Financial tips

"AestheticsInMotion" (aestheticsinmotion)
08/21/2017 at 23:23 • Filed to: None

My first credit card just arrived. What’s the best way to build credit quickly? Things I should know? I’ve dealt in cash for all of my professional life so this is completely new to me. Any help appreciated!

Details-it’s a Capitol One platinum card with a $300 credit limit. I basically just Googled “best credit cards for people with no credit” and this seemed like a well-received one.

Situations have arisen where I would have been better off making minimum wage and with a high credit rating than my decent “small business owner” wage and no credit. Kind of annoying, but I realize it’s not a battle I can win. I’ve got a friend who has been using multiple credit cards since she was 15. She’s working part-time while in school but she gets TONS of bonuses/rewards/perks every month like free flights, hotels, dinners at nice restaurants, etc. That sounds nice.

Beetle with a homemade waterproof shelter for your time. I spotted this while working for a customer and yes, it gets driven with the canopy thing on. Seattle is odd.

DISCUSSION (46)

Nibby > AestheticsInMotion
08/21/2017 at 23:29

don’t buy more than you can afford

and try not to buy shit you don’t need, cut back on impulse buys

and buy me stuff

Flynorcal: pilot, offshore sailor, car racer and panty thief > AestheticsInMotion
08/21/2017 at 23:31

Use it. Put your next $200 purchase on it. Pay it back off to zero, a little or a lot at a time. Repeat. Regular responsible use over time — that’s literally all there is to it.

ToyotaFamily > AestheticsInMotion
08/21/2017 at 23:31

Why not try getting a credit card with the bank you use? I know Wells Fargo was doing 0% intro apr for 18 months.

The Crazy Kanuck; RIP Oppositelock > AestheticsInMotion
08/21/2017 at 23:32

I got car loan to built my credit.

AestheticsInMotion > Nibby
08/21/2017 at 23:32

I just want good credit so in a few years I can take out a loan on an NSX. Or FD RX7. Or CTS-V Wagon.

But, like. Responsibly.

...what do you want

Highlander-Datsuns are Forever > ToyotaFamily
08/21/2017 at 23:35

I second this. It is much easier for me to track spending and pay my bill with my card through my bank.

AestheticsInMotion > ToyotaFamily
08/21/2017 at 23:35

I use a credit union (BECU) and I tried that, but they only would have accepted me if I put down 500 as collateral. Which isn’t the end of the world... But I’d rather not do that if I don’t have to. Besides which, I may switch banks soon after a few annoying issues. BECU Mobile banking is constantly down Friday and Saturday nights which just about drives me crazy...

Nibby > AestheticsInMotion
08/21/2017 at 23:36

eh, you don’t need to buy me anything! :P

move some monthly bills and such to your credit and pay everything on time, but don’t use it for *everything*

if you use it for less than 50% of your total expenses your score will grow quicker, try limiting the # of accounts to as few as you can

HFV has no HFV. But somehow has 2 motorcycles > AestheticsInMotion
08/21/2017 at 23:36

Don’t spend more than you can pay off. Do not make minimum payments, if it’s a car you use regularly.

Only make minimum payments if you use a card for a big purchase and have something like 12 months interest free.

MylesD > AestheticsInMotion
08/21/2017 at 23:37

Connect it to “Debitize” and it will function like a debit card, automatically withdrawing the $ from your account like you use a debit card.

All dem points with no interest and much less risk of overspending.

AestheticsInMotion > The Crazy Kanuck; RIP Oppositelock
08/21/2017 at 23:37

I thought about that, but was worried about getting a decent deal without having credit in the first place...

Supreme Chancellor and Glorious Leader SaveTheIntegras > AestheticsInMotion
08/21/2017 at 23:38

Use it

Pay it off

Repeat for a few years

The Crazy Kanuck; RIP Oppositelock > AestheticsInMotion
08/21/2017 at 23:40

My first loan I had co-signer (for the Sonic), for the Juke I had enough credit I did not need a co-signer. It’s still not great, but it’s growing.

ttyymmnn > AestheticsInMotion
08/21/2017 at 23:41

First credit card I ever had was in grad school, and I had it maxed out in no time from eating in restaurants. My fiancée sent me money to help pay the debt. But I quickly got into the minimum payment death spiral. Only buy what you can afford to pay off.

ttyymmnn > AestheticsInMotion
08/21/2017 at 23:41

The Snowman > AestheticsInMotion
08/21/2017 at 23:44

$300 sounds like a secured card type limit. Just be super careful. Always pay it off in full every month and never go over 50% of your available credit. Also for the love of God never rent a car with a card with a limit that low they can put a hold on your card large enough to get it closed for being overlimit. (I do operational support for a large credit card issue so I hear all the horror stories)

fintail > AestheticsInMotion
08/21/2017 at 23:46

Charge as much you know you can pay off quickly, then pay off as much as you can every month. I think you’ll have a higher limit sooner than later, which will help overall. I started with a secured $300 card when I was 18, and had thousands in potential limit by the time I was out of school.

Once you are there, definitely get some cards that work for you, and pay bills and normal expenses with them when possible. I have a Costco Citi card and an air miles card I use for almost everything. I get hundreds back in cash from the Costco card every year, and I have heaps of air miles, even after using some for a European trip 2 years ago.

If only EssExTee could be so grossly incandescent > AestheticsInMotion
08/21/2017 at 23:46

That’s actually the card I started with. Two years later with no missed payments and my limit has been raised three times to $4,500.

Regularly put some of your normal purchases on it and then pay them off immediately. They want to see that the card is being used but that you’re not hitting your limit or carrying a balance. Other than that, it’s just waiting. It takes time to build a credit history.

Your credit score will only rise so far with one card though. Eventually you should open a second card or take out a loan or something. Having a second credit line open and in good standing will cause your score to shoot up.

I have two cards now. One is used for “physical” purchases, the other is used for online shopping & subscriptions. That ensures both are used regularly and both get paid off weekly when my paycheck clears. Two years ago I had no credit history, and now my score is “Excellent”.

Eric @ opposite-lock.com > AestheticsInMotion
08/21/2017 at 23:47

1) As soon as it has posted a month, sign up for a credit monitoring site or at least use CapOne’s Creditwise. You want to see it going up, not down.

2) Use the above to find out when your card reports to the credit bureaus. Pay off shortly before that date to keep your utilization low.

3) Never spend money on them that you don’t have and pay in full each month. People that claim you should carry a balance are lying to you. You do not need it to post a balance, either. Just possessing and never using a card will bump your score (but might not help you with the lender issuing your card). I like to use them for day-to-day expenses and pay them off about 4 days before the reporting date.

4) Once you have a decent score, apply for another GOOD card. The one you have is the spiritual successor to the one I started with and was the only one at the time that I saw that would give someone with no credit a card with a limit with zero collateral. Chase will give you a succession of ever better cards, but no more than 5 in 24 months, so be careful. In any case, the one thing I really screwed up was not applying for cards regularly. You want to build up quite a few very early in your credit building so you have a good average account age score in the future.

5) Keep close tabs on your cards. Mothball the ones you don’t use.

6) Aim for cards with no annual fees unless they have amazing perks, particularly your earliest cards that you want to keep open forever. I only have one card with a fee.

7) Contemplate the card type. American Express isn’t accepted in a lot of places. Discover isn’t, either. Visa and MC are golden.

8) Never close a card account unless it has a fee. If it has a fee, try to convert to a no annual fee card before closing it, as they’ll usually do that and it keeps your credit healthy.

There are a lot of tricks, but these are only a small collection of them.

gmporschenut also a fan of hondas > AestheticsInMotion
08/21/2017 at 23:48

use it responsably. pay it off each month and after 9 months to a year request to have the limit increased, even if you don’t use it to that new limit. You’ll take a small credit score hit on requesting the extra cash, but in the future when they see you have a $1500 limit and only use say $200, AND pay off that 200 each month your utilization (decreases only 200/1500 availible) will help your score.

ok forbes says 10-20%

https://www.forbes.com/sites/investopedia/2012/02/08/6-benefits-of-increasing-your-credit-limit/#5009932a6fd9

“To get the biggest impact on your score, you should make sure to use your card every month. In general, try to use only 10% - 20% of your available credit limit. This will keep the utilization on your secured card low, and it will provide a strong positive indicator to the scores that you are responsible with credit. Most importantly, pay your statement balance in full and on time every month. The best secured cards charge no annual fee - which means you will only be out of pocket your security deposit until your score improves. Once you have a good enough score for a standard credit card, you can get your security deposit back.”

https://www.forbes.com/sites/nickclements/2017/05/23/3-simple-steps-to-boost-your-credit-score/2/#9dc3ace46df1

Arch Duke Maxyenko, Shit Talk Extraordinaire > AestheticsInMotion
08/21/2017 at 23:53

Well, you could just give your card to a complete stranger and hope for the best.

Chariotoflove > AestheticsInMotion
08/21/2017 at 23:53

Do what Nibby said. Whatever you do, pay the bill in full each month. Never ever carry a balance over. This is the most important thing you can learn about credit cards.

Flynorcal: pilot, offshore sailor, car racer and panty thief > Arch Duke Maxyenko, Shit Talk Extraordinaire
08/21/2017 at 23:59

Like the fans do at SF Giants games when they have a VISA Signature event where you hold your credit card up to end up on the largest HD TV in North America*? It’s a thing. They announce it and people open their wallets up and hold up their VISA cards to a 30,000 person crowd.

That VISA pays a large sum to have people give their cards away to anyone with a camera has always puzzled me, as from having worked there I can say they sure don’t trust their employees or contractors to not steal the toilet paper.

*when it was installed anyway

404 - User No Longer Available > AestheticsInMotion
08/22/2017 at 00:09

Stick with one rule: a credit card is not credit, it’s a payment method. Use only the amount you can pay right off, and always pay the bill in full.

Highlander-Datsuns are Forever > AestheticsInMotion
08/22/2017 at 00:14

My primary card is through Wells Fargo. My second is REI. As much as I hate the man Wells Fargo has been a good bank for me.

Flynorcal: pilot, offshore sailor, car racer and panty thief > Nibby
08/22/2017 at 00:58

Not trying to argue you’re wrong, as you aren’t, but clarification lest anyone mis-read:

Don’t carry 50% on your credit card. Anything above 30% very seriously dings your score. In this case using more is good, but it’s an edge case of new credit and who wants to buy a toaster with their shiny new card. I was young once. Also, as to the number of accounts, you’re wrong. # of credit inquiries you want below 6. They fall off over time. Ratio of available credit to debt and timely repayment and a variety of credit (car payment, cards, mortgage, etc) and length of accounts are all good. So more accounts is better but see the check in the # of inquiries being bad. Closing an account is bad for reasons I don’t understand, but I know it’s a bad thing. So fewest accounts possible isn’t always good, but overall good advice.

Denver Is Stuck In The 90s > AestheticsInMotion
08/22/2017 at 04:48

Keep your balances close to your $300 limit, and pay the card off in full, early, every time. I did that when i got my first card 2 years ago and my credit score is about as good as you can get for someone under 25 who has never taken out a loan

BrianGriffin thinks “reliable” is just a state of mind > AestheticsInMotion
08/22/2017 at 05:55

Side note, since everyone else has given you good advice already. You’re a small business owner: are you successful enough to pay yourself a wage? Many loan companies, especially car loans, will look more favorably on seeing a W-2 vs. trusting your SE income or seeing tax returns.

Wrong Wheel Drive (41%) > AestheticsInMotion
08/22/2017 at 07:26

Just make sure you pay the thing off every month. Do not carry a balance and dont be late on payments. As long as you do that for like 5 or 6 years, you will eventually have good credit. It sucks how long that takes though. As a 26 year old who has done everything 100% correct, im still not old enough to have perfect credit since starting at 18. Just annoying.

nerd_racing > AestheticsInMotion
08/22/2017 at 07:32

My first piece of advice is this: Do not spend more than you normally would if you only had cash/debit only.

Advice #2: Pay off your balance within the grace period so you don’t accrue interest.

Rico > Flynorcal: pilot, offshore sailor, car racer and panty thief
08/22/2017 at 08:10

Closing accounts usually dings your “average age of credit history” which ding the score.

Rico > Flynorcal: pilot, offshore sailor, car racer and panty thief
08/22/2017 at 08:12

Luckily my Chase Sapphire Preferred has the number on the back

merged-5876237249235911857-hrw8uc > AestheticsInMotion
08/22/2017 at 08:59

Use that card as if it were cash, so only spend what you can pay off at months end. Then ask for a credit limit raise after a few months, rinse and repeat. Just don’t carry a balance from month to month and you won’t get in trouble with it.

Eric @ opposite-lock.com > Nibby
08/22/2017 at 09:28

Why not use them for everything? I mean, this limit is too low to use for everything, but once he has more there is no reason not to spend everything he can on cards.

It’s the usage to available credit ratio that can be a problem if they exceed precedent levels (10% is often cited, but I have found that lower is always better, even just going from 2% to 1% or 1% to 0% have increased my score).

The best method I’ve found is to never pay interest (that is, pay off monthly) and keep reported balances as low as possible, hence the game I explained above.

Eric @ opposite-lock.com > The Snowman
08/22/2017 at 09:31

It’s the standard “no credit history” limit that Capital One uses for their credit building unsecured cards. I’ve never had a secured card because they all looked like rackets. My first card was an unsecured from them with exactly this limit. I’m a little surprised they didn’t bump it to $500 by now, but there must be some reason.

Nibby > Eric @ opposite-lock.com
08/22/2017 at 09:32

see Flynorcal’s post

Eric @ opposite-lock.com > gmporschenut also a fan of hondas
08/22/2017 at 09:37

Capital One does not give credit limit increases when requested. In fact, the card he has should top out at a $2000 limit (which they’ll automatically raise it to eventually if he doesn’t mothball it too early). Limit increases do not negatively affect your score, regardless of how they’re acquired, because there is no hard pull on your report for them. It will only have a negative effect if the increased limit came from opening a new account (that will be a hard pull in all cases).

Quite a bit of the information in that article is wrong. I don’t know why people keep posting these old superstitious beliefs. There is so much bad info out there, even from people in banking.

Using the card doesn’t matter. Simply possessing the account does. The issuer could close it if it isn’t used, but that’s the only risk to not using it. Utilization does matter. Posting a utilization doesn’t matter. They do not report whether a card was used or not because there is no way to report that. All they can report is limit, balance, and whether or not the account is in good standing.

Funktheduck > AestheticsInMotion
08/22/2017 at 09:40

I was in a similar situation and here’s what I did:

Started off with a $300 limit capital one card. Shortly after opened a secured credit card through my bank (because they offered) with $300 as well. The bank said after 6 months to a year the card would transfer to an unsecured card and I’d get my upfront money back. They converted it after 4 months.

What matters more to credit bureaus is how much of your available credit you’re using. Ideally it’s under 10% of your available credit but under 25% is still good. I made sure to pay down my cards BEFORE they closed for the month to get it under 25% (or 10% if I could). What I mean by that is you could max out the card, but as long as you paid $271 before the statement close date, the credit bureau would only think you put less than 10% on the card.

So. What I did for the first several months is either used the card for a few small purchases and paid in full when the statement came or if I had a big purchase (like a vet bill) I just prepaid the bill before the statement close date. In about a year each card limit had grown to close to $1000 each so I didn’t have to watch how much I put on them as closely.

I kept this up for a while. Reported my increased yearly income when they asked (that factors into your credit limit). I eventually got another card.

When it came time to buy my car I got pre approved and learned my credit score was 721 at the CU. I got 1.69% financing. The only other loans I have on my credit report are my 2 federal student loans that I pay regularly (plus some).

When Leonidas ate the tennis ball earlier this year and I applied for CareCredit I got immediately approved. When I applied for this recent lease on a house I didn’t even need to verify income because my FICO score is 760.

The biggest factor I focused on was credit utilization and then secondly making sure I paid in full. Paying in full had more to do with not getting into a debt cycle. I never spent (and still don’t) more than what I knew I could pain in full every month.

CreditKarma, BankRate, and NerdWallet all have great resources on how to build credit. There is no fast/easy way. Just takes discipline and time

Eric @ opposite-lock.com > Flynorcal: pilot, offshore sailor, car racer and panty thief
08/22/2017 at 09:49

I’ve never heard of this, but that’s crazy beyond reason...

Eric @ opposite-lock.com > AestheticsInMotion
08/22/2017 at 09:52

It’s not hard to get a score in the 800s with the tips I gave above (both my wife and I have scores above 800). All you need is a score somewhere in the mid-700s to get the best rates on everything.

Eric @ opposite-lock.com > Nibby
08/22/2017 at 09:53

Expenses and limit are totally different things.

You also said not to use it for “*everything*”, but gave no legitimate reason.

Your recommendation to limit the number of accounts is also detrimental to raising his score.

Now_looking_for_a_cheap_car > AestheticsInMotion
08/22/2017 at 09:55

This worked for me, may work for you too..but for the first 6 months a very important factor that will build your credit will be utilization %. and its the only one you have control over. What i would do is try to make sure that the day the statement is generated (also when they report to the equifax etc) the statement amount is less than 30% of the limit.

Age of Credit is important too, so i suggest if this is your first card, DONT cancel it anytime too.

just-a-scratch > AestheticsInMotion
08/22/2017 at 17:24

Go ahead and use the card for a while. Just make sure you have a solid plan to pay down the debt, and pay on time.

Keeping a small balance on the card isn’t bad either. Using credit and having a small balance owed makes you look like a regular customer to the creditor. An important bit is to keep your debt much less than the credit limit. At $300 limit try to avoid keeping more than $100 of debt rolling over month to month. That should also keep the interest part of your payment down.

After a while you may be elligible for a better, lower interest card or loan. After you transition to that, you can really get your credit rating improved at a lower cost (interest rate).

AestheticsInMotion > Eric @ opposite-lock.com
08/23/2017 at 22:06

Thank you man, I’ve screenshotted this and it will be the center of my “building credit” plan for the foreseeable future. Few questions

Can I pay my card off right after using it so I can “forget about it” until the next billing cycle, or should I instead wait until right before the card reports to the credit bureaus each month?

Would pursuing another entry level card be worthwhile or should I just wait until I’m in a position to be accepted for better cards?

Roadster Man > AestheticsInMotion
08/24/2017 at 14:29

Spend $50 a month with it, pay it off immediately. Don’t ever, ever carry a balance from month to month. That’s a slippery slope you do not want to take.

Keep an eye on your credit score and take any identity theft alerts seriously.

After a few years of doing this, your credit card company will have already raised your spending limit a few times just because you keep up on payments, and you’ll have companies throwing credit cards at you, you’ll easily be able to get a card with a $3000+ per month spending limit. Then you should look into getting a card that will give you some perks like airline points, etc.

Eric @ opposite-lock.com > AestheticsInMotion
08/24/2017 at 15:26

No problem. Glad I could help. :)

1) As soon as it posts, yes. It can take days to a week for some transactions to post, so you will probably need to give it a handful of days. My methods are because I use them for all day-to-day expenses to amass more rewards, but they’re a good habit regardless of where you are in building credit.

2) I’d wait until you have a score that gets you into better cards. In a handful of months your bank (and probably others) will notice that you have a credit file and start sending you offers. Read the fine print very carefully because you probably don’t want any of these cards. It’s a fairly long game at the beginning. You’ll probably start in the high-500s to low-600s, which won’t get you any good cards. Once you pass ~630, keep an eye out for a Chase Slate offer, as that’s the only decent card (it has no fee and super low interest) I’m aware of in the valley of mediocre cards in the 630-690 range to help get you over 690. Getting that card, which will have a decent limit (probably around $2000-4000, depending on your stated income) will really bump your score after a handful of months. Once you get into the 690+ range, you’ll start seeing no-annual-fee rewards cards, which is the point where using a credit card for all purchases starts being practical (and they reward you for doing it).

There’s an alternate method for really bumping your score fast, but you need to know (and be very confident in) the person you ask to do it for you: If your parents or someone you know has really good credit and manages their cards well (we’re talking a score in the 800s, doesn’t carry balances, rarely exceeds 3% utilization, etc), you could ask them to add you as an authorized user on one or more of their accounts (even if you never possess a card for that account) and it will massively increase your score. With that, it could be only 2-3 months before you will be in the 690+ range.