Is it wise to leave the house with or without at least SOME credit?

Question

I'm 19 years old. I'm currently living with my father. I have no credit. My brother (who is 21 and moved out about two years ago) tells me all the time about how he wishes he would've at least gotten a credit card and payed the minimum balance just to have some form of credit before he left home. He has NO credit what so ever and says it makes several things difficult. He can't even get a car. I don't want to be in that position. Is it a good idea to try to get some credit before I leave home? If so, how should I go about it? What would be an easy way to rack up credit without the chance of putting myself into debt?

Answer 1

first thing you have to do is apply for credit cards.  Just do one or two, not more than that.  Then every month, put a small balance on it (one that you can pay off at the end of the month, like $50.00).  then every month pay off the card and you should establish credit

Answer 2

This is a prime example of why the Dave Ramsey fans are WRONG. He has a whole legion of mindless followers here and they refuse believe his advice is dangerous.

People NEED credit, no other way around it. Try financing a home or car with no credit. You also will have trouble staying at most hotels and renting cars with no credit card. Your best bet is to start applying for some cards and build your credit history. You might have to start out with a secured card at first.

As for preventing yourself from going into debt, that is dependent on your spending habits not on the credit cards. Simply be smart and don't charge more than you can afford to pay in full each month.

Answer 3

Excellent question. It is advisable that everyone have some credit not as a means of spending more but for 2 reasons.

1. Emergency funds

2. Alternative method of payment

If you ever get into a financial jam and can't wait 1-2 weeks to get paid you can lean gently on the credit for food..necessities until then.

If you ever go to buy something and you don't have enough cash or your debit card won't swipe you can just use the credit card and repay the balance.

Both you and your brother can apply for secured card (or student cards if you're in school) Orchard Bank and Capital One are the more popular companies. What you do is send them funds for the limit you want. Even $300-500 is a good start, if you can afford more or as you go along put more on. This will establish a real line of credit that gets reported to the credit bureaus. Be absolutely  sure that:

1. Always pay on time, everytime

2. Pay the full balance if you can

3. If you can't pay all ALWAYS pay the minimum

4. Don't charge more than 25-30% of your limit

Within a year or 2 you can apply for unsecured credit.