200 what would cost 50 if paid upfront...let alone that I don't have $500 to give to a bank to issue a credit card under my name. I am sure it is a matter of different culture between here and and where I am from, but I've always been used to buy what I can pay for, and wait until I have enough money if I want to buy expensive stuff.

[Messybrownhair 251]

but what is the practical reason of doing that? other than receiving a credit card with which I will pay 200 what would cost 50 if paid upfront...let alone that I don't have $500 to give to a bank to issue a credit card under my name. I am sure it is a matter of different culture between here and and where I am from, but I've always been used to buy what I can pay for, and wait until I have enough money if I want to buy expensive stuff.

To be honest I agree with you. I don't want or need one either but its the only way yo build a credit score and that's important here, or else you won't be able to buy a house or a car unless you've paid full price which in my case will never happen. I also don't want to be financially dependent on my hubby forever so that's why I need to build my own credit. My hubby is in the military and I know deployments will be a part of our life so during the times he's on tour I wont be able to get anything if I don't have credit.. that's just why its important for my case

[Gosia & Tito 199]

but what is the practical reason of doing that? other than receiving a credit card with which I will pay 200 what would cost 50 if paid upfront...let alone that I don't have $500 to give to a bank to issue a credit card under my name. I am sure it is a matter of different culture between here and and where I am from, but I've always been used to buy what I can pay for, and wait until I have enough money if I want to buy expensive stuff.

You are correct 100%, in only buying when you actually can; however, there are a number of things: house, car and other big $ tickets that can only be acquired through loans. And good or bad, how much do you ultimately pay on those loans is tied to your credit score; that is, someone with a higher credit score pays less overall than someone with a lower one. So, getting a credit card to go on a spending spree is just dumb, but getting one as a step up to a higher credit one is how credit is built. Your credit rating is used for many things, inclusive how much you pay for car insurance (well, in some states at least); whether you can get a lease for an apartment, etc. Unfair? Probably, but since we do not define the rules of the game, we must learn to make them play in our favor. And in a married couple, both scores need to be about same, a big difference is a handicap.

[웃 910]

but what is the practical reason of doing that? other than receiving a credit card with which I will pay 200 what would cost 50 if paid upfront...let alone that I don't have $500 to give to a bank to issue a credit card under my name. I am sure it is a matter of different culture between here and and where I am from, but I've always been used to buy what I can pay for, and wait until I have enough money if I want to buy expensive stuff.

It would be MATHEMATICALLY IMPOSSIBLE to pay $200 for a $50 purchase on a low limit credit card.

The cheapest minimum payment I have ever seen is $15.

So with a $50 purchase it would take you 3 months to pay off. You might pay about $1 or $2 in interest!

[tc2010 0]

If you want to build a good solid credit history, you need to build your savings at the same time.

One old but good method nobody will tell you about is;

1) invest in a Certificate of Deposit with your local bank or Credit Union (about $1,000.00 should be sufficient)

2) use that certificate of deposit as collateral on a secured loan

3) set the payoff for one year

4) using the proceeds of the first loan invest in another CD at a different financial institution (repat steps 1 - 3 above)

5) make your monthly payments on time (or earlier) every time (use the autopay option on your checking account)

6) use the proceeds of the second loan to invest in a Mutual Fund

A classmate from high school showed me this method shortly after he became a branch manager at a local bank.

This method forces the bank to report the loans and transactions on a regular basis establishing a good credit history

and;

at the end of one year you should have a start for a good credit standing AND $3,000.00 in some form of savings.

It generally takes 2 to 3 years of continuous employment and good payment history to establish a really good credit rating.

NOTE: Any more than 2 forms of credit cards or "revolving charge accounts" and it impacts your credit negatively

unused available credit counts against you as if it were maxed out because it is available even after a loan is made