what is the best way for a young person to establish good credit?

[utsherman]

Not certain this is correct, and not certain it is not correct.

Several years back my wife took out two credit cards and put my name on them as well, but she is the primary account holder.

This year we needed to borrow some money so we thawed our credit and applied for a loan with a local bank. They said her credit looked wonderful but mine was deemed insufficient and had no credit score . So she got the loan based on her credit, and fortunately my no credit score did not cause us to pay a higher rate, but was told by the loan officer that is usually the case.

So I am going to agree with The Voice here, that basic cable, electric, property tax etc do not help establish credit, as those are all in my name, and I showed no credit score. I was going to take out a card in my name but the loan officer said that wouldn't be necessary since I signed for the loan I would begin getting credit.

It is correct. An account (tradeline) and entire history of account appears on an authorized user's credit report. The tradeline will remain, but not update, if that authorized user is removed from the account. In most cases, the financial institution will provide the account information to consumer reporting agencies for account users over 18. However, some states may have different age requirements.

Either way, it's just a suggestion. You can clearly go the utility route if you prefer.

 

[Thavoice]

Credit card companies don’t want you at 0. Having no balance does nothing positive for your credit score

Carrying a balance is a myth. Do some research. It is a common held myth so you are not alone.

They report if you paid on time, and your utilization rate. Carry a balance and it hinders you on the second part.

True, not using it at all wont help (other than the length of credit history....they prefer you to have zero balance than to cancel it so it will help you in that aspect), but if you use and pay it off then you get reported as paying on time, and the credit utlization rate.

Paying on time is like 30% of your score. A low utilization rate is right behind that in importance. Carrying a balance negatively effects the utilization rate.

All things being equal, Yappster A who pays off his CC each month to zero with a low utilization rate will see better score jumps than one who pays on time but carries a balance.

 

[Crusaders]

It isn’t a myth, if you pay off your balance your utilization is 0 which does nothing for your credit score lol

If you want to run it up 15-20% and pay it all in full every month you can do that too but the companies don’t like you dodging interest so you’re going to get dinged for it

It helps to understand the credit score is a scam

 

[Thavoice]

It isn’t a myth, if you pay off your balance your utilization is 0 which does nothing for your credit score lol

If you want to run it up 15-20% and pay it all in full every month you can do that too but the companies don’t like you dodging interest so you’re going to get dinged for it

It helps to understand the credit score is a scam

Dude. Do some research. Please. There are literally hundreds and hundreds of articles from the money experts on why carrying is a bad idea and does not help the score. Carrying a balance is NOT a positive. CC dont report what they 'like from the customer'.

Score doesnt give a damn what the CC like. The CC want a high balance and the schleps paying interest each month. The credit score doesnt reflect what they want and like.

Score = pay on time, low utilization rate.
CC Company = pay the min, high utlization rate.


The lower the utilization, the better. The y dont necessarily report it after you pay it. You can pay it off each month by the due date and still get a high utilization rate because.


Credit score a scam....well it is what it is. Just a number on a persons trustworthiness to borrow and pay $$ on time.
Can one have a high score with carrying a balance? Sure.
But not carrying one would result in a higher score, with everything else being the same.

 

[D4fan]

Dude. Do some research. Please. There are literally hundreds and hundreds of articles from the money experts on why carrying is a bad idea and does not help the score. Carrying a balance is NOT a positive. CC dont report what they 'like from the customer'.

Score doesnt give a damn what the CC like. The CC want a high balance and the schleps paying interest each month. The credit score doesnt reflect what they want and like.

Score = pay on time, low utilization rate.
CC Company = pay the min, high utlization rate.


The lower the utilization, the better. The y dont necessarily report it after you pay it. You can pay it off each month by the due date and still get a high utilization rate because.


Credit score a scam....well it is what it is. Just a number on a persons trustworthiness to borrow and pay $$ on time.
Can one have a high score with carrying a balance? Sure.
But not carrying one would result in a higher score, with everything else being the same.

Going to agree 100% with every point you've made. We pay our CC balance off every month and yet the only difference between my wife's credit and mine was the credit card. So zero balance still gave her a very high score, but even with my name on her card I came out as not enough history to give a score.

To that end, I agree with the CC being the best idea to get credit. Pay it off every month, get the rewards, and build credit. Better than purchasing a car and paying interest to get the credit, though that is a good way if
1-you were going to purchase said car anyway and
2- you were going to HAVE TO TAKE OUT A LOAN to do it.

 

[D4fan]

It is correct. An account (tradeline) and entire history of account appears on an authorized user's credit report. The tradeline will remain, but not update, if that authorized user is removed from the account. In most cases, the financial institution will provide the account information to consumer reporting agencies for account users over 18. However, some states may have different age requirements.

Either way, it's just a suggestion. You can clearly go the utility route if you prefer.

The utility route does not work, as utility companies do not report your payment history because you are paying for a service, not paying on a line of credit.

Same for Spectrum, they will not report your payment history, but if you pay Spectrum with a credit card and then pay off the credit card that will build credit BUT ONLY IF THE CARD IS EXCLUSIVELY IN YOUR NAME. Paying my wife's card off that has me as a listed user does not give me credit history.

 

[Crusaders]

Dude. Do some research. Please. There are literally hundreds and hundreds of articles from the money experts on why carrying is a bad idea and does not help the score. Carrying a balance is NOT a positive. CC dont report what they 'like from the customer'.

Score doesnt give a damn what the CC like. The CC want a high balance and the schleps paying interest each month. The credit score doesnt reflect what they want and like.

Score = pay on time, low utilization rate.
CC Company = pay the min, high utlization rate.


The lower the utilization, the better. The y dont necessarily report it after you pay it. You can pay it off each month by the due date and still get a high utilization rate because.


Credit score a scam....well it is what it is. Just a number on a persons trustworthiness to borrow and pay $$ on time.
Can one have a high score with carrying a balance? Sure.
But not carrying one would result in a higher score, with everything else being the same.

Im aware of what experts say but they’re wrong on this. They’re not looking at it from the perspective of those who give credit points. If you pay it all in full, you’re not being a “good borrower”, which is what they’re after and what the credit score is actually doing - signaling who is a “good borrower” or who is able to keep up payments with interest. So your credit score will not be helped by paying it all off each month. Keep a manageable balance.

 

[D4fan]

Im aware of what experts say but they’re wrong on this. They’re not looking at it from the perspective of those who give credit points. If you pay it all in full, you’re not being a “good borrower”, which is what they’re after and what the credit score is actually doing - signaling who is a “good borrower” or who is able to keep up payments with interest. So your credit score will not be helped by paying it all off each month. Keep a manageable balance.

Forbes says that is a myth. Clark Howard says same.

After you get so high it does not matter anyway I guess.

 

[Crusaders]

It's not a myth lol credit score isn't there for us, otherwise we wouldn't get dinged every time someone took at glace at our score or when student loans come off the books. It's for the lenders.

 

[Thavoice]

Going to agree 100% with every point you've made. We pay our CC balance off every month and yet the only difference between my wife's credit and mine was the credit card. So zero balance still gave her a very high score, but even with my name on her card I came out as not enough history to give a score.

To that end, I agree with the CC being the best idea to get credit. Pay it off every month, get the rewards, and build credit. Better than purchasing a car and paying interest to get the credit, though that is a good way if
1-you were going to purchase said car anyway and
2- you were going to HAVE TO TAKE OUT A LOAN to do it.

Yeah, you dont have to PAY to have good credit.

 

[utsherman]

The utility route does not work, as utility companies do not report your payment history because you are paying for a service, not paying on a line of credit.

Apologies, as I misstated my point regarding utilities. You're correct, as those do not report.

Same for Spectrum, they will not report your payment history, but if you pay Spectrum with a credit card and then pay off the credit card that will build credit BUT ONLY IF THE CARD IS EXCLUSIVELY IN YOUR NAME. Paying my wife's card off that has me as a listed user does not give me credit history.

Being an authorized user at my financial institution, and most others, does build credit history.

 

[SLS]

Credit card companies still make money off you if you do not carry a balance. They get paid merchant fees of from 1% to 3% on your purchases. Some merchants give discounts for check or cash to avoid the fees.Those who carry a balance help subsidize those who do not carry a balance.