Credit Card Options

[cmac]

I need a credit card.
I know very little about what I want.
It's important that it will collect airline miles and I'd like for it to have some sort of reward points too.
I obviously would like a low interest rate.
I don't mind a small annual fee.
I bank at Wells Fargo if it helps.
Any suggestions?

[impala454]

best way to build credit is to keep a balance. i know everyone thinks that's terrible but you build credit by making payments. buy a car or big tv or something you need to finance and make payments. just don't miss em or be late on em.

[Spectatrix]

best way to build credit is to keep a balance. i know everyone thinks that's terrible but you build credit by making payments. buy a car or big tv or something you need to finance and make payments. just don't miss em or be late on em.

Um, no? Getting and paying off an installment debt (such as a car loan) can build your credit, but keeping revolving debt isn't really a good thing. The only way it might help your credit history is by prompting your credit card company to increase your credit limit, thus making your debt balance a smaller percentage of your available credit.

Basics for building credit:

1) Pay off your bills on time (duh)
2) Ideally keep your balance below 30% of your credit limit. Using a high percentage of what's available can limit your credit score.
3) Hold off on closing old accounts, as the average age of your accounts is figured into your score and your total credit available is used to figure your % used.
4) Even on accounts you aren't really actively using, make a small purchase every 6 months or so and pay it off. If you don't, you run the risk of the credit card company closing your account for inactivity.

Breakdown of the FICO score:

35% Payment history
30% Outstanding debt
15% Length of your credit history
10% Recent inquiries on your credit report
10% Types of credit in use

[impala454]

Um, no? Getting and paying off an installment debt (such as a car loan) can build your credit, but keeping revolving debt isn't really a good thing. The only way it might help your credit history is by prompting your credit card company to increase your credit limit, thus making your debt balance a smaller percentage of your available credit.

I'm sorry but you're just wrong. If you have held credit cards, make purchases, and pay the full balance every month, your credit will be shit. You have to carry a balance at one point or another if you want a halfway decent interest rate on a car or house later. My guess is you've never purchased a house or car before? The whole idea is they want to see that you've proven you can make large, recurring payments over a long period of time. It may not be financially responsible to carry a large credit card balance all the time, but carrying a decent balance will help your credit. So will buying a car or other large, financed item.

and I dunno where this "closing accounts is bad" is coming from. if you go to buy a car and have $10-20k in available revolving credit, you're not gettin a good rate.

[GOB]

I'm sorry but you're just wrong. If you have held credit cards, make purchases, and pay the full balance every month, your credit will be shit. You have to carry a balance at one point or another if you want a halfway decent interest rate on a car or house later.

this is absolutely untrue

the breakdown that spectatrix posted is how it's done, straight from fair isaac. nothing else. they can't throw in bullshit rules like how much money you have to spend and how long you have to make payments, it's all completely subjective. what if you bought a $3000 tv every month and paid off the balance? why would it matter if you paid off the balance every month if you are making the payments on time? it might not be the smartest thing to do, depending on what rate you can get, but it's not "wrong."

My guess is you've never purchased a house or car before? The whole idea is they want to see that you've proven you can make large, recurring payments over a long period of time. It may not be financially responsible to carry a large credit card balance all the time, but carrying a decent balance will help your credit. So will buying a car or other large, financed item.

really? so then there's no need for subprime or adjustable rate mortgages? because the only people that would need those would have weak credit history and possible liens/bankruptcies/foreclosures.

virtually anyone can get a mortgage, just as long as you have income.

and I dunno where this "closing accounts is bad" is coming from. if you go to buy a car and have $10-20k in available revolving credit, you're not gettin a good rate.

closing accounts is bad when you don't already have an established credit history (although, depending on the bank your card is through, the closed account can affect your credit for years).

[impala454]

this is absolutely untrue

the breakdown that spectatrix posted is how it's done, straight from fair isaac. nothing else. they can't throw in bullshit rules like how much money you have to spend and how long you have to make payments, it's all completely subjective. what if you bought a $3000 tv every month and paid off the balance? why would it matter if you paid off the balance every month if you are making the payments on time? it might not be the smartest thing to do, depending on what rate you can get, but it's not "wrong."

if you can afford to buy a $3000 tv every month you won't be applying for much credit. what she posted is absolutely correct, look at the numbers: 35% of your credit score is payment history. if you are not making payments then how do you have payment history?

really? so then there's no need for subprime or adjustable rate mortgages? because the only people that would need those would have weak credit history and possible liens/bankruptcies/foreclosures.

virtually anyone can get a mortgage, just as long as you have income.

well of course, it's the interest rate that depends on your credit

closing accounts is bad when you don't already have an established credit history (although, depending on the bank your card is through, the closed account can affect your credit for years).

if you have a ton of available credit when you go apply for an auto loan or mortgage, especially if you're young, you will get screwed on the interest rate. the only way to bring that number down is to either call them all up and lower your available credit (which is pretty fruitless because they'll just raise it again without your permission), or close unnecessary accounts (like store CCs).

[Spectatrix]

if you can afford to buy a $3000 tv every month you won't be applying for much credit. what she posted is absolutely correct, look at the numbers: 35% of your credit score is payment history. if you are not making payments then how do you have payment history?

Uhhh... you charge a bit each month and pay it off each month? That 35% is concerned with punctuality, not the amount you paid. From wiki:

35% — punctuality of payment in the past (only includes payments later than 30 days past due)
30% — the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
15% — length of credit history
10% — types of credit used (installment, revolving, consumer finance)
10% — recent search for credit and/or amount of credit obtained recently

if you have a ton of available credit when you go apply for an auto loan or mortgage, especially if you're young, you will get screwed on the interest rate. the only way to bring that number down is to either call them all up and lower your available credit (which is pretty fruitless because they'll just raise it again without your permission), or close unnecessary accounts (like store CCs).

Where are you getting this from? I've read lots of financial articles on MSN, Motley Fool, and other sites and I've never heard this.