Author Topic: Building credit in a Mustachian manner  (Read 3700 times)

hoyahoyasaxa

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Building credit in a Mustachian manner
« on: March 22, 2013, 12:50:28 PM »
Does anyone have any recommendations for building credit in a Mustachian manner?  I am 28 and have just one credit card with a $1000 limit.  I got this card three years ago, and previously had a Bank of America credit card.  However, after leaving Bank of America (they are the worst) and opening a checking account with TD Bank, BOA cancelled my card due to lack of use (I kept it open because it was oldest credit line but they made it extremely difficult to pay it each month unless you had a BOA checking account).

I'd like to build up my credit.  I've never missed a payment, have always paid my cards in full, and don't intend to carry a balance.  Last I checked, my credit score is in the 680 range.  What are some good cards out there for people with fair credit like myself?  What are some things I should pay attention do when shopping for cards - no annual fee, etc.?  I should add that my wife has impeccable credit in the high 700's because her father had each of his kids' names on a family card when they were growing up, and he never missed a payment (and always paid in full).

ketchup

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Re: Building credit in a Mustachian manner
« Reply #1 on: March 22, 2013, 12:57:09 PM »
Get one of (or several) the cashback rewards credit cards mentioned in this thread: http://www.mrmoneymustache.com/forum/share-your-badassity/rewards-credit-card-perfecta/msg51717/  My post is the second one there.  Build credit, get paid money to use plastic, win-win.

Kazimieras

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Re: Building credit in a Mustachian manner
« Reply #2 on: March 22, 2013, 02:35:33 PM »
To build your credit put more through on the card and consider upping the limit a smidge. This does hinge on 2 conditions - one, that you will pay in full every month (think of it as a free 30 day loan!) - two, you do not spend up the limit and can keep your spending controlled. After that, just be patient.

And yes, as ketchup said, if you can get a reward back card, do so (just never pay for it!)

randymarsh

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Re: Building credit in a Mustachian manner
« Reply #3 on: March 22, 2013, 02:47:01 PM »
Length of credit lines is a big factor. For only have 3 years of history, 680 isn't bad. Continued on time payments and high available credit will raise your score quickly, but it takes time.

People with different types of credit (installment like auto/student loans, revolving like credit cards, etc.) usually have higher scores than people with just one type. That said, never go into debt for the credit score benefit! But a mortgage someday will probably enhance your score.

skizz

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Re: Building credit in a Mustachian manner
« Reply #4 on: March 22, 2013, 03:21:58 PM »
Get one of (or several) the cashback rewards credit cards mentioned in this thread: http://www.mrmoneymustache.com/forum/share-your-badassity/rewards-credit-card-perfecta/msg51717/  My post is the second one there.  Build credit, get paid money to use plastic, win-win.
I just wanted to chime in here and say that getting rewards and cash-back credit cards may be difficult, since they are typically marketed towards those with higher credit scores (700+). That being said, ~680 is a "pretty decent" score and it's definitely possible to get one or more of these cards. If you apply online, you may be given an initial rejection or "pending decision", but you can always call the reconsideration line at the issuing bank to talk to a rep who might be able to help you out.

You also mentioned that your wife has a high credit score. It should be possible for her to add you as an authorized user on some (or all? :P) of her cards. Even though you didn't apply for these cards yourself, they will appear on your credit report. This way, you'll be able to increase your score as these accounts age and you guys continue to pay the bills on time. Having an increased total credit limit can also help your score, since part of your score depends on your total credit utilization, e.g. having a $2000 balance and $5000 total credit limit looks worse to an issuer than having a $2000 balance and a $10,000 total credit limit.

tkirk62

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Re: Building credit in a Mustachian manner
« Reply #5 on: March 23, 2013, 11:33:03 AM »
I am 21, and have had a student cash back Visa for almost two years. That wasn't hard to get, but all I had to do was go into my bank and tell them and they wee very helpful pointing me to their best option of credit card for me. Unfortunately, it is a decent card but not the best. If I were you I would go into my preferred bank and just ask the exact same question. Say you want to build credit, are going to pay the card off each month and wouldn't mind cash back. As long as the rep you get is nice they will hook you up.

I looked for cash back rewards cards on my own and found one that offered 3% on gas and groceries and 1% on everything else. This was better than the 1% on everything of my other card. It is one of the best cards in Canada, and usually requires a household income of $160,000 + but there was an exception for students so I was lucky. I applied twice because on the first try I didn't get it. I built up my credit with my Visa for a couple more months and reapplied and was accepted. I think with your decent credit rating you shouldn't have a problem getting accepted but there are lots of rewards cards and some of them won't require immaculate credit. Find one of those and then build your credit for a while longer until you can get one of the really great premium cards.

Jamesqf

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Re: Building credit in a Mustachian manner
« Reply #6 on: March 23, 2013, 11:47:39 AM »
...but they made it extremely difficult to pay it each month unless you had a BOA checking account).

How so?  I have no love for BofA (which is why I was happy to take their $100 and 12 months zero interest :-)), but I have never had any difficulty making payments from my credit union checking account.