Reader question:
I’m barely out of high school and have been driving my parents car around. Now, I’ll be working for a year and then going to college, and I’m interested in buying a new car, but I don’t have any credit history. What do I do?
Rodney
Build your credit.
It sounds easy, but it really isn’t. You are starting out on your path of credit, and as a young person who is just beginning, you have to take even better care of your credit score because it will affect you for a very long time. And once you’ve gotten started down the wrong path, it’s hard to give off. Some people go their whole lives trying to fix their credit and never succeed. Start off on the right foot.
Don’t think that your credit decisions now can be that big of a deal? Some people who get a student credit card when they are eighteen have it follow them around for awhile because they are so surprised by having so much “free money”, that they max out their card and then don’t have the income to pay off the bill.
First, to build credit, you’ll want to get a credit card. Not a bunch. Having a bunch of open accounts actually looks bad on your credit report. The best idea is to get a major card, like a Visa or MasterCard, as well as a gas card. Then you’ll have to use those wisely for the next six months to a year in order for them to affect your credit report. Never spend over fifty percent of the balance and pay off the full amount that you spent every month. If you start getting more bills in your name before you get that car, always pay them and pay them on time, because every time you mess up, it is noted.
The idea is responsibility and patience. If you have a score of 550 or below, you’re untouchable and shouldn’t think about getting a car financed. Even at 680, you want to be careful, because if you apply and are denied that could hurt your chances in the future. If you can’t get your credit score raised in time to buy your new car, you might want to search out special deals for people with bad or no credit.
Cheers,
Fashun Guadarrama.