Advice please on smart financial changes

[greenjeans]

Hello, I have just recently found this great website! I would really appreciate opinions on how to improve our finances. We have $3200 total monthly take home, $3000 worth of debt left, "fair" credit, and no credit cards. We need to improve our credit scores and I'm wondering about the smartest way to do it. I really cringe at the idea of getting a credit cards, but I read that we need to, and then use 30% of our balance monthly to raise our credit scores. The only other advice I've seen for raising the score is to put $500 in a savings account, take out a personal loan against it, make several payments on time, and then pay it off early. The mortgage person we talked to advised us to buy a car somewhere that reports regularly and make timely payments to improve our score. Which would improve the score the most?

[ea1776]

I recently got an HEB credit card that gives 2% back on groceries purchased there, 1% back on all other purchases. They give you HEB gift cards for the reward. Good way to save on groceries, and it'll build your credit score. Just pay the balance in full each month.

[jIM_Ohio]

Using credit is the best (only?) way to improve a credit score. Why do you need a better credit score- do you plan on using a higher score to win something?

[disneysteve]

Jim, OP mentioned speaking with a mortgage person so I assume there is a house purchase in the near future.

OP, I want to clarify the credit card thing. You do not need to use 30% of your credit limit monthly. What you need to do is limit your monthly charges to no more than 30% of your credit line and pay your bills in full and on time. In fact, paying in full doesn't actually matter. All that really matters is not charging more than 30% and paying on time, but if you can't pay in full each month, you are charging too much (unless you are taking advantage of a 0% offer).

I think buying a car to improve your score is lousy advice unless you were already planning to purchase a car anyway.

Use your credit card to pay regular bills that would have to get paid no matter what. We charge our local, long distance and cell phone, internet, cable, auto insurance, alarm fee, medical bills, gasoline, groceries, newspaper and magazines, auto registration fees... all things that we'd be paying anyway. This way we get reward points/cash back and it happens to be good for the credit score.

[maat55]

Don't worry so much about your credit score, just continue to stay out of debt and save money. I have two credit cards that only have 1000 limits just for buying gas and I pay in full each month.

Pay your bills on time and build assets, you will have no problem prospering.

[disneysteve]

Don't worry so much about your credit score, just continue to stay out of debt and save money.

If OP is looking to buy a house sometime, I think paying attention to credit score is very important. Lenders have tightened lending standards and folks with less than stellar credit scores are finding it tougher to get loans at decent rates if at all.

[Seeker]

Hello, I have just recently found this great website! I would really appreciate opinions on how to improve our finances. We have $3200 total monthly take home, $3000 worth of debt left, "fair" credit, and no credit cards. We need to improve our credit scores and I'm wondering about the smartest way to do it. I really cringe at the idea of getting a credit cards, but I read that we need to, and then use 30% of our balance monthly to raise our credit scores. The only other advice I've seen for raising the score is to put $500 in a savings account, take out a personal loan against it, make several payments on time, and then pay it off early. The mortgage person we talked to advised us to buy a car somewhere that reports regularly and make timely payments to improve our score. Which would improve the score the most?

Do not do the part bolded above.

IMO the best way to improve your credit score is to use a CC for those things you normally buy, and pay off the entire balance in full each and every time you get the monthly statement.

Do not pay less than the full amount -- that leads to trouble when or if something happens. Do not attempt "buy" a credit score by taking money out and not paying in full the balance owed -- you pay more in interest.

Don't buy a car if you don't need one. Only buy what you absolutely need. Only borrow what you absolutely need and have the cash to pay off.

[maat55]

If OP is looking to buy a house sometime, I think paying attention to credit score is very important. Lenders have tightened lending standards and folks with less than stellar credit scores are finding it tougher to get loans at decent rates if at all.

I don't believe in buying your credit score. The OP can establish credit without seeking too. Paying bills on time and getting out of debt and saving money is a great start. Then, asking for manual underwriting should be enough.

Having a low limit credit card you pay in full is just fine, which I stated I have. But I certainly would not borrow money and pay interest, just to raise my score.

People who attempt to have something before they are ready, are the ones who have the most risk. Saving a little longer and having more down payment, will increase your ability to get a mortgage. The thought of HAVING to play with snakes to get a home loan is repulsive.

[Reldon]

If you continue to pay your bills on time, it will help with the credit score. There is no rule that you have to use 30% of your credit every month. Also, buying a car just to increase your credit score doesn't seem like a good idea. You will just be adding more to your debt.

[Ima saver]

I agree with steve, just charge some things each money and pay the card off each month. That way it does not matter what the interest rate is, cause you pay the card off each month. I have a Chase rewards card and I get a check back every month for at least $50, sometimes I get $100.

[disneysteve]

I certainly would not borrow money and pay interest, just to raise my score.

Absolutely! I hope I didn't sound like I was suggesting otherwise. You should not pay interest in order to raise your score. I meant you should charge stuff and pay it off in full each month. Don't carry a balance. Don't pay any interest. And always pay on time.

[maat55]

Absolutely! I hope I didn't sound like I was suggesting otherwise. You should not pay interest in order to raise your score. I meant you should charge stuff and pay it off in full each month. Don't carry a balance. Don't pay any interest. And always pay on time.

.

You didn't, your suggestion was accurate. I tend to focus on the good money management aspect aside from the use credit to get credit approach. CC's are not as simple as they seem, some who learn to use them properly, do so the hard way.

I still believe that you can buy a house without getting a credit card. Using CC's wisely can speed up the process, but patience has it's virtues.

[SnoopyCool]

Captain Kangaroo!

We pay many of our day-to-day expenses with a CC that pays rewards, and we pay it off each month (thus no interest to pay). This helps build credit.