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  1. #21
    The Unstoppable Force May90's Avatar
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    Quote Originally Posted by IRunSoFarAway View Post
    I edited my previous post with two examples if you wanna take a look back at it, but yes, that's how it works.
    Thank you for the examples, I think I understand the system now, more or less.

    Quote Originally Posted by IRunSoFarAway View Post
    Yeah, that's the sad truth, you're not going to get a good home loan without good credit, the ONLY option in that case, would be to have your parents on as co-signers, but if you fuck up, it'll be on them.
    Well, since my parents still live in Russia and they do not have a particularly good income, I guess this option is not going to work either. I guess I do need credit history in the end.

    Whatever the case, try not to get yourself into a situation that's too over your head/beyond your means, you don't want to be like one of the millions of people in very deep, deep credit card debt.
    Certainly. I would prefer not going into debts at all, and I certainly can save some money to buy things like a computer, a car and such. But to buy a house... Unless I'm willing to wait for 20 years (which I'm not), I will have to get credit for it eventually.

    Quote Originally Posted by Mormolyce View Post
    I work in the credit card industry. If used responsibly, you can clear off your debts quickly and pay little or no money on them. If you're smart you can even MAKE money from a credit card, with all the deals that are currently available.

    But the temptation is always there to spend like crazy and only pay the minimum back - this is where the credit card company makes money.

    Basically, to buy a $2500 computer you will need a credit card with a limit >= $2500. The credit card company usually assesses you when you apply to see how big a limit they'll give you (they estimate your income and expenses to decide how much you can afford to pay back, basically - and also check your credit score to make sure you aren't a deadbeat with a history of not paying bills).

    So say you get a $3000 limit - you buy the computer and now your credit card balance (ie what you owe) is $2500. Every month you are charged interest - 20%/12 = ~1.7% of what's still owing. This is just added to your balance, so after a month you'll owe $2542. You can choose to pay off as much of that outstanding balance as you like, obviously the more you pay the less you owe and the less interest you'll be charged next month.

    Most credit card companies require you to make at least a minimum payment - not sure what it's like in the US but I think here it's 2-5% of the principal (so like $125 in this case maybe). This is to ensure you are making some effort to pay it off and not digging a deeper and deeper hole for yourself. If you only pay the minimum it'll take a very long time to pay off so it's in your interests to pay more if you can.

    One other thing is that a lot of cards offer an interest free period - so like the first month you won't be charged interest. This is great if you need short term money - you can put everything on your card that month and pay it all off in one payment at the end and be charged nothing (other than the annual fee for the card, which some cards have). Some cards even have rewards points - so you get frequent flyer miles or whatever for every dollar you spend on the card. These cards usually have bigger annual fees to compensate, but can be worth it depending how much you spend.
    Wow, thank you very much, you basically answered every potential question I had in mind!

    So, the question is, do you think with my current income of about $2000/m I have a chance to get a credit of the amount of $3000 or so? I would pay it off quickly, in less than 6 months certainly, and I think it is a good start. I would prefer just saving money and then buying PC normally, but, if I can use this opportunity to start a credit history, why not?

  2. #22
    Quote Originally Posted by May90 View Post
    So, the question is, do you think with my current income of about $2000/m I have a chance to get a credit of the amount of $3000 or so? I would pay it off quickly, in less than 6 months certainly, and I think it is a good start. I would prefer just saving money and then buying PC normally, but, if I can use this opportunity to start a credit history, why not?
    I doubt it'll be that high initially, as you have no credit history to really look at, but if you're part of a bank or credit union, go there and see what they can offer you in terms of credit cards. The proof of a good/steady income and all that definitely helps, so it's possible you may get what you want.

    Oh, and I forgot to mention, anyone can co-sign on a loan with you, it doesn't have to be someone related to you like your parents. So if someone trusts you enough(girlfriend/boyfriend/husband/wife/whatever) to bring their excellent/good credit on board, it'll definitely be beneficial.
    Last edited by IRunSoFarAway; 2014-07-16 at 04:15 AM.

  3. #23
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    If you're trying to build up a good credit rating, there are two things that you need to do.

    One, you need to be using the card regularly. If you have a card and you never put anything on it, it's not doing anything. The primary way credit companies make money is actually off of transaction fees with the vendors, so they really want you to be using their card as often as possible.

    Two, you need to be paying off the balance (or at least the interest) regularly. If you put $200 worth of purchases on it every month, and pay off all $200 every month, they WILL like you. They really really hate having to go after you for money owed, so the more reliable and trustworthy you are, the better.

  4. #24
    The Unstoppable Force May90's Avatar
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    Quote Originally Posted by Endus View Post
    Banks like it when you carry a balance and pay it off regularly. You're better off keeping a balance on the card and making monthly payments than if the card sits at $0. In terms of credit score, at least; you'll be paying interest (which is why banks like it; they're making money). It doesn't have to be a ton of money, though, they just like seeing the regularity of payment.
    Well, this makes sense. Banks want to get some income from me, and if my card is at $0, they obviously get no income - just like in a bank account I normally want to keep as much money in bank as possible to get better interest. I wouldn't want to keep a big balance for long though. Maybe keep something like $500 and pay a little bit more than I have to monthly would be the best strategy?

    Quote Originally Posted by chrisberb View Post
    It sounds like you will have no problem opening a bank account, but getting a credit card you have to apply and qualify for, and I honestly couldn't tell you whether you would qualify or not. If you can show that you have a decent income (2000 isn't too bad), that could help in your favor.
    I'm sure some will tell you, that honestly the BEST situation would be pay for the computer in cash, but I know sometimes it's not that easy.
    Well, I have no problem saving money until Christmas (that was my initial plan) and pay then in cash. I just think that, since I want to create a good credit history, it is a good way to start it, to combine two pleasantries into one. Or perhaps I can wait, maybe, 2 months and then pay half the money by cash and the rest by credit?

    Quote Originally Posted by Vandexander View Post
    If you have a bank account now, I would start by talking to your bank about getting a credit card.
    If you don't have one, consider a local bank or a credit union, instead of going to a big corporate bank like Bank of America.
    But aren't big corporate banks better for a credit history? Isn't a customer having a strong credit history with Bank of America seems more trustworthy than someone with a strong credit history in some Bank of Western Utah?

    Quote Originally Posted by Endus View Post
    Wouldn't surprise me. I haven't gotten a card in the US, but Canada isn't THAT different in this regard, and I got something like a $1000 card just for being a college student. That card's limit is now somewhere over $10k, I think. I actually got them to reduce it at one point, it was up to $16k.

    And I'm not wealthy nor has my work history been particularly consistent; I've been doing a lot of self-employed contract work recently. My head's above water, but it's not like I have a reliable monthly paycheck. Bank still likes me, because I make my payments.
    OK, now I feel a little bit more confident. I guess you guys are right, it is better just to go to the bank after I open the account there (should be in a few days, once I decide which bank to choose) and ask them directly. I have some doubts based on the fact that I am an international student, which means that, theoretically, I can return back to Russia any time and they won't be able to reach me there - but the university I am at is quite strong, in the top 20 US universities, and, well, I still have that small history with Bank of America which might show that I am trustworthy. At least I hope they see it the way I do.

    Quote Originally Posted by IRunSoFarAway View Post
    Oh, and I forgot to mention, anyone can co-sign on a loan with you, it doesn't have to be someone related to you like your parents.
    Interesting. But, I guess, it still is not a perfect solution, unless I can absolutely trust that another person and his/her steady financial situation?

    Quote Originally Posted by Lynarii View Post
    Two, you need to be paying off the balance (or at least the interest) regularly. If you put $200 worth of purchases on it every month, and pay off all $200 every month, they WILL like you. They really really hate having to go after you for money owed, so the more reliable and trustworthy you are, the better.
    Hmm, is $200/m considered good? I actually thought that they were looking for larger sums. While I am still a poor PhD student, I think I can handle $200-$300 per month, given that I can get many things instantly without any savings.

  5. #25
    Quote Originally Posted by May90 View Post
    Well, this makes sense. Banks want to get some income from me, and if my card is at $0, they obviously get no income - just like in a bank account I normally want to keep as much money in bank as possible to get better interest. I wouldn't want to keep a big balance for long though. Maybe keep something like $500 and pay a little bit more than I have to monthly would be the best strategy?

    Interesting. But, I guess, it still is not a perfect solution, unless I can absolutely trust that another person and his/her steady financial situation?
    Yeah, you can definitely do that, keep it at some amount that's manageable just so you're constantly paying every month, building credit, and not just sitting at $0.

    Well technically the other person doesn't have to pay anything, they're just guaranteeing the debt. There may be a case where one person has ok credit/income, and can't get a loan, so they get someone with excellent credit/income to co-sign so they're able to get it. The person with ok credit/income may be able to make the payments, but if they don't, for whatever reason, the responsibility to pay off the loan falls on the co-signer(s).
    Last edited by IRunSoFarAway; 2014-07-16 at 04:30 AM.

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