Establishing Credit

[eSJay]

My daughter recently graduated & thankfully has already secured a job.
However; she wants to live with us for a year to save money. During this year, what are the sensible ways for her to establish initial credit in order to be able to rent an apartment, finance a car, etc... when the time comes?
Thanks in advance__sj

[Smoke68]

Much as I hate to say it, a credit card is the best way I think. Of course, the balance should be paid in full every month.

One thing she can do in order to prevent the card balance from being out-of-sight-out-of-mind until the end of the month would be to synchronize it with a quicken account. Daily downloads would keep one updated on the balance and all expenditures can be categorized as they occur and put into a spreadsheet.

When the bill comes at the end of the month, paying it is more of a formality since the balance has been in mind all along and the money to pay it is there.

[Smoke68]

Don't mess around with getting credit through loans/leases on vehicles. While it will accomplish the credit part, that's a fool's game.

[missed mallards]

Much as I hate to say it, a credit card is the best way I think. Of course, the balance should be paid in full every month.

One thing she can do in order to prevent the card balance from being out-of-sight-out-of-mind until the end of the month would be to synchronize it with a quicken account. Daily downloads would keep one updated on the balance and all expenditures can be categorized as they occur and put into a spreadsheet.

When the bill comes at the end of the month, paying it is more of a formality since the balance has been in mind all along and the money to pay it is there.

Man knows what he's talking about. Me and several friends were "cash only" for years. Went to buy a house a found out cash is great until you need more and don't have it. Credit card and pay it off each month! That's what the lenders told 4 out of 5.

Personal loans don't seem to be as effective at "building" credit. For whatever reason. I took out a small loan and it hasn't done near as good at helping as the credit cards and credit score.

I still hate credit. Absolutely hate the chit. But gotta have it.

[mfalkner]

Don't mess around with getting credit through loans/leases on vehicles. While it will accomplish the credit part, that's a fool's game.

It's only a fools game if played foolishly.

My girls both had a credit card when they started working - and paid the balance every month (I checked), but also when I got them a ride for college, I financed part of it for a short term in their name and let them make the payments. Paid it off after a year or so, now they both have a very good credit score and guard it well.

[Smoke68]

Don't mess around with getting credit through loans/leases on vehicles. While it will accomplish the credit part, that's a fool's game.

It's only a fools game if played foolishly.

My girls both had a credit card when they started working - and paid the balance every month (I checked), but also when I got them a ride for college, I financed part of it for a short term in their name and let them make the payments. Paid it off after a year or so, now they both have a very good credit score and guard it well.

Point taken. And there are several deals I've seen out there that are ## months financing with no interest. If someone had the money sitting in its own account to pay it off, I could see where that would be helpful.

No, I'm talking about living with a car payment perpetually. That's the fool's game.

[reservoirdawg]

Cash back credit card. Keep the amount spent monthly to less than 20% of the limit. If, and only if, she's a GREAT money manager then get the highest limits. Lenders see she has access to say $10,000, but only uses an average of $1,000/month. Every time the card company offers to increase my limit I gladly accept. Anything and everything goes on the card. Then use the cash back to pay towards the bill. Pay the current statement off every month.

[matador1]

I deal with this every day. Two things she needs to do. One, open a credit card. Use it sparingly, never charging more than 50% of the limit which is probably going to be $300 initially. Let it cycle each month and pay the balance off. After 6 months ask for an increase in limit and continue to use it sparingly. You want to increase the limit but always maintain a small balance so the ratio of balance vs limit increases showing she has the self restraint to manage something with no collateral.
Second thing, call Rob Richard at State Bank. They will do a signature loan for I think $1500 for anyone who attends a half day credit seminar. Don't pay it off early! Pay it as required over the term, normally 12 months.

These tow things will have her in the low 700s in 6-12 months which is ridiculous if you ask me but so is the world we live in.

Any other questions, call me.

[matador1]

Cash back credit card. Keep the amount spent monthly to less than 20% of the limit. If, and only if, she's a GREAT money manager then get the highest limits. Lenders see she has access to say $10,000, but only uses an average of $1,000/month. Every time the card company offers to increase my limit I gladly accept. Anything and everything goes on the card. Then use the cash back to pay towards the bill. Pay the current statement off every month.

Pretty sound advice!

[mfalkner]

100% correct there bud

[Deltaquack]

Don't mess around with getting credit through loans/leases on vehicles. While it will accomplish the credit part, that's a fool's game.

Unless you own a business and can write it off

[Hole Hunter]

I deal with this every day. Two things she needs to do. One, open a credit card. Use it sparingly, never charging more than 50% of the limit which is probably going to be $300 initially. Let it cycle each month and pay the balance off. After 6 months ask for an increase in limit and continue to use it sparingly. You want to increase the limit but always maintain a small balance so the ratio of balance vs limit increases showing she has the self restraint to manage something with no collateral.
Second thing, call Rob Richard at State Bank. They will do a signature loan for I think $1500 for anyone who attends a half day credit seminar. Don't pay it off early! Pay it as required over the term, normally 12 months.

These tow things will have her in the low 700s in 6-12 months which is ridiculous if you ask me but so is the world we live in.

Any other questions, call me.

This is sound advise, coming from another financial professional.