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Best Credit Card for new graduate? (1 Viewer)
- Thread starter Mr.Pack
- Start date
Juxtatarot
Footballguy
Why in the world would you make a distinction between state and federally chartered credit unions in this regard?
Arizona Ron
Footballguy
Doctor Detroit
Please remove your headgear
Mile High
Footballguy
You might be right but kind of unrealistic for most new grads to pay off school loans quickly.
Arizona Ron
Footballguy
I agree about paying off student loans but I wouldn't discount how helpful having a credit card with a credible credit card company will help in the long run.
Having a line of credit for several years with the same company will prove to be valuable 5+ years from now.
Having a line of credit for several years with the same company will prove to be valuable 5+ years from now.
Arizona Ron
Footballguy
Also, I would suggest getting a credit card with the same company you bank with.
Doctor Detroit
Please remove your headgear
Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
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Arizona Ron
Footballguy
DD, I think you're overlooking "good debt", e.g. a Home Loan. It's hard to convince a bank to foot 800k for a decent home when all you have to show for it is paying off your student debt. They want to see credit history, credit cards and small loans to develop a pattern of credibility.Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
Doctor Detroit
Please remove your headgear
No credit card debt is good debt. Paying off a school loan is fine, she doesn't need to establish a credit pattern at 22 so she can get "good debt." You are confusing no credit record with a bad credit record. Plenty of banks will give people with a limited credit history a home loan, especially if they have a good job and a good deal of cash.DD, I think you're overlooking "good debt", e.g. a Home Loan. It's hard to convince a bank to foot 800k for a decent home when all you have to show for it is paying off your student debt. They want to see credit history, credit cards and small loans to develop a pattern of credibility.Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
Juxtatarot
Footballguy
Arizona Ron
Footballguy
It better be about 25% of the value of the house if you're trying to get a home loan with limited credit history post-housing bubble.No credit card debt is good debt. Paying off a school loan is fine, she doesn't need to establish a credit pattern at 22 so she can get "good debt." You are confusing no credit record with a bad credit record. Plenty of banks will give people with a limited credit history a home loan, especially if they have a good job and a good deal of cash.DD, I think you're overlooking "good debt", e.g. a Home Loan. It's hard to convince a bank to foot 800k for a decent home when all you have to show for it is paying off your student debt. They want to see credit history, credit cards and small loans to develop a pattern of credibility.Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
Having a credit card <> credit card debt. I think it's fine to get a credit card as long as you're basically paying it off each month. If the individual is disciplined it is a good way to build credit. My first credit card had a $300 limit. Hard to get in to too much trouble with something like that. Then work your way up to more credit. Given that the person in question is already out of college she should probably start building up credit before she does want to make a major purchase.No credit card debt is good debt. Paying off a school loan is fine, she doesn't need to establish a credit pattern at 22 so she can get "good debt." You are confusing no credit record with a bad credit record. Plenty of banks will give people with a limited credit history a home loan, especially if they have a good job and a good deal of cash.DD, I think you're overlooking "good debt", e.g. a Home Loan. It's hard to convince a bank to foot 800k for a decent home when all you have to show for it is paying off your student debt. They want to see credit history, credit cards and small loans to develop a pattern of credibility.Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
Doctor Detroit
Please remove your headgear
Or maybe she should just save for a major purchase.Having a credit card <> credit card debt. I think it's fine to get a credit card as long as you're basically paying it off each month. If the individual is disciplined it is a good way to build credit. My first credit card had a $300 limit. Hard to get in to too much trouble with something like that. Then work your way up to more credit. Given that the person in question is already out of college she should probably start building up credit before she does want to make a major purchase.No credit card debt is good debt. Paying off a school loan is fine, she doesn't need to establish a credit pattern at 22 so she can get "good debt." You are confusing no credit record with a bad credit record. Plenty of banks will give people with a limited credit history a home loan, especially if they have a good job and a good deal of cash.DD, I think you're overlooking "good debt", e.g. a Home Loan. It's hard to convince a bank to foot 800k for a decent home when all you have to show for it is paying off your student debt. They want to see credit history, credit cards and small loans to develop a pattern of credibility.Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
Again, this mindset is the problem in a country where consumer debt is just expected. Most people don't get credit cards and then pay them off the same month.
Arizona Ron
Footballguy
It's the American wayOr maybe she should just save for a major purchase.Having a credit card <> credit card debt. I think it's fine to get a credit card as long as you're basically paying it off each month. If the individual is disciplined it is a good way to build credit. My first credit card had a $300 limit. Hard to get in to too much trouble with something like that. Then work your way up to more credit. Given that the person in question is already out of college she should probably start building up credit before she does want to make a major purchase.No credit card debt is good debt. Paying off a school loan is fine, she doesn't need to establish a credit pattern at 22 so she can get "good debt." You are confusing no credit record with a bad credit record. Plenty of banks will give people with a limited credit history a home loan, especially if they have a good job and a good deal of cash.DD, I think you're overlooking "good debt", e.g. a Home Loan. It's hard to convince a bank to foot 800k for a decent home when all you have to show for it is paying off your student debt. They want to see credit history, credit cards and small loans to develop a pattern of credibility.Then why get a credit card? Seems like getting a debit/credit connected to a checking account is the only way to go. Why we are encouraging young people to pile onto consumer credit when they have tens of thousands in school loans, is not a great way to teach financial responsibility. Credit score doesn't do you any good if all you're paying is debt down.
Again, this mindset is the problem in a country where consumer debt is just expected. Most people don't get credit cards and then pay them off the same month.
Doctor Detroit
Please remove your headgear
I'm just playing devil's advocate. I never had any debt until my late 20s and I wish I would have kept it that way. I don't have a ton now, but it's enough for me to completely change my perspective on consumer debt. Will all be paid off by spring except my mortgage, then me and consumer debt will part ways forever.
The Big Guy
Fear the Blitz
I see what DD is saying, but he is totally discounting that AZ Ron's kid might just be one of the people who will use their card judiciously and pay it off in full monthly. Plus, if she is going to make major purchases, then she is going to miss out on the potential credit card rewards that can be had for purchasing items on a card and paying it in full monthly. I get paid about $50/month to use my credit cards. Highly recommend it if you can do it.
The reality is that to get a mortgage in the world today, the underwriters want to and need to see a more complete credit file. This means that you will need 2 credit cards with some time under their belts. Does not mean carrying a balance on either card, so you can have credit and not use it/pay in full monthly.
Now for a decent starter card, there are a couple of decent offerings from Capital One and as a recent grad, she should be getting a fair amount of junk mail offers from the banks at this point. My daughter is in a similar boat and there was a pretty strong offer from TD Bank in her mail.
The reality is that to get a mortgage in the world today, the underwriters want to and need to see a more complete credit file. This means that you will need 2 credit cards with some time under their belts. Does not mean carrying a balance on either card, so you can have credit and not use it/pay in full monthly.
Now for a decent starter card, there are a couple of decent offerings from Capital One and as a recent grad, she should be getting a fair amount of junk mail offers from the banks at this point. My daughter is in a similar boat and there was a pretty strong offer from TD Bank in her mail.
I don't disagree with any of this. However, it's unrealistic to expect someone not to take out a mortgage when they buy a house. What percentage of people do that? I see from your posts that you have a mortgage. Personally, I also don't have a problem with someone financing a new car depending on how much the loan is for and the interest rate. Sometimes taking on debt isn't a bad thing. It all depends on the individual and their financial situation. Building up a credit record gives a person flexibility in how they go about their finances. That's not a bad thing, and I wouldn't discourage someone from trying to build a good credit record.
AAABatteries
Footballguy
AZ Ron and Mr Pack have a kid together?
Not sure if I could have come up with a bigger odd couple if I tried.
Not sure if I could have come up with a bigger odd couple if I tried.
Doctor Detroit
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Where did I say that?
Buying a new car is a terrible purchase also, and I've bought five of them. Never did I leave that lot saying, "damn I just made a great financial decision."
Student loans and mortgages are good debt, pretty much everything is bad.
Doctor Detroit
Please remove your headgear
The Big Guy
Fear the Blitz
Again, you keep calling his kid getting a cc Debt, like it is preordained and a done deal already. AZ already said that his kid is paying down her SL debt, so it is safe to assume that she is working at this point, so having a CC does not mean that she is going to be incurring debt.
Doctor Detroit
Please remove your headgear
Okay, say she gets a credit card and does one of the following:I'm not following any of this.
- Doesn't ever charge anything on it.
- Charges a few household expenses on it instead of paying cash, but sets aside the cash as she goes along and pays off the bill in full every month.
Is that still bad? You're acting like she's gonna suddenly have a massive additional debt, which may not be the case. Some of us are suggesting to you that not everyone fits the profile you posted above. Some people are disciplined and responsible and are just looking to establish themselves in the adult world, which typically includes having some credit.
Doctor Detroit
Please remove your headgear
lol at all of this.Okay, say she gets a credit card and does one of the following:I'm not following any of this.
- Doesn't ever charge anything on it.
- Charges a few household expenses on it instead of paying cash, but sets aside the cash as she goes along and pays off the bill in full every month.
Is that still bad? You're acting like she's gonna suddenly have a massive additional debt, which may not be the case. Some of us are suggesting to you that not everyone fits the profile you posted above. Some people are disciplined and responsible and are just looking to establish themselves in the adult world, which typically includes having some credit.
Doctor Detroit
Please remove your headgear
In the land of unicorns and free lunches 22-year-old women pay their credit cards off every month, Beirut is the hottest tourist spot, and the Cubs win the World Series every year. 
Juxtatarot
Footballguy
In the land of unicorns and free lunches 22-year-old women pay their credit cards off every month, Beirut is the hottest tourist spot, and the Cubs win the World Series every year.
They're not THAT bad. I don't know the percentage but I would agree it's low.
SacramentoBob
Footballguy
This is false.
Revolving credit card debt being paid off does much more for your FICO than installment loans.
SacramentoBob
Footballguy
People paying cash instead of credit are just leaving money on the table. Pay off your revolving balances in full every month and in 2 years you will have unbelievably great credit.
The main thing is: Don't treat credit card limits as additional income. Just put your normal monthly spending on them and pay it off. You buy gas and groceries every month right? Put that on the card and pay it off in full each month. If you're carrying a balance, you're doing it wrong.
The main thing is: Don't treat credit card limits as additional income. Just put your normal monthly spending on them and pay it off. You buy gas and groceries every month right? Put that on the card and pay it off in full each month. If you're carrying a balance, you're doing it wrong.
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Doctor Detroit
Please remove your headgear
Credit score facts & fallacies
Doctor Detroit
Please remove your headgear
Exactly. But that's the problem, almost everyone is doing it wrong. Me included.
SacramentoBob
Footballguy
Your FICO pretty much determines whether or not you get credit and how much you get, period. There are some things outside of FICO that underwriters take into consideration, but FICO is going be the biggest deciding factor. $200K salary and nothing on your credit file gets you a $500 secured card at Bank of America, while a $40K salary and a 700 FICO gets you a limit that, at a minimum, matches your highest credit limit from a competitor at any of the prime credit card issuers.
ETA: People who are eligible for some of the really good credit unions based on being a service member (USAA, Navy FCU) can be exempt from this criteria. Anyone who is eligible for those credit unions should be joining them right now if they aren't already a member.
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SacramentoBob
Footballguy
It's a life lesson we all have to learn. Now is a good time for Mr Pack to sit down with his daughter and give her some words of wisdom. She may follow it or she may learn the hard way. Either way, if she wants to buy a house in 5-10 years she's going to have start proving she's responsible with credit now or pay cash.
Doctor Detroit
Please remove your headgear
So Bob, if you have student loans and are paying them off religiously, is that not positively reflected on your FICO report?
Doctor Detroit
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SacramentoBob
Footballguy
It's not negative, but it's actually a smaller component of your score unfortunately. The best thing student loans do for you is establishes your credit file at 18 so by the time you graduate from college, you already have 4-5 years of credit history. Overall age of your file and perfect payment history on revolving debts/mortgages are the two best things you can do for your credit score.
Juxtatarot
Footballguy
Getting a small limit credit card and using it responsibly is a hell of a lot easier route to go.
SacramentoBob
Footballguy
lol
So in other words, take out no credit, but call your utility companies and ask them for a credit reference proving you've been on time for two years.
Or you could just do the same thing automatically with a credit card.
I like Dave Ramsey's practical advice for people who actually have debt problems and how to get out of them, but he really is the credit version of a luddite sometimes and comes across as a complete bonehead a lot of the time. His advice is terrible for people who are responsible.
Doctor Detroit
Please remove your headgear
Ok. So if someone was say 28, paid off $40k in student loans, and had no other credit...what would their score be? I would think that along with a good salary and a good down payment would be plenty to secure a mortgage. No?
SacramentoBob
Footballguy
Barclays Bank offers 2 reward points for each $1 spent on utilities, so you could pay the exact same bills as Dave suggests and get a small reward at the same time. American Express has 6% cash back on groceries and 3% cash back on gas if you use their Blue Cash Preferred.
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SacramentoBob
Footballguy
They would have a good score. I'm not a mortgage underwriter so I can't say, but they'd have what is called a "thin file" which may make them ineligible for the best programs based on other requirements.
Doctor Detroit
Please remove your headgear
Juxtatarot
Footballguy
Actually, after 6 months of the creditors stopping reporting of the payoff, that individual would have no score.
http://www.myfico.com/crediteducation/questions/requirement-for-fico-score.aspx
