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ashleysb · Oct 7, 2006, 01:06 AM

I'm 19 and am in my first year of living on my own. I have been thinking about buying a new car, but the problem is I have NO credit. I have been approved for loans, but the interest rate is ridiculous!
I don't want to get a credit card because everyone older and wiser than me says it I'm just better off not dealing with them. I have also seen my parents try to pay off credit cards from years ago and its not something I want to be doing.
My first car is in my mom's name and all my other bills only report bad credit. I'm stuck. Do I have to pay these crazy interest rates just to build my credit?

CaptainForest · Oct 7, 2006, 01:12 AM

Originally Posted by ashleysb

but the problem is I have NO credit. I have been approved for loans, but the instrest rate is rediculous!

When one has no credit, the interest rates tend to be sky high.

Originally Posted by ashleysb

I don't want to get a credit card because everyone older and wiser than me says it I'm just better off not dealing with them.

The people that are telling you this might be older than you, but are certainly not wiser than you on this issue.

A credit card is NOT evil. It helps build your credit.

If you pay your credit card bill at the end of each month, then there is NO problem.

Just get a credit card with a $500 limit. And NEVER miss a payment. Every time you charge something, make sure you have the money set a side for when the bill comes at the end of the month.

Originally Posted by ashleysb

I have also seen my parents try to pay off credit cards from years ago and its not something I want to be doing.

I agree, and that is good you don't want to do that. So, NEVER use a credit card unless you have the cash in the bank to pay for it right then and there.

Originally Posted by ashleysb

My first car is in my mom's name and all my other bills only report bad credit. I'm stuck. Do I have to pay these crazy intrest rates just to build my credit?

What you can do is go take out a credit card, and build up your credit.

In the mean time, save up your money so you can afford to make a bigger down payment and once you have established credit in your name, the interest rates being offered to you should come down.

CaptainForest · Oct 7, 2006, 01:22 AM

One more thing I want to add…

Let's say you want to go on a trip and reserve a hotel room, you need a credit card to hold your room for you!

There are so many instances in today's world when you need a credit card, so go with a small, $500 limit so you have it when you need to book a hotel room, etc.

And it will also help to build your credit.

ashleysb · Oct 7, 2006, 01:24 AM

I will look into this. Thank you for your help!

excon · Oct 9, 2006, 09:04 AM

Hello ashley:

My ex-wife didn't have any credit either, when I met her. I told her to do exactly what the Captain is telling you. ALL she heard (as most people do), is get the credit card. And, she used it. Boy did she use it. But she forgot the most important part - paying the bill.

Plus, use it to build credit - not to buy things you don't have money for.

In my view, there are only two things you SHOULD buy on credit - a house and maybe a car (and I'm not so sure about the car). If you're business minded, credit cards can be used for start up cash (and you don't have to apply for a business loan! ). I raised over $150,000 that way in 20 minutes. That would not be the way to finance your business long term, but it sure works in the short term.

excon

ScottGem · Oct 9, 2006, 09:54 AM

Originally Posted by ashleysb

I'm 19 and am in my first year of living on my own. I have NO credit. I have been approved for loans, but the interest rate is ridiculous!

First, I agree with everyone else on the credit card issue, though I would soften it a bit. I would get a few higher ticket items ($100-$200 range) and pay them off in 2-3 months. You will actually be considered a better credit customer if you do that, because it shows that the creditor will earn interest from you, but that you pay everything back. But you still should not buy anything if you don't have the money set aside for it.

Originally Posted by ashleysb

...all my other bills only report bad credit. I'm stuck. Do I have to pay these crazy interest rates just to build my credit?

Now wait a minute here. First you say you have no credit then you say you have bad credit. Which is it? Bad credit will be a lot harder to overcome (and is probably the source of the higher rates) then no credit.

mr.yet · Oct 9, 2006, 10:30 AM

Take 500.00 open a saving account at the bank. Ask to borrow 500.00 with that bank, use the saving account as colleteral. Pay the bank for 3 to 6 months, you have now establish "A- 1 rating " with the bank.. You can carry it further, Open another saving account at a different bank, use the 500.00 borrow from the first, place in account there, and do that same again. YOu now have two credit references.

Just a thought, not must risk to the bank or you.

SSchultz0956 · Oct 9, 2006, 10:36 AM

I went and bought a new Specialized Mountain Bike for 500, but instead of paying cash (even though I had it) I used my credit card and paid it off entirely the next month, not only did I help improve my credit some, but the card company gave me some reimburcments for making such a large purchase and paying them for it.

ashleysb · Oct 9, 2006, 01:59 PM

Originally Posted by ScottGem

Now wait a minute here. First you say you have no credit then you say you have bad credit. Which is it? Bad credit will be a lot harder to overcome (and is probably the source of the higher rates) then no credit.

No I don't have any credit. Someone told me to call and ask the electric company and my cell phone company if they report any kind of credit that would be in my name. I did contact them and they said they do not report any good credit, only bad credit. So that was no help.