Hey guys, looking for some advice to build my credit. I'm 19 and in the military. I just paid off my s2k and have the title in hand. I only make roughly $1600 a month but I have only $350 a month in bills. Any advice on where to start?

 

First off, you need to know your score. You can get it for free on creditkarma.com. The site will also tell you what your history looks like, number of accounts, etc.

Do you have any credit cards in your name or are you an authorized user on someone else's credit card? If you want to build credit, that's what you need, credit cards. Try to sign up for a credit card that has no annual fee. Chase in fact has several that are targeted at military members: https://www.chase.com/online/militar...edit-cards.htm. Sign up for the card, use it, pay off your balance in full every month. In a few months (3-6), sign up for another card from a different bank. The more cards you have, the higher your score will be, as long as you don't actually carry a balance.

 

Good deal man. I bank with chase right now so that should make it even easier. Thanks for the help.

 

You sound just like me when I was 19, except I didn't have an S2000 then. I was 18 when I joined the military and barely had a solid credit foundation. 11 years later, still in the military, I have learned a lot. What branch are you? The Navy and Marine Corps offer a ton of financial classes that are very useful.

I started with a low limit credit card, than a couple car loans, then eventually a mortgage. It's maintaining your payments on time. That's all I did in my earlier years, and in just 4 years, I was able to get my score up 200 points. It takes patience. And once you start climbing the pay grades, things will get easier.

 

Thank you for your service! I'm in the Coast Guard. 200 points in the next four years would be great for me.

 

Like everyone said - get a credit card as young as you can. Use it to the point that you can pay it off each month in full. If you can't pay it off at the end of the month, you are buying more than you are making and you are on the road to trouble. off topic - make a budget where you subtract savings and expenses from your pay, then you know what you have left to spend. I know it seems simple and you probably already know this, but it will help keep you on track.

The sooner you get one and the more you use it responsibly, the more data lenders (credit cards, auto loan, mortgage etc.) have to see how consistent you are with being financially responsible. I have some friends who didn't get a credit card until a few years after college and they had a hard time finding one, and even more trouble getting a car loan because they really had no credit history on file.

It's not hard, but you have to be consistent. It will all pay off in the end when you go to buy a house and get a really good rate and not have to deal with any crap from lenders asking "why do you have this ding from 2011 etc." Getting a good rate could mean a few hundred dollars difference in your mortgage payment each month.

Sorry to keep writing but loans and credit cards aren't evil. As a young person you don't have a ton of savings or equity in anything. If you want a house, you aren't going to pay in cash and will need to borrow. The good thing is your car is paid off, however having a car loan (and credit card) are good opportunities to create a credit history for yourself that shows a lot of responsibility.

 

Hello my coastie brother or sister, the Chase option is a good deal. I have that and navy federals card. Patience is the key. Good luck.

 

First the Official Building Credit Thread is the place to start.

As mentioned get credit cards, two preferably, but only really use one. Next, use that card as often as possible, for every expense possible. Whether its bills, gas, food, whatever, put it on your credit card. Pay 95-98% off every month, so you have a very minimal amount left accruing interest. Accruing interest is key in short cutting the credit score game, but of course you don't want to be dealing with interest rates or interest debt that burdens you. That's why you're looking at only keeping 2-5% (depending on the original amount).

Between my car payment, and that strategy, I went from zero credit to a 785 in less than 24 months.

Also, never leave any bill that has your SS number tacked to it hanging (medical, energy bills, etc.). Pay those asap, though I realize the energy part won't really be applicable to you. But you should understand what I'm saying.

 

There are other factors as well that underwriters look at such as length of file, how old your oldest loan/trade is, how any total loans/trades you've had etc. Even with a high credit score you still could be labelled as "thin file", or newer to credit. These are all elements that could also go into what tier of a rate you'll fall into or the size of a loan you can get. Meaning, the sooner you get started the sooner you'll have a solid credit history with years of proof of financial responsibility.
Regardless, whiteflash's suggestion is solid, credit cards were designed as a sort of personal loan and by "revolving" or holding a balance (not paying it off 100% each month) you're using it as a loan, rather than a vehicle for transacting. if you just transact and pay it off, you're really not using it any differently than a debit card. Having the balance and revolving shows you can borrow money and pay it back over a slightly longer time frame (i.e., not 1 month).

 

How bad for the credit score is a tax lien? I'd imagine bad haha. Forgot to pay state tax on time last year and got the damn tax lien. Paid it off as soon as I got a letter in the mail but had totally forgot about it and now it's on my score. Gave me a D rating for public records which has my score down quite a bit.
Guess I'm screwed until that comes off my score in 6-7 years or whatever it is?

Credit utilization is an A, payments on time is an A and hardly have any debt. Like 5 grand in student loans left and that's about it.

Sorry don't mean to thread jack but seemed fairly on topic.