Friday, November 12, 2010

Picking a Credit Card

Can you tell I'm a little focused on money at the moment? I basically have no credit. Not bad credit, just none, which apparently is just as unappealing to creditors. A year or so ago I tried applying for several cards so that I could begin building my credit but to no avail. Though at the time I was a graduate student making barely $1000 a month, not exactly a great credit candidate. So after being rejected 3 or 4 times, I gave up, lest I ruin my credit forever. But now that I have my big girl job, I've decided that it's time again to try and build up some credit. I've looked at a couple different ones (basically just Target and Amazon) and am currently wondering to myself if it really matters which I get. They both have no annual fee and offer rewards of some sort. And basically I'm just looking to use this to build credit, not to make purchases out of my price range.

Basically my fear is that one of these days it will be time to buy a car or a house and I won't be able to because I have no credit. Manny thinks it's silly of me to worry but that's because he already has good credit! Lucky duck.

How have you built up your credit? Any great credit card suggestions? Is it better to get a store card or a bank card? Does it really matter as long as you watch your spending and make payments on time?

On a slightly different note, my new budget starts tomorrow! I'm unnaturally excited. I think it's because the budget for the past couple weeks was (it seemed) a big fat fail. More on that Monday. I'm really excited to start a new budget cycle and try to stay in budget once more! Wish me luck!


  1. A word on credit. There are three different "companies" (I guess that's what you'd call them) that give credit reports. When you're buying a house (not sure about a car) they look at all three scores and take the middle one. When you're buying a house with someone else they do it for both of you. Basically you can kinda ride the wave of the other person's good credit (though your bad credit can bring them down a bit too).
    As for credit cards, I'd get a Capital One card. That was my first card and it was very user-friendly and good for building credit. Though they typically have yearly fees, I'd also consider American Express though, because they have amazing rewards for their users.

  2. I'll second Megg on the Capital One card. I just applied and got a Capital One Venture card. I thought I had limited credit history, but being an authorized user (meaning my name is on the actual card even though I don't pay the bill) really helped my credit score. I had no idea I had such awesome credit until my mortgage broker told me so.

    If you don't qualify for a no fee card and you don't want to pay an annual fee, I would get a store card like Amazon or Target. If you get an Amazon Visa, you can use it other places while earning rewards. The interest rates on these are pretty high, so don't by something you can't pay off right away.

    I think it goes without saying that you should always pay off your credit cards in full (or almost in full) every month to have awesome credit.

  3. Megg,
    Thanks for the great advice! I feel like by my (gulp) mid-twenties I should know all this but I never got a credit card when I was younger (you know, back in the day when they were throwing credit around) because I was afraid of the bad credit.

    Totally agree on the not using a credit card to shop out of your price range. I'm a big fan of using it to pay for stuff already in your budget and then paying it off with the money you already have set aside.

  4. Pattie (Metairie Mom)November 13, 2010 at 5:29 PM

    Dietz -
    It really doesn't matter where you get the credit card. I would just recommend one with no annual fee. If you pay your bills timely, you will build up your credit score -- or create one! I do think, however, that Amazon sounds intriguing.