I went into Debt Consolidation 5 years ago, and I have now officially made it to “Zero”.
I’d like to get a credit card again, just to use for manageable purchases, so that I can begin repairing my credit.
Example: I have a vacation planned in December. The vacation is already responsibly budgeted for- there’s a realistic savings schedule that has already started and will continue to build from now until then. I can TOTALLY do this vacation with no credit card whatsoever. But I’m thinking that this would be a good opportunity to use two or three thousand dollars worth of credit to then pay down in a responsible manageable way.
No Credit Card:
I’ll be buying a plane ticket in September. Some show tickets in October. Will book a hotel room- but it will not be a prepaid booking. Late October, November, early December, I’ll be saving for the hotel room and meals and incidentals.
With a Credit Card:
I could book a prepaid hotel room for a better rate, I could look for show tickets earlier giving a chance for better seats. I could “buy” everything by early October, then the savings schedule can turn to a pay-down-credit-card schedule.
Thoughts on my plan?
Are my chances for approval better or worse if I ask to open a new account with the same credit card company I just paid off? I know they do NOT like when you go into debt consolidation, but on the other hand they’ve seen my consistent paying down of my balance for the past five years. From MY perspective, I think they should see me as safe- I don’t know if that would be their perspective though.
Can’t people these days just use a bank card that has the Visa symbol on it? I have not used a credit card for years and I stay in hotels all the time.
Last time I moved I couldn’t get a lease without a family member cosigning. I want to establish a healthy credit history and it ain’t going to happen with anything HUGE at this moment. A credit card with a couple thousand dollar limit would be entirely manageable.
The vacation, as stated above, is entirely doable without a credit card. The current saving and budgeting plan assumes no credit card at all. I just gave it as an example of how I’d like to use and manage a new card- to better inform any advice that anyone would like to share.
Assuming you can qualify for an unsecured card, the interest rate is going to be very high, which I think would make your plan a bad idea if you have to pay your balance down in increments.
I would get the card, but only charge the expenses you can pay down that particular billing cycle.
This is something I can do but I was under the (mis-?)understanding that as long as you’re zeroing every month you’re basically having zero effect on building a good credit history- is this wrong?
It is wrong. Carrying a balance (and likely paying lots of interest on it!) is of zero benefit, credit report-wise. What gets reported is how long the account has been open, whether you pay on time, and utilization (balance at reporting time / total limit).
I don’t even know if a credit card is necessary for building good credit these days.
A better way is just through timely payments on things like cell phone bills, car loan payments, cable/sat/internet bills, etc. These are all tied into your credit history.
You’d be better off taking advantage of a stores “0% financing for 24 months!” on large purchases once in a while.
Only the car loan of those items is reported on your credit report. Telephone, Cable, Internet, Garbage, Water, Sewer, Electric, and any other bill you can think of are not reported unless you go so delinquent that they send you to collections. So having them in good standing does zero for you.